The direct and indirect effects of the rand will be largely responsible for dampened earnings. Prospects for the year ahead are also not very bright.

This suggests that poorer performances are likely to be reported by related companies, such as building material suppliers, over the next few months, following highly favourable conditions last year.

In the domestic market, project cuts and delays in the mining sector will have affected earnings to a large extent. Subdued activity in mining projects was expected to continue for at least another six months, said one of SA's top-rated construction analysts, who asked not to be named.

The mining sector generates a substantial portion of construction companies' revenue. Mining and earthworks generated 26% of SA's largest construction group, Aveng's construction revenue last year, for example.

Several mining companies are reviewing projects. The Business Times at the weekend quoted new Anglo Platinum CE Ralph Havenstein as saying that if the rand were to remain at current levels or made further gains, "we would have to look at our whole suite of projects and some would not meet our hurdle rates".

Government spending on infrastructure projects, meanwhile, is expected to continue rising. Government's announcement at the weekend that it would launch a big investment drive to improve roads, rail and ports infrastructure was encouraging, said Henk Langenhoven of the South African Federation for Civil Engineering Contractors.

However, government spending was slow and appeared not to have improved since last year, he said.

Construction companies are also expected to report currency losses. Most of the companies in the sector have activities outside of SA, mainly in Africa. African business accounts for a substantial portion of the activities of the two largest companies in the sector Aveng and Murray & Roberts.

Meanwhile, wage negotiations between Safcec and the National Union of Mineworkers had reached a deadlock, said Langenhoven. The dispute has been referred to the Commission for Conciliation, Mediation and Arbitration.

"The bulk of construction companies are performing well at operational level, but headline earnings will be on the downside," said the construction market analyst.

Another analyst said: "The construction sector is not doing worse in general compared with other sectors that have been hit by the rand."

Another one said while the construction market was quite small from analysts' point of view, it was growing fast.

Aveng's revenue for the year to June last year was at R13bn, followed by Murray & Roberts at R9bn, and Group Five at about R4bn.

Business Day