http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.15Change: -0.01
R/$ = 10.98Change: -0.07
Au 1223.45 $/ozChange: -12.67
Pt 1350.00 $/ozChange: -12.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Mar 11, 2009

Aveng reports solid growth, but warns of steel market decline

Back
Aveng CEO Roger Jardine discusses the influence of the lower steel price on the group (11/03/2009) Cameraperson: Danie de Beer; Editing: Darlene Creamer.
Construction|Engineering|Africa|Aveng|Aveng Manufacturing|CoAL|Ports|Projects|Road|Roads|Trident Steel|Africa|Australia|South Africa|Manufacturing|Mining|Open-cast Mining|Products|Public Sector Infrastructure|Steel|Steel Market|Steel Prices|Infrastructure|Power|Rail|Roger Jardine|Hewlett Packard R967 Digital Camera
Construction|Engineering|Africa|CoAL|Ports|Projects|Road|Roads||Africa||Manufacturing|Mining|Products|Steel||Infrastructure|Power|Rail||
construction|engineering|africa-company|aveng|aveng-manufacturing|coal|ports|projects|road|roads|trident-steel|africa|australia-country|south-africa|manufacturing|mining|opencast-mining-industry-term|products|public-sector-infrastructure|steel|steel-market|steel-prices|infrastructure|power|rail|roger-jardine|hewlett-packard-r967-digital-camera
© Reuse this



JSE-listed construction company Aveng on Wednesday reported solid revenue growth for the six months ended December 31, 2008, but warned that the second half of the financial year would be tougher, especially for its manufacturing and processing division, consisting of Trident Steel and Aveng Manufacturing.

This division faced a very different market when compared with the same time last year, when steel had been in short supply, driven by high demand, and steel prices had been rising sharply.

Aveng CEO Roger Jardine said the recent decline in global steel prices had been much steeper than expected, ranging from 30% to 35% on different products. Demand for steel had also slowed from the high levels experienced in the first half of 2008, especially in the embattled motor industry.

“We are exposed to the steel market, especially given the steel prices seen over the last few months,” said Jardine.

“The way things are moving at the current rate, the outlook for steel is not good for the next two to three years – but really, nobody knows exactly what will happen.”

Consequently, the operating performance of Aveng's manufacturing and processing division was expected to be under pressure, with the group not expecting overall headline earnings for the second half of the 2008 financial year to match the previous year's earnings.

The manufacturing and processing division delivered revenue growth of 29% to almost R5-billion for the six months ended December 31, 2008.

The group's construction and engineering division, comprising Grinaker-LTA, E+PC and McConnell Dowell, lifted revenue by 30% to R11,5-billion.

Open-cast mining, comprising Moolmans, delivered revenue of R1,3-billion, representing 26% growth.

However, a slowdown in the commodities market had seen the retrenchment of 422 salaried staff over the six-month period, added Jardine.

He said that the group was currently not considering further retrenchments.

Jardine expected Aveng's construction and engineering segment, as well as the open-cast mining operations, to continue achieving operating results in line with current levels of performance.

In total, Aveng's revenue increased by 30% to R17,8-billion, with operating profit, before nontrading items, continuing its upward trend with growth of 36%, reaching R967-million for the six-month period.

The group reported net closing cash of R6,1-billion, after some R4-billion was returned to shareholders.

Aveng said it had a two-year order book of R29,2-billion, which represented an increase of 13,2% from the June 2008 level of R25,8-billion.

Jardine said the group had R4,2-billion worth of contracts cancelled over the last few months, mostly in the struggling commodities market in Southern Africa and Australia, but that this had already been reflected in the order book.

He noted that while the tightening global economic environment had affected its target markets, “the group’s diversified capability across the construction and engineering sector has muted the effects of slower demand”.

He added that “the South African government recently renewed its commitment to upgrading all aspects of the national infrastructure, increasing its three-year investment budget to R787-billion.

“Similarly, in Australia, the government allocated R518-billion to infrastructure investments including funds for road, rail and ports in October 2008.

“Aveng continues to benefit from the backlog in infrastructure projects, including coal-fired power stations, roads and dams.”

Jardine said that it appeared to be a common thread among many governments to consider infrastructure expansion as a “leading measure” to stem the economic slowdown.

“This is certainly the case in South Africa and Australia.”

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Construction News
In a landmark R1.5-billion deal that precedes it planned listing on the JSE, Pivotal Property Fund has acquired “strategic” land and property assets from Standard Bank Properties, which includes Sandton’s landmark Alice Lane development. “Pivotal has acquired...
Noting that it had made “great strides” in achieving its performance targets in the first quarter of the 2014/15 financial year, the Department of Public Works said this week that it had attained 60% of its 81 listed targets, which it believed was an indication that...
Confidence in the building sector, as measured by the First National Bank (FNB) and Bureau for Economic Research building confidence index, ticked up four index points to 45 in the third quarter, with improvements in residential building activity supporting the rest...
More
 
 
Latest News
Updated 4 minutes ago Three Chinese firms led by Shanghai Electric Group are considering setting up a coal mine and a 1 200 MW thermal power station in western Zimbabwe, company officials said. Industries and households in the southern African country have endured electricity cuts for...
Kariba dam
Updated 30 minutes ago Zambia and Zimbabwe have obtained pledges of $280-million to rehabilitate the Kariba dam, a crucial source of energy built more than 50 years ago that requires urgent maintenance, the authority managing the dam said on Wednesday. The European Union (EU) will provide...
Updated 38 minutes ago South African company Denel Aviation signed a memorandum of understanding (MoU) with one of the world's top simulation and training companies, Canada's CAE, and its local partner, Elisa, on Thursday, at the African Aerospace and Defence exhibition at Air Force Base...
More
 
 
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
 
 
 
 
 
This Week's Magazine
The board of UD Trucks Southern Africa (UDTSA) has announced the resignation of MD Jacques Carelse.   Long-time UD employee, corporate planning and marketing GM, Rory Schulz, has been appointed as acting MD while the process started to appoint a new MD. The Japanese...
There is a need to start planning another pumped storage scheme in South Africa. Much work has already been done at a site in the Limpopo province and the project was very close to being put out to tender at one stage. In 2008/9 the National Energy Regulator of South...
The Coega Development Corporation (CDC) is preparing to leverage its strategic coastal position to develop the Eastern Cape economy through proposed aquaculture development zones (ADZs), with a proposed R2-billion project aiming to contribute $278-million to the...
Completion of the ongoing construction of the 102 km Zomba–Jali–Phalombe–Chitakale road, in southern Malawi, has been extended from June  to December 15 because of persistent rains and difficulties in paying the contractor. The project is being undertaken by Kuwait's...
The Malawi government has awarded South African firm  Fischer Consortium the  contract to upgrade the Malawi Road Traffic Information System. The Directorate of Road Traffic and Safety Services at Malawi's Ministry of Transport and Public Works says Fischer...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks