Aveng Group Interim Results

Resilient performance in key geographic markets and industry sectors

Negatively impacted by SA construction


Key features

Revenue improved by 11% to R27,6 billion (2012: R24,9 billion).
Net operating earnings down by 8% to R503 million (2012: R544 million).
Headline earnings per share down 21% to 82,1 cents compared with 104,5 cents in 2012,reflecting a substantial improvement against the immediate preceding six months ended 30 June 2013.
Net cash position remained stable at R2,4 billion.
Mining and Construction & Engineering: South Africa and Rest of Africa operating segments’ order books increased by 18% and 22% respectively from June 2013.
Commenting on the results Aveng Group CEO, Kobus Verster said “The second half of 2013 was as challenging as the first, with no material improvement in infrastructure spending in South Africa and Australia. Market conditions, particularly in South Africa, remain difficult but optimisation programmes have delivered pleasing cost benefits across the Group.”

Notwithstanding the challenges experienced, a significant improvement was achieved in the performance of the Construction & Engineering: South Africa and Rest of Africa segment when compared with the immediately preceding six month’s result ending 30 June 2013.

Operating performance

The trading conditions experienced by the South African and Australian Construction & Engineering businesses remained challenging, with the Group’s performance adversely impacted by labour disruptions contract execution and claim challenges in the first half of the year.

The Manufacturing & Processing part of the business performed well in a relatively soft market, which was also affected by labour disruptions.    

Construction & Engineering: Africa and Rest of Africa saw revenue increased by 11% to R4,2 billion. This improvement is mainly due to the commencement of major contracts at Aveng Grinaker-LTA and increased activity on renewable energy projects at Aveng Engineering.

Despite Aveng Grinaker-LTA having an operationally disappointing year in 2013, the operating group increased revenue by 10% to R3,8 billion from R3,4 billion in the comparative period. However the execution of current projects at lower margins, together with the still high level of fixed costs resulted in a net operating loss. Various initiatives have been implemented to improve the performance of Aveng Grinaker-LTA, including strengthening of management capabilities.

The segmental revenue from Aveng Moolmans and Aveng Mining Shafts & Underground decreased 9% to R3,5 billion, whilst net operating earnings were 24% lower at R295 million. Aveng Mining Shafts & Underground performed below expectations largely due to a combination of margin slippage at some South African projects and problems experienced on a mining contract in Chile. This was marginally offset by continued strong results at Aveng Moolmans, although it did not reach the levels of the comparative period due to the loss of a contract in Zambia.

Order book and prospects
The order book is marginally down compared to June 2013, at a still-strong R36.7 billion (June 2013:  R37.4 billion).

The Group anticipates improved trading conditions in the second half of the year against its comparative period.

Kobus Verster said, “The past six months have been characterised by consolidation and repositioning of the Aveng Group. Through various interventions we have started to lay the foundation from which the Group can strengthen its focus and optimise its performance. We nevertheless still have a way to go to drive delivery of the full potential of our diverse business.  The Aveng Group strives to ensure that the companies within its portfolio become leaders in the industry based on market share and profitability. The focus in 2014 will remain on further strengthening our capabilities within the Construction and Engineering operating groups.”

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For further information contact:
Dawn Spencer, Group Corporate Affairs Manager
Tel: +27 82 412 5885, dawns@aveng.co.za

Issued by Brunswick South Africa on behalf of The Aveng Group:
Iris Pilane     071 680 0236
Georgie Armstrong   082 318 3745