Aveng CEO Kobus Verster. Picture: RUSSELL ROBERTS
PERFORMANCE FOCUS: Aveng CEO Kobus Verster presents the firm’s interim results in Sandton on Tuesday. Picture: RUSSELL ROBERTS

A SHARP drop-off in construction activity in South Africa after the 2010 Soccer World Cup has seen the value of projects in Aveng’s Australasia and Asia segment rise to four times that of its home market.

But while the global exposure has been a boon to South Africa’s largest construction and engineering firm since global stock markets crashed in late 2008, this might now be coming to an end, forcing it to explore new opportunities in the Asia-Pacific region, but also possibly in the rest of Africa.

In its latest interim results to December, the company saw a 21% plunge in headline earnings per share. This came despite overall revenue being 11% higher.

The drop especially refers to the group’s troubled domestic Aveng Grinaker-LTA construction and engineering division for South Africa and Africa, which is targeting break-even in financial 2015.

In light of the results, Aveng said there had been "no material improvement" in South African and Australian infrastructure spending. This comes as declining Australian commodities markets and the near-completion of large oil and gas projects there take their toll on its balance sheet, along with labour unrest in South Africa

The company said on Tuesday that operations continued to be challenging, with the direct cost of labour disruptions in South Africa amounting to R140m, from R115m in the comparative period.

"The past six months have been characterised by consolidation and repositioning of the Aveng Group," Aveng’s new CEO, Kobus Verster, said.

"Through various interventions we have started to lay the foundation from which the group can strengthen its focus and optimise its performance. We nevertheless still have a way to go to drive delivery of the full potential of our diverse business.

"The focus in 2014 will remain on further strengthening our capabilities within the construction and engineering operating groups," he said.

The group had earlier taken advantage of the commodities super-cycle prompted by Chinese demand for Australian minerals, and also a boom in Australian liquid natural gas projects.

But now it is shifting from commodities to transport and general infrastructure projects in Australia and New Zealand, augmenting existing infrastructure projects in Singapore, according to chairman Angus Band.

"During the global financial crisis (Singapore) shifted expenditure into infrastructure development," he said on Tuesday.

Australia and New Zealand are now following suit, and Aveng would invest in this trend, Mr Band said.

Aveng’s revenue was up as a result of high activity on a number of large projects within its Australasian and Asian construction and engineering segment. But this had to be balanced against large project-related claims against the group in Australia, which some analysts perceive to be a big underlying risk for the group.

Aveng said the segment continued to compete well despite tough market conditions, with opportunities being pursued in the transport, oil and gas, and marine sectors.

The Queensland Curtis liquefied natural gas pipeline and facilities project in Australia achieved substantial completion at the end of November last year.