Concrete results from allied divisions boost Aveng
Concrete results from allied divisions boost Aveng results
September 13, 2005
By Roy Cokayne
Pretoria - Strong performances by the construction, steel and allied divisions of Aveng, plus the contribution from joint ventures and associates, boosted the financial results of the listed construction and engineering group in the year to June.
Aveng yesterday reported an increase in headline earnings a share to 93.5c from 55.3c in the previous year.
Revenue rose by 15 percent to R13.5 billion, operating income by 44 percent to R327 million and income from associates and joint ventures, which largely comprises cement producer Holcim, by 47 percent to R270 million compared with the previous year.
Holcim South Africa, in which Aveng holds a 45.65 percent stake, improved revenue by 30 percent to R3.97 billion and operating income by 52 percent to R1.1 billion.
A dividend of 23c a share was declared, 64 percent higher than last year`s 14c.
Carl Grim, Aveng`s chief executive, said the group`s directors were pleased to report the successful completion of the first step in Aveng`s recovery programme, as demonstrated by the 69 percent growth in headline earnings.
`With a return on average equity of 13.4 percent, the group is just short of its target to achieve a real return of 10 percent for shareholders. `Most encouraging is the 10 percent decline in net debt and the associated reduction in the net debt-to-equity ratio to 40 percent, the lowest in five years and fast approaching the Aveng target of 35 percent.`
Grim said Aveng would deliver on its three corporate objectives in the current year. They are a growth in headline earnings a share of 10 percent more than inflation, a return on shareholder equity of 10 percent more than inflation, and a net debt-to-equity ratio of 35 percent.
Steve Meintjes, an analyst at Imara SP Reid, said Aveng`s financial results were a bit better than consensus forecasts and there was an ongoing superb performance from Holcim.
Meintjes added that Aveng had previously signalled the bad news with regard to McConnell Dowell but was now signalling a turnaround by indicating that a lot of that would not recur.
He said Aveng should easily achieve or exceed its targets in the current financial year.
Aveng shares gained 79c to close at R14.44 and the construction and building materials sector gained 1.9 percent.
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