Construction group Aveng on Friday said its two-year order book had increased to R31,3bn at the end of last month compared with R30,4bn in June, despite delays in awarding contracts, particularly in the public sector.

Chairman Angus Band said the group continued to pursue opportunities in its total project pipeline, which remained stable at R100bn. But he was concerned that the stronger rand would negatively affect its foreign earnings.

Band was giving an update on the group’s operations at Aveng’s annual general meeting on Friday. He said volumes in the manufacturing and processing cluster had stabilised while average steel prices had risen about 10%.

Band said the group’s comparative performance in the first half of the 2010 financial year was expected to reflect the tougher trading environment when viewed against the first half of this year, when demand was still buoyant.

“The continued relative strength of the rand against other currencies is of concern and will negatively affect foreign earnings when translated to rand, particularly in McConnell Dowell and Moolmans,” he said.

The group’s construction division, Grinaker-LTA, had won a R350m contract to build the Mitchells Plain Hospital in the Western Cape as well as the chimneys and silos for the Medupi power station in a joint venture. The group’s share of this contract was valued at R320m.

The operating group was also granted an extension of its contract at the Two Rivers Platinum Mine in Steelpoort, valued at R360m. Moolmans, the group’s open-cast mining division, had secured an open-cast gold mining contract with a two-year term at Sadiola, in Mali.

McConnell Dowell, the Australian leg of the group, had been awarded several contracts including one of R420m for the construction of marine facilities on the Sino Iron Project in Hong Kong and the Singapore International Cruise Terminal on Jurong Island.

The group’s results for the year ended June were revealing, with an adverse operating environment, fluctuating steel prices and postponements and cancellations of construction projects totalling R4,2bn taking their toll and seeing profit tumble 13% to R2,1bn.

Despite strong performances from the group’s construction and engineering and open-cast mining segments, which improved their combined operating profit 40%, overall results were offset by a 54% decline in the manufacturing and processing segment.

Headline earnings slipped 10% to R2,1bn from R2,3bn, but revenue increased 14% to R33,8bn compared to R29,6bn a year ago. The group maintained a 145c dividend per share.

CEO Roger Jardine blamed the decrease in revenue in the manufacturing and processing division from R8,5bn last year to R8bn on pressure on the steel sector resulting from the global economic downturn.