Infrastructure, resource and mining group Aveng said its first-half earnings were expected to slump by almost a fifth, sending its shares on their biggest fall since October 2022.
In a trading statement released late on Friday, Aveng advised shareholders its operating earnings for the six months to the end of December were expected to be 13%-17% lower than the previous year’s comparative period.
The news saw its share price plunge by as much as 11.2%, though it later recovered to close 9.22% lower at R12.80 on Friday.
The company, which in 2021 successfully concluded a R392m rights offer and debt restructure, warned that softer operating earnings and flat earnings were expected for the period.
The operating earnings of Moolmans, Aveng’s locally-based contract mining subsidiary, are expected to decline from the previous comparative half-year due to lower revenues after the completion of projects in the previous financial year. The group also highlighted underperformance of a major contract in southeast Asia under its Australian subsidiary McConnell Dowell. The contract has since been renegotiated.
Once one of SA’s largest construction companies, Aveng is among just a few left standing after an industry-wide slump that led to the collapse of peers including Group Five and Basil Read.
It now focuses on Moolmans, which provides services such as shaft sinking and bulk earthmoving and is one of Africa’s largest open-cut mining contractors. Its other core business is Australasian engineering, construction and maintenance contractor McConnell Dowell, which generates two-thirds of group revenue.
McConnell Dowell
Nevertheless, Aveng said it was expecting to report a 16% increase in revenue, bolstered by work in hand, particularly at McConnell Dowell, led by an excellent performance at the Australian business unit and above planned performance in New Zealand and the Pacific Islands.
It said McConnell Dowell’s revenue is expected to grow by 22% while Trident Steel, the last remaining significant asset that forms part of a disposal strategy which is being sold, was expected to report a revenue increase of 58%.
The Johannesburg-based group has been on a restructuring path dating back to 2018 that has seen it exit all its noncore businesses.
Aveng said in a bid to stave off the effect of prevailing macroeconomic challenges, the group had deployed robust internal controls and measures and continued to make good progress in implementing its strategy of ensuring a fit-for-purpose organisation capable of sustainable and profitable long-term growth.
Aveng is expected to release its interim results after the close of trade on Monday.
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