Aveng lifts headline earnings 55% despite strong r
Aveng lifts headline earnings 55% despite strong rand
March 8, 2005
By Roy Cokayne
Pretoria - Aveng, South Africa`s biggest construction and engineering company, yesterday reported a 55 percent increase in headline earnings a share to 34c in the six months to December.
Earnings rose on the back of a 12 percent rise in revenue to R6.7 billion, despite a 10 percent appreciation in the value of the rand.
Operating income declined 4 percent to R121.3 million, but cash generated by operations improved by almost 17 percent to R309.6 million.
Carl Grim, Aveng`s chief executive, said the company`s trading update had said headline earnings for the full year to June were expected to be between 40 percent and 60 percent higher, but it had assumed an exchange rate of R6 to the dollar and no significant extraordinary events.
However, Grim said that after the end of Aveng`s half year, German construction company Walter Bau was placed in liquidation.
At that time Aveng`s subsidiary McConnell Dowell had been subcontracting to this group on two contracts, and initial estimates were that R35 million would be written off in respect of services rendered, but not paid for. Grim said the group was confident of reaching its target.
The group`s construction cluster, comprising Grinaker-LTA in Africa and the Middle East and McConnell Dowell in Australasia and the Pacific, may have turned the corner despite tough conditions.
It delivered an operating loss of R18 million, compared with a loss of R186 million in the six months to June last year.
The steel and allied cluster, comprising Trident Steel, Grinaker-LTA Manufacturing and the Aveng corporate office, registered a 14 percent growth in revenue and a 16 percent increase in operating income.
Aveng`s 46 percent interest in Holcim South Africa benefited from the almost 14 percent industry growth compared with the prior six-month period.
Grim said group companies were well placed to benefit from the infrastructure spending expected on 2010 World Cup projects, including Gautrain, and capacity upgrading by Eskom and Transnet.
Aveng shares fell 15c to R11.85 yesterday. The construction and building materials sector fell 0.14 percent.
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