Aveng shares had their best day since November 2021 on Wednesday after it said it expected its recovery to be better than it had previously estimated if the consequences of one-time writedowns are taken out of the equation.
The company expects to have swung into headline earnings per share (HEPS) of 29-30.8 Australian cent in the year to end-June from the prior year’s 61.6c headline loss per share, the group said in a trading update, just two days after forecasting a softer recovery.
The market welcomed the announcement with Aveng’s share leaping 15.92% to R9.10 on Wednesday, its best level since June last year. This gives the Johannesburg-based firm a market capitalisation of R1.157bn.
“Shareholders should note that the prior reported financial information included expenses amounting to A$104m from the Batangas LNG terminal project and losses from discontinued operations of A$12m, which are not expected to recur,” the group told shareholders.
The engineering-led contractor ran into trouble after its client FGEN LNG Corporation called in more than R500m in project guarantees due to project delays in the Philippines.
The group said it had learnt tough lessons from the fallout in Southeast Asia and devised improved standards and governance procedures to avoid another such incident.
Additionally, Aveng has reorganised its operational divisions and relocated its updated executive leadership team to Australia, confident that this would put it in a strong position to continue its steady, profitable expansion.
Aveng now operates three business units: infrastructure, building and mining.
Though expecting a rebound from the disappointing 2023 results, Aveng reported that all three business divisions reported reduced work in hand for the period.
For McConnell Dowell, work in hand fell due to the long-term nature of larger infrastructure awards — particularly government-funded projects. For Built Environs, work in hand also fell from peak levels, though remained high enough to maintain similar revenue.
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