Aveng, a JSE-listed construction and engineering group, saw its shares rise over 6% despite reporting a significant operating loss of R1.06 billion in the year ending June 2023.
- The company experienced strong growth in its total work in hand, which increased by almost 70% to R52.2 billion at the end of June, up from R30.8 billion in the previous year.
- The operating loss was primarily attributed to substantial losses in the Southeast Asia business unit of subsidiary McConnell Dowell, mainly from the Batangas liquefied natural gas (LNG) terminal project.
- McConnell Dowell’s operating loss amounted to R815 million, compared to operating earnings of R385 million in the previous year. Moolmans, Aveng’s mining business, also contributed to the operating loss with an operating loss of R110 million.
- Aveng’s operating loss was also affected by South Africa Construction, which reported an operating loss of R59 million, and other operations, including the corporate head office, which incurred an operating loss of R76 million.
- Despite the operating loss, Aveng’s CEO, Sean Flanagan, expressed that the group conducted a review of the BLNG project and other ongoing projects, leading to the implementation of improved operational standards and governance procedures.
- Flanagan highlighted that McConnell Dowell reached a commercial settlement with FGEN LNG, the client on the BLNG project, and booked a full loss on the project. He emphasized Aveng’s focus on restoring sustainable, profitable growth, with McConnell Dowell and Moolmans expected to return to profitability and generate positive operational cash flow.