Aveng (AEG) post 31% earnings per share drop
CONSTRUCTION firm Aveng (AEG) posted a 31% drop in diluted headline earnings per share to 67.5 cents for the six months to end December 2011, from 98.2 cents a year earlier. Revenue was up 13.4% to R19.1 billion. The open cut mining, manufacturing and processing, and construction and engineering segments in Australia and the Pacific recorded solid revenue growth.
However, regardless of the higher revenue, the impact of problematic contracts resulted in a 35% decline in operating profit to R332 million. The group’s two year order book increased from R37 billion at end June to R46 billion by end December 2011, driven primarily by demand from the mining and energy related sectors in Australia.
In its outlook, the group said the Australian and Pacific Rim infrastructure market was expected to remain strong due to continued infrastructure investment in the mining, oil and gas sectors. Aveng said engineering and construction company, McConnell Dowell, which is a major Australian based Aveng Group member is well positioned to benefit from growth in these markets, which continue to drive its order book growth of 62% to R31 billion. One notable win is McConnell Dowell’s construction of a 540km coal seam gas pipeline from the Surat Basin of Southern Queensland to a process plant on Curtis Island.
The manufacturing and processing segment is well placed to participate in the anticipated increase in mining activity and rail infrastructure spends. While economic conditions are likely to remain subdued in the South African Infrastructure market for the next 18 months, Aveng is leveraging its strong balance sheet to enter new markets. Currently 77% of the group’s two year order book comes from offshore operations.