South African construction and engineering firm Group Five said on Wednesday that global credit crisis and lower oil price had hit its business badly in the Middle East.

According to Group 5, its African and Eastern European operations remained buoyant and the company expected a strong improvement in earnings for the full year.

'However, the company's business in the Middle East is under pressure. Dubai authorities had terminated a 3.3 billion rand ($324 million) contract and had suspended a 654 million rand contract, Group Five said, said an official.

It said other contracts to the value of 563 million rand in Dubai, Abu Dhabi and Jordan were not affected.

Group 5 said it expected a 50 per cent rise in first-half earnings, but headline earnings per share (EPS) - which strips out certain one-off, non-trading and financial items - was expected to be 45 per cent to 55 percent higher for the six months to the end of December compared to the previous half.

The company's shares gained 3.98 percent after the statement was released and were trading up 1.04 percent at 34.01 rand at 0847 GMT, outperforming Johannesburg's Top 40 index, which was down 1.98 percent.

Group Five, which has been benefitting from a building boom in South Africa ahead of the 2010 soccer World Cup, also said it had won more than 2 billion rand worth of public infrastructure contracts since November 2008.

'It's good news and bad news. On the earnings front, I think it was a pretty good performance, but some negative news throughout the Middle East,' a Johannesburg-based construction analyst said. 'It's going to be tough,' he added.