Aveng is confident that by reorganising its operational divisions and relocating its updated executive leadership team to Australia, it has put itself in a strong position to continue its steady, profitable expansion.
The JSE-listed engineering-led contractor is banking on sustained growth momentum Down Under to help it claw back the more than 50% loss in its share price over the past two years. It has, however, risen 13% so far in July and closed 5.35% higher at R7.88 on Friday, giving it a market capitalisation of R1bn.
Though SA companies such as WBHO and Murray & Roberts have had tough luck when investing in Australia, Aveng seems to be getting it right.
The company returned to profitability in the first half of the 2024 financial year — after taking a hit in its Southeast Asia business unit of McConnell Dowell, primarily from the Batangas liquefied natural gas terminal project in the Philippines.
McConnell Dowell operated 74% of its projects at or above bid margins, “illustrating strong operational performance across most of its portfolio”.
The group highlighted that its combined work in hand tallied A$3.6m (R44m), which supported 100% of the 2024 full-year revenue and more than 60% in 2025.
With about 75% of Aveng’s project portfolio located in Australasia and Southeast Asia, according to the board, its longer-term goal to relocate the group to those areas remains constant.
The group has been making staggered progress in this relocation strategy target, which it said enabled it to make the most of its executive functional competence and capacity.
After the resignation of Sean Flanagan in November, Aveng named Australia-based Scott Cummins, CEO of McConnell Dowell, as his successor.
With 91% of its revenue sourced from outside SA, Aveng in February changed its reporting currency from the rand to the Australian dollar.
Aveng took its internationalisation further and announced the relocation of CFO Adrian Macartney to Melbourne.
“The team is located in Australia and close to the majority of our business activities,” said Cummins. “This new structure is lean and agile with all key functions represented at an executive level to deliver near and longer-term expectations. This allows Aveng to fully leverage existing executive functional capability and capacity, ensuring operational support and governance is provided and consistently applied across the group.”
It said though the management epicentre had shifted to Australia, governance and control remained in SA with the group still listed on the JSE.
The firm has also cut its existing businesses into three operating brands: infrastructure, building and mining. The infrastructure segment will include McConnell Dowell and operates in Australia, New Zealand and the Pacific Islands as well as Southeast Asia. The building segment includes Built Environs, while the mining segment includes Moolmans.
In SA, Aveng has targeted extending its Moolmans clientele base and expanding its geographic reach while diversifying its commodity exposure beyond manganese and iron ore.
Implemented on March 1, the new structure aims to achieve focused management and governance, allowing greater efficiency and effectiveness. Over time, this shift will enhance access to diverse capital markets, it said.
The Australian operating environment has not been without challenges as the effect of hyper-escalation on project costs in Australia eroded the group’s gross margins.
The company said the effect was largely ameliorated by various strategies adopted to address this potential risk including ensuring that the portfolio of work in hand comprises a high proportion of alliance model projects in Australia that offer protection in terms of cost reimbursement.
“Management continues to focus on improving margin on active projects,” it said. For Cummins, this was an absolute priority, as was positive cash generation in the short to medium term.
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