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Aveng full-year profit falls

Aveng, Africa’s largest builder by market value, posted an 8% drop in full-year profit, hit by lower demand for construction projects, and said it would buy back up to $137-million of its own shares.

The South African construction industry avoided the worst of the economic downturn, due to big infrastructure projects related to the 2010 Soccer World Cup.

However, companies now need to replenish their order books as funding shortfalls have caused firms such as power utility Eskom to delay, or suspend construction projects.

Aveng, which has operations in more than 25 countries, said its two-year order book rose 2% to R31,1-billion, and that it saw R102-billion-worth of projects in its markets.

The group had R7,5-billion in net cash in the year to end-June and said it would use up to R1-billion of the cash to buy back its shares.

“We’ve been looking for ways to deploy this cash in an accretive manner. And we think a share buy-back of R1-billion will be good for our shareholders,” chief executive Roger Jardine told Reuters.

The buyback should lend some support to the stock, said Dirk Noeth, an analyst at Avior Research.

“The order book looks quite good. The business looks relatively stable compares to its peers and has really strong balance sheet,” he said.

Aveng’s main rival, Murray & Roberts, said last month its full-year earnings dropped by 50%, hit by costs from completing Africa’s first rapid rail network, but forecast a rebound this year.

Aveng reported headline earnings per share (EPS) of 483,6 cents in the year to end-June, down from 528,5 cents a year earlier. It maintained its final dividend at 145 cents.

Headline EPS is the main profit gauge in South Africa and strips out certain one-time items. — Reuters

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