Engineering and construction group Aveng booked losses on problematic legacy contracts in Southeast Asia and South African mining, dragging on first-half earnings, even as its infrastructure division steadied performance and helped the group swing back into an operating profit.
It set aside additional cost provisions on the affected projects, with most of the cash outflows expected in the second half of 2026 and into the 2027 financial year as the contracts near completion, it said in its results for the six months to end-December.
Aveng has been reporting losses from its Kidston Pumped Storage Hydro and J108 projects in Australia for several years, an issue that emerged first during the Covid‑19 pandemic.
“In infrastructure, our priorities are completing the Kidston project in line with the current plan, maintaining strong performance across the rest of the portfolio, securing new work, and building the order book. We also remain committed to delivering on our current contracts in Southeast Asia,” the group said.
The Southeast Asia division narrowed its loss to A$18.5m (R209m), from A$40.3m a year ago, as the project finished and extra costs and a warranty claim weighed on earnings.
In Australia, revenue fell 37% to A$560m, in line with guidance, while earnings were also weighed down by technical challenges on a Queensland project and pressure from the Kidston project.
HEPS increased to 0.2 Australian cents. The mining segment reached a break-even position. The Gamsberg zinc mine, in the Northern Cape, continues to perform, driven by solid project execution, while the Tshipi manganese project struggles with inefficiencies, as planned production volumes and profitability have not yet been reached.
Mining contractor Moolmans lifted revenue due to the new Gamsberg contract. “While Gamsberg continues to perform well, performance at Tshipi was again affected by operational inefficiencies and mounting unresolved contractual claims. Management is considering all options to bring this to resolution,” the group said.
The infrastructure segment generated A$802m in revenue, down from A$1.1bn a year earlier, with activity mainly coming from its New Zealand, Pacific Islands and Australian units.
The group generated a free cash inflow of A$40.7m for the period, up from A$16.1m a year earlier, boosted by early cash receipts and working capital reductions. It closed the half-year with a cash balance of A$308.8m and net cash of A$250.1m.
Work in hand rose by A$300m to A$3.5bn.
Building was the group’s best performer, with operating earnings rising to A$24.3m, anchored by several major project completions, though these gains are not expected to repeat in the second half, it said.
Looking ahead, the group said a strong pipeline is emerging in the Pacific Islands, while New Zealand projects are gaining visibility. In Australia, timing remains uncertain as work on Aukus — the defence partnership with the UK and US — and the Brisbane Olympics infrastructure ramps up. The segment holds A$1.2bn in preferred status and has submitted A$1bn in competitive tenders for the 2026 financial year.
Business Day
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.