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Aveng's revenue, profit rises

Johannesburg - Construction company Aveng [JSE:AEG] on Friday reported diluted headline earnings per share rose by 44% in the six months to end December 2012 to 97.5 cents. This was due to a 30% increase in revenue to R25bn‚ which resulted in a 56% gain in operating profit to R518m.

Aveng Group CEO Roger Jardine said the group’s performance for the first six months of the year reflected the modest recovery in the global economy and the subdued operating environment in the construction and engineering segments.

“We are particularly pleased that some of the large African infrastructure projects outside of South Africa are now reaching implementation stage. We have made inroads on large contracts in Mozambique and Mauritius‚” he said.

The company said that it was encouraging that‚ despite delayed timing in contract renewals‚ the order book remains strong at R40bn and it continues to grow as reflected in the 6% increase as at February 28 2013.

High levels of activity within McConnell Dowell and an improved performance by Aveng Mining have made significant contributions to the 30% increase in revenue of R25bn. However‚ the labour disruption experienced in South Africa during the year‚ drove the R150m loss in revenue at Aveng Grinaker-LTA.

Jardine said that industrial action had affected the Group’s profitability by 23%.

Commenting on the Competition Commission investigation into the historical anti-competitive practices in the South African construction industry‚ Jardine said Aveng has proactively engaged and cooperated with the Competition Commission.

“The matter has not been finalised‚ and Aveng’s view remains that the investigation must be completed as soon as possible in order for the industry to move forward. As the settlement process has not been concluded‚ the provision for a potential penalty we announced in September 2012 remains unchanged‚” he said.

Given the slow rollout of infrastructure spend in South Africa and a weaker Australian economy‚ public sector infrastructure spend in both countries is expected to remain subdued in the coming year.

Notwithstanding this‚ Aveng will be participating in the R827bn infrastructure projects budgeted for over the next five years in South Africa‚ while in Australia the company expects social infrastructure spending to increase as resource spend decreases.

Aveng Grinaker-LTA was recently awarded two separate contracts with a combined value of approximately R1.6bn for the construction of Eskom’s Majuba Rail Link‚ and another in Mozambique for the Nacala Section 2 Rail Project on behalf of the Vale/CFM Concession Company.

In Mauritius‚ Aveng Concessions‚ together with its consortium partners‚ has been identified as the preferred bidder in the Mauritius Road Decongestion Project. Aveng Grinaker-LTA has a significant interest in the design and construction contract. We anticipate that these achievements will drive the growth of the African business at Aveng Grinaker - LTA.

Aveng will continue to focus on the energy market as a key growth area‚ having won bids for two projects in the second round of the Renewable Energy Independent Power Procurement Programme.
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