JSE-listed engineering contractor Aveng has reported an attributable loss of A$92.3-million, or R1.1-billion, for the financial year ended June 30, owing to A$98.5-million worth of losses recorded from the Jurong Region Line (J108) and Kidston projects, in Singapore and Australia, respectively.

The group’s headline loss a share amounted to A$0.64 or R7.44.

This compares to headline earnings a share of A$0.29, or R3.64 apiece, in the prior year.

Aveng posted a basic loss a share of A$0.70, or R8.13, for the year under review, compared with basic earnings a share of A$0.20, or R2.45, in the prior financial year.

Positively, the company has A$3.2-billion, or R37.5-billion, of work in hand, as well as A$267-million, or R3.1-billion, of cash on hand.

Until the J108 and Kidston projects are completed, it will continue to impact the group’s cash flow, but a healthy cash balance in the Infrastructure and Building segments, as well as ongoing profitability across the wider portfolio of projects the company is working on, will offset the expected outflow from the problematic projects.

Aveng group CEO Scott Cummins tells Engineering News & Mining Weekly that there are green shoots for profitability in the new financial year, including the fact that the J108 project is nearing completion and that the company is seeing an improved financial performance from projects awarded since its enhanced risk management process became effective in December 2022.

He points out that the company’s Building business has done particularly well in the reporting year, which proves the group’s strategy and approach is the right one.

Responding on how the global trade turmoil and political tension is affecting Aveng, Cummins explains there has been minimal direct impact, but the group remains cognisant of the impact there may be in some industries, including owing to uncertainty about global economic growth.

The company continues to invest in equipment to support its work in the Infrastructure, Building and Mining segments, with the Moolmans business in South Africa, in particular, focused on a renewable-energy programme and buying new equipment to assist the Gamsberg project, in the Northern Cape.

While Cummins does not foresee new projects materialising for Aveng in South Africa in the near term, he is encouraged by investment happening in critical infrastructure such as rail and ports, which bodes well for possible mining sector expansion.

Aveng operates its Infrastructure segment through McConnel Dowell, in Australia, New Zealand and Pacific Islands, as well as Southeast Asia, while its Building segment operates through the Built Environs business in New Zealand and Australia.

The group’s Mining segment is served by the Moolmans business in South Africa.

The Infrastructure segment generated revenue of A$1.9-billion in the year under review, compared with A$2.4-billion in the prior year, mostly owing to under-performance associated with certain projects awarded in the pre-Covid-19 period.

Excluding the Kidston project, the Australian operations under the Infrastructure segment reported improved margins across the portfolio. Similarly, the group’s Southeast Asia projects are performing well, especially newly awarded marine projects, which is being offset by the J108 project delays and disruptions in Singapore.

The Building segment reported revenue of A$491-million in the reporting year, compared with revenue of A$419-million in the prior year. Notably, the segment has a work-in-hand value of A$864-million as of June.

“The improved operating performance and growth in the order book reflect a disciplined approach to operational delivery and a focus on its targeted market sectors of education, healthcare and recreation,” Cummins states.

Moreover, the Mining segment’s revenue reduced by 9.9% year-on-year to R3-billion, following the completion of work on two contracts late in 2024, as well as restrictive mining conditions owing to mine planning on the Tshipi manganese mine, which has led to claims of more than R300-million having been made against the customer. Cummins confirms a formal dispute resolution process is under way in this regard.

The Mining segment nonetheless reported operating earnings of R1.8-million in the reporting year, while Moolmans successfully negotiated a new 60-month contract at the Gamsberg mine with Black Mountain Mining – a subsidiary of Vedanta – which will bode well for the Mining segment’s profitability in the new financial year.

Aveng’s segmental strategies remain aligned with current market trends, with improving trade conditions being observed across the Infrastructure and Building segments.

The company’s main priorities are to complete the J108 and Kidston projects, as well as to secure new work and improve profitability across all segments.

“Our overall strategic direction is to pursue two separate businesses, with progress having been made with a preferred party for the sale of the Moolmans business. All the required work in support of a separation has advanced and management expects to present these options to the board in the coming 12 months,” Cummins concludes.