Aveng slides 20% as it flags nosedive in H1 earnings

The share price of construction and engineering group Aveng plunged around 20% in afternoon trade on the JSE on Monday, after the group posted a profit warning in its latest half-year trading update.

Its share price weakened by as much as 35% at one point, following the trading update. However, it later regained some lost ground.

Aveng’s update reveals that basic earnings for the six months ending 31 December 2021 is expected to nosedive by between 87% to 89% (to between R49 million to R58 million), compared to R438 million for the period ending 31 December 2020.

Read: Aveng reports 15% growth in work on hand

“In accordance with… the JSE Listings Requirements, issuers are required to publish a trading statement as soon as they are satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported on will differ by at least 20% from those of the prior comparative period,” it notes.

“Aveng expects to report operating earnings of between R210 million and R218 million for the six months ended 31 December 2021 compared to R280 million in the comparable prior period,” says the group.

However, a much more dire picture is presented towards the end of the trading statement, where expected basic earnings, headline earnings and basic headline earnings per share (Heps) for the period are shown.

Headline earnings are expected to come in between R14 million and R19 million, compared to R109 million, representing a plunge of between 83% and 87%.

Basic Heps is forecast at between 12 cents to 15c, compared to restated basic Heps of 226 per share of the corresponding half year. This represents a plunge of between 93% to 95%.

“Trading conditions in the period continued to be impacted by the effects of Covid-19, including travel restrictions and lockdowns,” Aveng says.

“In addition, South Africa was impacted by riots, a steel industry strike and a global shortage of semi-conductors affecting the automotive sector.

“Despite the difficult operating conditions, McConnell Dowell is expected to record an operating profit in line with the prior comparative period whereas Moolmans and Trident Steel are expected to report a slightly reduced profit,” it further points out.

Aveng is set to release its reviewed half-year results on or about 22 February 2022.