South African construction group Aveng on Thursday said its net operating loss more than doubled in the latest financial year, highlighting the challenges the company faces as it embarks on a turnaround strategy.
Construction companies in South Africa are battling a weak economy and a pullback in infrastructure spending by the government and private sector.
Aveng’s operating loss widened in the year to June 30 in South Africa and the rest of Africa, but it made a profit in Australasia and Asia, other markets where it operates and where it said infrastructure investment was on an upward trajectory.
Aveng reported a net operating loss of 1.1 billion rand ($72.19 million) for the year to June 30, compared with an adjusted loss of 401 million rand in the same period a year earlier.
The company said the loss partly reflected a weak performance at its Moolmans mining business, as well as pressure on margins at Aveng Manufacturing. That was partly offset by strong performance at Trident Steel.
It made a headline loss of 1.55 billion rand, after earlier flagging a potential headline loss of up to 1.60 billion rand.
Aveng, which has around a third of its operations in South Africa, has been selling non-core businesses to reduce its debts.
It expects to complete these disposals assets by October 2019 and said it had raised around 1 billion rand so far.
“We are implementing our strategic plan in turbulent domestic market conditions which have taken a heavy toll on many of our peers,” Sean Flanagan, Aveng Chief Executive Officer said.
Aveng said a 372 million rand operating loss for its Moolmans mining business in South Africa was mainly attributable to tough mining conditions at Gamsberg, underperformance of the Khutala project in South Africa and additional closure costs at the Karowe contract in Botswana. An asset health review also led Aveng to take an impairment charge.