The share price of JSE-listed Aveng fell by more than 31% on February 14 after the company advised that it was likely to report a loss a share of between A$0.253 and A$0.254 and a headline loss a share of between A$0.26 and A$0.27 for the six-month period ended December 31.

This is in comparison to the earnings a share of A$0.006 and headline earnings a share of A$0.088 for the six months ended December 31, 2023.

Aveng delivers its projects through three operating brands in three distinct segments. These are the infrastructure segment, branded McConnell Dowell, operating in Australia, New Zealand, the Pacific Islands and Southeast Asia; the building segment, branded Built Environs, operating in New Zealand and Victoria and South Australia, in Australia; and the mining segment branded Moolmans, operating in South Africa.

McConnell Dowell’s New Zealand and Pacific Islands business unit delivered a strong performance and will contribute to reported margins at similar levels to what was reported last year.

The Australia and Southeast Asia business units previously reported on under-performance associated with certain projects awarded prior to the Covid-19 period.

The majority of these projects were managed to a satisfactory outcome, Aveng said on February 14.

While not contributing profit to the group, they represented a reducing proportion of revenue as these projects move towards completion.

The remainder of the project portfolio reportedly performed well and contributed to an improving margin.

The Australia business unit reflected improving margins across its portfolio of projects, excluding the Kidston Pumped Hydro lossmaking project. The Kidston project, in Queensland, did not achieve expected productivities, Aveng said, resulting in an increased forecast cost to complete and a reported loss in the period.

Consequently, the Australia business unit will report a breakeven result for the period.

In Southeast Asia, the new projects have been profitable. However, the Jurong Region Line project for the Land Transport Authority in Singapore experienced delays and disruptions. These delays resulted in commercial claims and increased forecast cost to complete. The commercial negotiations continue with the client and the project will report a significant loss in the period.

As a result, the entire Southeast Asia business unit will report a loss for the period.

These two loss-making projects will report losses of A$77-million. This will result in Aveng’s infrastructure segment reporting an overall operating loss for the period.

Other than these lossmaking projects, Aveng said the infrastructure project portfolio delivered a strong performance that was ahead of both budget and the prior year, contributing a profit of A$50-million.

While additional costs in the forecast cost to complete have been recognised in the current period, the cash flow impact will largely materialise over the next 18 months as the projects move towards completion.

Aveng will report a cash balance of A$252-million as at December 31, 2024, compared with A$233-million as at June 30, 2024, for the infrastructure and building segments, supported by continued strong cash generation.

The cash outflow relating to the two lossmaking projects will be funded through these existing cash resources, supplemented by ongoing profitability.

Meanwhile, Built Environs is expected to report improved operating earnings year-on-year.

Moolmans is also expected to report positive operating earnings for the six-month period under review. Moolmans is at an advanced stage of negotiations to conclude a new 60-month contract at the Gamsberg zinc mine, in the Northern Cape.

Aveng expects to release its reviewed results on February 18.

Aveng’s share price on the JSE fell to 820c on Friday morning – a decrease of more than 31% on Thursday’s close of 1 200c.