Aveng profit lower as manufacturing unit hit

Africa’s second biggest construction group Aveng posted a drop in full-year profit on Wednesday as lower volumes and falling steel prices hit its manufacturing and processing business.

Aveng, which is building Soccer City stadium to host the Soccer World Cup final, said headline earnings per share for the year to end June fell 11 percent to 528,5 cents, in line with its revised forecast of a 9% to 14% drop.

The group, which has big infrastructure projects in Australia, New Zealand and Nigeria, said its results were also hit by a slump in new deals in the public and private construction sectors as a global slowdown dries up funding.

“The year under review has proved challenging due to an adverse operating environment, fluctuations in steel prices as well as postponements and cancellations of construction projects,” chief executive Roger Jardine said in a statement.

The firm said R4,2-billion worth of awarded work had been cancelled during the year.

But construction continues to be the best-performing sector in South Africa, bolstered by a government infrastructure spending programme and preparations for the tournament.

Aveng’s rivals, Africa’s biggest construction company Murray & Roberts, Group Five and Wilson Bayly Holmes-Ovcon, have all posted strong full-year profits.

Aveng said the group’s two-year construction and engineering order book rose 18% to R30,4-billion compared to R25,8-billion in the year-ago period.

It said its construction and engineering and opencast mining segments remained relatively robust and had helped offset the slowdown in its manufacturing and processing business.

Aveng, which maintained a dividend of 145 cents, said its total project opportunity pipeline stood at around R100-billion, and added it was well positioned for further growth.

Headline EPS is the main profit gauge in South Africa and strips out certain one-off, non-trading and financial items. - Reuters

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