Optimism at Aveng over Australia profit
JOHANNESBURG – Construction Group Aveng has new optimism as its Australian subsidiary McConnell Dowell added A$535 million (R5.45 billion) in the period after June 30 to an already growing order book, securing about 90 percent of budgeted revenues.
Its re-christened mining operations, Moolmans, sealed a further contract extension at the Nkomati mine in Mpumalanga in the same period, also securing 90 percent of the budgeted revenues.
This as its disposal of Grinaker-LTA Mechanical and Electrical business to the Laula Consortium contributed R72m to the war chest in the period after June, helping its liquidity position amid the continued slump in which local construction companies are battling a weak economy and a pull-back in infrastructure spending by the government and private sector.
On the Australian front, the two-year order book has seen a 26 percent increase to A$1.45bn on projects including the Mordialloc Bypass (Australia), Echuca-Moama Bridge (Australia), Westland Milk Bypass (New Zealand), and the built environs of the Modbury Hospital.
In an update on its business performance released on the Johannesburg Stock Exchange, Aveng said these significant awards have also meant that good progress has been made towards securing orders to meet the budgeted revenue beyond the current financial year.
Additionally, McConnell Dowell has more than A$1bn worth of projects in preferred status.
“The markets in which McConnell Dowell operates remain supportive of the medium-term growth objectives, and management at McConnell Dowell will continue to exercise discipline in terms of selecting opportunities on which to tender,” it said.
Aveng said its mining venture was on firmer footing with the renegotiation of some contracts, together with the other aspects of the group-led intervention, which are yielding positive results. “The business has returned to profit during the first quarter and has met budget expectations. This provides a strong underpin to the expected return to profit for the full financial year,” it said.
Aveng said the Competition Commission's approval of the asset sale to the Laula Consortium tallied asset sales revenues at R1.1bn.
“Discussions with potential buyers for the remaining non-core businesses of Aveng Trident Steel and Aveng Automation & Control Solutions are continuing. The company expects to have finalised the disposal of all non-core businesses during the course of the current financial year,” it said.
In its financial results for the year to August, Aveng reported a net operating loss of R1.1bn, compared with an adjusted loss of R401m in the same period a year earlier.
The company said the loss partly reflected a weak performance at its Moolmans mining business, as well as pressure on margins at Aveng Manufacturing. That was partly offset by strong performance at Trident Steel.