Aveng’s Australasia construction and engineering subsidiary has secured 91 percent of its budgeted work for financial 2023, while the group’s open-cut contract mining business Moolmans has secured 78 percent of its budgeted revenue for the period.
“We are suitably equipped to continue on our path of sustainable, profitable growth,” CEO Sean Flanagan said at the release of the annual results for the 2022 financial year, in an online presentation, yesterday.
He said they had five key growth levers: an optimised balance sheet, the specialist capabilities of McConnell Dowell particularly in rail, marine and green energy; the group’s people and systems, the optimisation of fleet and equipment, and the ESG framework. Talks to sell the non-core Trident Steel were underway and the proceeds would likely erase debt and leave additional liquidity in the group, he said.
McConnell Dowell had work in hand of R37 billion (AUD3.2bn), while it was also the preferred bidder on projects valued at R20bn.
Additional tenders valued at R44bn were awaiting a decision or being prepared for submission. The group was returning to work in south-east Asia after a long interruption caused by Covid–19 restrictions, and it would probably be 12-18 months for those operations to normalise, said Flanagan.
“McConnell Dowell is expected to increase revenue and earnings in the year ahead,” he said.
Moolmans’ work in hand of R3.5bn includes the post year-end award of a new rehabilitation project at Klipspruit mine.
Moolmans is a preferred bidder on projects valued at R11.4bn. The business also has tenders worth R23.3bn awaiting a decision and is preparing to submit tenders for contracts valued at R17.4bn.
This project pipeline included existing and new customers in gold, copper, lithium and uranium projects in west and sub-Saharan Africa.
“Moolmans’ performance is expected to remain steady” as the operation would focus on improvements in internal processes, while significant progress had been made in its fleet renewal strategy to improve on-site productivity.
Trident Steel’s revenue and operating earnings are expected to increase due to increased volumes from OEMs and new component supply awards for new models and a higher global steel price.
In the past year, improved revenues, gross margins and operating earnings combined with strong cash generation were underpinned by a stronger capital base. Aveng has completed its transition from recovery and turnaround to profitability, and the group was now in a position to focus on significant long-term growth prospects, said Flanagan.
Revenue of R26.2bn was reported in the year, as a second year of profitability saw earnings before non-recurring items grow by 7.5 percent to R576 million. The gross margin increased to 8.1 percent from 7.6 percent.
Work in hand increased further to R40.7bn post year-end in July, as new project awards were secured, including the Bridgewater Bridge contract, Tasmania’s largest ever transport infrastructure project. External debt was reduced by R398m to R481m.
“We are satisfied with our performance this year and look forward to continuing on our upward growth trajectory, while remaining alert to the risks and opportunities in our external environment.”
Aveng’s share price fell 4.56 percent to R16.13 on the JSE yesterday afternoon.
McConnell Dowell maintained strong growth momentum, driven primarily by supportive market conditions in Australia. Revenue grew by 13 percent to R19bn, its highest in six years. Earnings before non-recurring items increased by 23 percent to R385m.
Moolmans’ revenue came to R3.3bn, down from R4bn in 2021, on the back of project completions at four projects in South Africa and Guinea. Its earnings before non-recurring items were steady at R207m, from R239m in 2021 and after taking account of a R33m once-off gain from the sale of assets following the completion of a project in the prior year.