Aveng sees first-half loss on softening market demand

JSE-listed construction and engineering group, Aveng, has reported a first-half loss for the 2025 financial year, citing delays in its Australia and Southeast Asia infrastructure projects as the primary drivers for the setback. Aveng Group CEO, Scott Cummins, discussed the challenges faced by the company in a recent interview on CNBC Africa's Power Lunch Southern Africa. The company's performance has seen a reversal from its previous financial recovery, with unforeseen factors affecting project execution. Cummins delved into the specifics of the project delays, pointing out the complexities encountered in the Kidston Pump Hydro scheme and the Singapore viaduct project. The structural issues and constrained working space at Kidston led to productivity challenges, while the Singapore project faced disruptions due to the prioritization of housing developments and strained subcontractor environments. The estimated financial impact of these delays on Aveng's full-year performance was also addressed during the interview. Cummins highlighted the full cost impact and loss incurred due to the delays, emphasizing the need to deliver projects in accordance with the re-established plan to mitigate future cash impacts. Despite the challenges, Cummins outlined a disciplined approach to navigating the softening market and focusing on winning projects where Aveng's expertise can add value. In response to market concerns and share price fluctuations, Cummins reassured investors of the company's efforts to address the problem projects and maintain a strong focus on risk management. He emphasized that while the two projects in question had incurred losses, the majority of Aveng's portfolio had performed well, with expectations of margin improvement as loss-making projects are resolved. Looking ahead, Cummins expressed optimism for the rest of the year and the short to medium term, hoping to avoid further negative impacts from the problematic projects. He highlighted positive contributions from projects like Building Byrons and the long-term contract with Hunsberg, indicating a reasonable outlook for the second half. On the topic of the separation strategy, Cummins provided an update on the progress towards divesting Moorman's and preparing McConnell Dow for independence. While negotiations with prospective buyers for Moorman's are advancing, the company has completed essential preparatory work for McConnell Dow's independence and is exploring various options for its future. Overall, the discussion with Scott Cummins shed light on Aveng's challenges, strategies, and outlook in the face of project delays and market uncertainties. The company remains focused on resolving current issues, maintaining financial discipline, and pursuing opportunities where it can deliver value and drive growth.