Johannesburg - Construction company Aveng on Wednesday reported a 43% increase in headline earnings per share to 244.4c for the six months ended December 2008 from 171.4c a year ago. On a diluted basis HEPS were up 54% to 222.1c per share from a previous 144.1c.
The group reported a 30% increase in revenue to R17.8bn and a 36% rise in operating profit to before non trading items to R967m.
The group pays an annual dividend at year end.
All Aveng's operating groups showed solid revenue growth during the six months under review, it said.
Cash generated by operations rose by 41% to R1.4bn, in line with the improved operating performance.
While the tightening global economic environment has affected Aveng's target markets, it said its diversified capability across the construction and engineering sector has muted the effects of slower demand.
The impact on public sector infrastructure spending in the geographies in which Aveng operates has so far been limited, although projects related to mining and commodities have come under pressure, in particular, junior mining houses have been particularly affected by declining commodity prices.
In Australia and the Asia pacific region, greenfields infrastructure projects in the downstream oil and petrochemical sectors are also under pressure.
Aveng continues to benefit from the backlog in infrastructure projects, including coal fired power stations, roads and dams.
In spite of deteriorating market conditions over the review period, the group won several contracts. Most notably McConnell Dowell was awarded a R2.7bn project from BHP Billiton Iron Ore for the Rapid Growth Project 5 Marine Works contract, which is a staged development valued in excess of R4bn, and McConnell Dowell was also engaged to deliver the design and construction contract for a new woodchip loader and the berth at Corio Quay for Geelong Port in Victoria Australia, valued at R1.6bn.
Moolmans, the group's opencast mining contracting operation, concluded six new long term contracts valued at R11.4bn for a period of up to five years.
Aveng said its confirmed two-year order book of R29.2bn, which represents an increase of 13.2% from the June 2008 level of R25.8bn, demonstrates that Aveng continued to secure new projects in spite of a tightening market.
Grinaker-LTA and McConnell Dowell closed the period with two-year work on hand amounting to R9.4bn and R12.6bn respectively. Moolmans' two-year order book of R6.1bn has increased by 42% from June 2008 as it secured several substantial opencast mining projects during the six months.
The group maintained its momentum with regard to training, recruiting and retaining its pool of artisans, technicians and engineers to deliver on these opportunities.
Looking forward, the existing order book should ensure that the construction and engineering segment as well as the opencast mining operations will continue to achieve operating results, at least, in line with current levels of performance, it said.
The manufacturing and processing business units are, however, facing a very different market when compared to the same time last year when steel was in short supply, driven by high demand, and steel prices were rising sharply.
The second half of this financial year will see a reversal of this trend with lower steel prices and a weaker market. Consequently, the operating performance of both Trident Steel and Steeledale will be under pressure.
In addition, interest received will be lower, in line with lower cash balances. As a result, Aveng does not expect headline earnings for the second half of the 2008 financial year to be matched this year. Against the backdrop of the slower economic outlook and the ongoing effects of the global liquidity squeeze, the group's conservative approach to conducting business and its strong balance sheet, ensure that it is well positioned to weather the current adverse markets, it concluded.
- I-Net Bridge