South African contractor Aveng’s revenues for the full year to the end of June were down -17% to ZAR 43.9 billion (US$ 3.4 billion). The company made a net loss of ZAR 288 million (US$ 22 million), compared to a profit of ZAR 799 million (US$ 62 million) a year ago.
Aveng CEO, Kobus Verster said, “While Aveng has made inroads in delivering on our strategy, improved operational performance was overshadowed by the economic slowdown in our key markets. Delays in resolving historical problematic contracts, losses in the steel and engineering businesses, restructuring costs and a substantial provision for an unresolved claim also impacted performance.”
A company statement went on to say, “Aveng was impacted by the lack of material improvement in domestic infrastructure investment in both the public and privates sectors in South Africa. This was aggravated by reduced mining activities and labour disruptions, specifically in the construction, steel and mining sectors. The steel business was adversely affected by labour disruption and weak margins due to low demand and increased price competition. Conversely, the building industry remained relatively strong, with a number of large projects underway.
“In the Australian market, trading conditions remained difficult, with a fall in all categories of infrastructure development except for residential building. Delays or cancellation in tenders impeded anticipated growth in social and transport-related infrastructure projects. Notwithstanding efforts made by McConnell Dowell to increase social and infrastructure-related projects these are not yet compensating for the reduced mining infrastructure spend and the decline in liquid natural gas projects.”
With a like-for-like order book some -11% lower than it was a year ago, at ZAR 28.9 billion (US$ 2.24 billion), and no short-term improvements expected in its end markets, the company has a subdued outlook for this year.
Mr Verster said, “Given this outlook and our strategy we continue to focus on the stabilisation and recovery of the business, intensifying our claims recovery process and improving project delivery. These initiatives, together with yet to be realised structural improvement benefits, should result in a strong improvement in the Group’s operational performance in the 2016 financial year.”