AVENG’s interim results on Tuesday would show a headline loss per share of up to 60c, the construction group warned on Friday, sending its share plunging as much as 31% to an intraday low of R2.45.
Aveng’s share closed 13% lower at R2.83.
Friday’s trading statement said the construction group’s basic and headline loss for the six months ended December would be from R220m-R240m.
In December, Aveng warned shareholders its interim loss could be as high as R300m.
Aveng has not made an annual profit since 2013, challenged by the dearth of large state infrastructure spend matching the 2010 World Cup.
Two years ago it appointed former ArcelorMittal chief financial officer Kobus Verster as its CEO following the resignation of Roger Jardine.
Weak global demand and pressure on commodity prices that resulted in mine closures were among the factors that weighed on SA’s beleaguered construction sector.
The group touched on some of these when it released its earnings guidance for the first half to December. It said the global economic slowdown affecting the major regions in which Aveng operated — most notably Australia — had resulted in a decrease in available contracts and associated revenue. Severe weakness in steel demand and pricing would result in operating losses at Aveng Steel and it expected lower fair value gains in Aveng Capital Partners on projects completed in the period.
December’s trading update saw Aveng’s share price fall 10%, but the market took comfort in progressive steps the firm said would partially offset losses.
These included the completion of long-standing underperforming contracts, improved gross margins and the reduction in overheads.
Aveng also said the resolution of certain claims related to the power programme in SA had also added to the positive cash generation of Aveng Grinaker-LTA during the period.
"Aveng Grinaker-LTA’s emphasis on resolving claims and debtor collections combined with improved operational performance has resulted in positive cash flow," the company said in December.
"Combined with working capital reduction in Aveng Steel and the positive cash flow from the mining and manufacturing business units, the South African operations are expected to be cash positive for the period," the company said.
Analysts took comfort in management’s assertion that it would complete a strategic review to "unlock shareholder value in a timely manner".
This was in response to the board’s belief that "the current market valuation did not reflect the intrinsic value of the businesses in the group as well as the upside potential resulting from the various performance improvements … under way", according to the statement
Despite the hammering of its share price on Friday, Aveng’s share price is still up 25.3% from the start of this year, according to Bloomberg data, versus the 2.3% decline of the JSE’s construction and building materials index.
The stock tanked more than 80% last year.