Aveng slumps on earnings warning

AVENG’S shares yesterday slumped 6.42 percent to R5.25 after the listed construction and engineering group reported that it expected a further deterioration in its earnings in the year to June.

Aveng said earnings a share and headline earnings a share for the year to June were expected to be “substantially more than 20 percent lower” than the loss a share of 25.4c and headline loss a share of 75.2c in the previous year.

The group attributed this to weak market conditions in the South African business, operational under-performance and accelerated claims settlements at McConnell Dowell, an increased net interest expense, and the impact of previously reported settlements and agreements concluded with the government.

The agreements settled outstanding and pending civil damages claims by state entities against seven listed companies, including Aveng, following their admission and payment of fines to the Competition Commission for collusion and bid-rigging during the commission’s construction fast-track process.

In terms of the agreement with the government, the seven companies collectively agreed to pay an additional R1.5 billion over 12 years into a socio-economic development fund and embark on transformation initiatives. Aveng agreed to pay R165 million in terms of this agreement.

The group said the arbitration hearings about claims related to the Queensland Curtis Liquefied Natural Gas pipeline project in Australia had been completed, and the findings and award of the tribunal were expected in its current financial year.

In regard to other claims, Aveng said the group had noted “increasingly difficult, litigious and costly processes” in bringing long-outstanding claims to commercial conclusion.