Welcome to the Martin & East Group of Companies Web Page
I trust that you will find the website user friendly and informative. The structure of the organisation and how the different companies relate to each other and operate in the market place should be easily understood.
The question on most peoples mind is how are the companies doing in view of market sentiments and the drastic way that share prices have fallen for many of the listed companies? Put another way “Is our glass half full or half empty?”
For most managers of South African construction companies they would say their glass is half empty. They would sight for example that since 2003 the number of CIDB level 9 companies has grown from 15 to 45. The value of work that has been put out to tender has decreased from just short of R60 billion in 2008 to about R40 billion in 2011. As a result of the growth in number of construction companies and the rapid decline in contracts being put out to tender many companies are pricing at a loss. This is reflected in the company results of many listed construction companies, most of whom have shed many jobs.
However in spite of much doom and gloom written in the press about the construction industry and what is said at site inspections, there are signs of optimism.
There has been an increase in the demand for bitumen during the period of rapid decline in construction activity. Since 2008 the average compound growth in demand for bitumen has been 12% per annum. While the number of our private sector clients who were hardest hit by the economic collapse has declined by well over 50%, we are now more dependent on state organisations for our work.
The other good news sign is that many companies are reporting an increase in their turnover on all civil engineering work. Although this is a marginal increase in turnover on a low base it appears that the demand for construction work is on the rise.
Many of our competitors seem to have panicked and cut their tender price drastically. We have rather erred on the side of caution and waited for our competitors to fill up with work at low margins. Unfortunately we may not have been lowest on as many tenders we had capacity for and several teams have been under employed over the last year or so. However, almost all of our contracts have made a positive contribution to the group results. As we see it “Our glass is half full!” We have spare capacity to tackle any surprise contract that may come into the pipeline. With our spare supervision capacity we must focus on making profits through good quality work delivered on time and within budget.
Yours,
Mike Winfield