Aveng rebounds after its most difficult period

Posted On Tuesday, 13 September 2005 02:00 Published by Commercial Property News
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Listed construction, steel and cement group is on a path to recovery from the disappointing performance last year of its key construction businesses

Aveng Grinaker LTAListed construction, steel and cement group Aveng is on a path to recovery from the disappointing performance last year of its key construction businesses, and on Monday it reported a 15% increase in revenue in the year to June.

The construction cluster - which consists of the engineering, construction and mining operations of Grinaker-LTA and subsidiary McConnel Dowell Corporation - was largely held responsible for the group's 11,4% decline in revenue last year. The company said that last year was the most difficult period in its history.

Aveng CEO Carl Grim said on Monday that the company had turned its fortunes around. He said the next few years would be important to the local construction industry because of government-led fixed-investment projects and the low interest rate environment, which has lifted the housing market.

State-owned electricity utility Eskom plans to spend R93bn on power stations, transmission projects and public-private partnerships in the next five years. Transport parastatal Transnet has set aside R37bn to improve the capacity of its rail and port businesses.

Aveng was part of the Gauliwe consortium that lost to the Bombela consortium in the bid to build the Gautrain over the next four-and-a-half years.

Grim said that because of losing the bid to construct the high-speed train, Aveng had a low order book, which would enable the company to take advantage of new opportunities.

In the year ended in June, the company said, its headline earnings a share grew 69% to 93,5c, from 55,3c in the corresponding period last year. Revenue increased 15% to R13,5bn, from R11,7bn. Operating income was up 44%.

Grinaker-LTA reduced its operating loss from R126m in the year-ago period to R18m.

Grim said Grinaker-LTA was in good stead to take advantage of opportunities from the 2010 Soccer World Cup, mining investments, infrastructure investment of parastatals Eskom and Transnet and downstream opportunities from the multibillion-rand Gautrain project.

McConnell Dowell reported an operating loss of R117m. Grim attributed the loss to "one-off adjustments" including the company's decision to write off R41m after German construction company Walter Bau was liquidated.

At the time, McConnell Dowell was subcontracting to Walter Bau on two contracts for Sydney Water Corporation.

Steel and related businesses reported a 20% increase in revenue, from last year's R4,1bn, to R4,9bn.

The division's operating income was up 15%. Grinaker-LTA Manufacturing contributed 40% to the steel and related businesses' revenue.

Grim said its manufacturing businesses had benefited from the current housing boom.

Holcim, in which Aveng has a 46% interest, saw its revenue rise 30%, while operating profit rose 52% to R1,1bn.

Meanwhile, Grim said, the company would in the "next few days" get a report from auditors quantifying the value of its contractual dispute with junior platinum miner Aquarius.

Last modified on Friday, 21 June 2013 22:50

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