Aveng earnings up 110%

30 January, 2007 at 12:48 pm | Posted in Companies | Leave a comment

Aveng, South Africa’s biggest construction and engineering company, expects to report an increase of between 110 percent and 130 percent from a year earlier in its headline earnings and earnings a share for the six months to December.
The company confirmed this in a trading update yesterday, but advised shareholders that the financial information on which the statement was based had not been reviewed or reported on by its auditors.

Peter Armitage, a fund manager at Investec, said the percentage increase in Aveng’s earnings was “not wildly ahead of expectations”. People had high expectations for Aveng, which was evident from what its share price had done.

He added that Aveng’s core construction division was underperforming. It made a loss last year and the turnaround would obviously add to its profitability.

In the interim period last year, Aveng reported a 52 percent improvement in headline earnings a share to 51.8c from 34c a year earlier. But analysts expressed disappointment in the construction division, which made an operating profit of only R12 million off a revenue base of R3.6 billion.

The construction division has made large losses at year-end for about three years.

top.DisplayAds(‘SquarLAV’,17,563); In September last year, Aveng reported a 75 percent rise to R1.44 from 83c in headline earnings a share in the year to June, but this was largely attributable to strong performances by its steel operations and its 46 percent stake in cement producer Holcim. Aveng’s South African and African construction cluster, comprising Grinaker-LTA Construction, Moolmans and E+PC, lifted revenue by 11 percent to R7.5 billion in the same period but reported an operating loss of R125 million, compared with a restated loss of R65 million in the previous year. The group attributed this poor performance partly to the non-payment of certified work and the escalation of a claim regarding the Marikana mine to R156 million.

Earlier this month a joint venture between Grinaker-LTA and Interbeton, which is owned by Dutch-based Royal BAM Group, was awarded a R1.5 billion contract for the revamping of Soccer City in Johannesburg, the main event stadium for the 2010 soccer World Cup. But this contract, the first to be awarded for the construction and upgrading of a stadium for the soccer showpiece, was awarded after the end of the company’s interim period and did not contribute to its performance.

Aveng expects to release its interim results on March 5.

Aveng closed 0.9 percent lower at R39.60 on the JSE yesterday, while the construction and materials sector dropped 0.69 percent.

(BusRep)

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