Aveng profits erode on Australian project woes, Grinaker-LTA
Grinaker-LTA’s poor performance and projects in Australia in the past financial year continued to negatively affect construction and engineering group Aveng.
On Tuesday, Aveng reported its financial results for the year ended June 30, with revenue up 2%, to R53-billion, compared with the previous financial year. However, the group recorded a R376-million loss for the period, compared with R459-million profit in the previous financial year.
Aveng in July announced that it had raised impairments totalling R830-million at Grinaker-LTA and Aveng Water, which it said would impact on its 2014 earnings.
Aveng CEO Kobus Verster said in Johannesburg that the group had experienced significant losses on its Gold Coast Rapid Transit project, in Australia.
Technical and legal complexities meant that commercial negotiations around the claims would be protracted, the outcome being a risk to the group’s medium-term earnings, said Verster. This applied also to the Queensland Curtis Liquefied Natural Gas Pipeline (QCLNG) contract.
Although many efforts had been made to return Grinaker-LTA to profitability, the business remained a poor performer as it worked to complete a number of legacy projects at low margins.
This year, the business was also negatively affected by excessive rain delaying work on the Mokolo Crocodile Pipeline contract.
Aveng’s South African and rest of Africa construction and engineering business, which housed Grinaker-LTA, reported a loss of R566-million for the 2014 financial year, down from a R968-million loss in 2013, and a R861-million loss in 2012.
By: Irma Venter
Read the full article here: http://www.engineeringnews.co.za/article/troubled-gold-coast-project-grinaker-lta-erode-aveng-profit-2014-08-26