Release Date: August 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 27% to AUD3.1 billion.
- Headline earnings rose to AUD38 million.
- Net cash position improved to AUD173.7 million.
- 96% of infrastructure projects are profitable.
- Positive cash generation and return to profitability.
Negative Points
- Work-in-hand is marginally down.
- Pre-COVID projects impacted by hyper escalation did not contribute margin.
- Margin pressure in the mining segment, particularly with the Tshipi contract.
- Scaling down of two mining contracts due to infrastructure constraints in South Africa.
- Significant portion of revenues delivered at zero or limited margin due to reliance contracts.
Q & A Highlights
Highlights of Aveng Ltd (FRA:UG8, Financial) Earnings Call
Q: Can you clearly unpack what you mean by the [stepping] Moolmans mining business will be held inside Aveng Limited and will explore alternative ownership models potentially introducing Broad-Based Black Economic Empowerment Capital? In terms of alternative options for Moolmans, does this mean we intend to fully dispose of Moolmans or Moolman Aveng retain a majority shareholding?
A: We need to look at all possible opportunities for Moolmans. Moolmans needs capital for growth and triple B, double A direct ownership. Facilitating these through a transaction will put Moolmans on a path of long-term sustainable and profitable future. It's early days, and we will begin discussions with potential interested parties over the coming months. - Scott Cummins, CEO
Q: What are the key financial highlights for the year?
A: Revenue is up 27% to AUD3.1 billion, headline earnings up to AUD38 million, net cash up to AUD173.7 million, operating earnings before capital items up to AUD34.5 million, and headline earnings per share up to AUD29.6 cents. - Scott Cummins, CEO
Q: How has the infrastructure segment performed?
A: 96% of projects across the portfolio are profitable. The margin of overall project portfolio within Australia is expected to improve with the completion of pre-COVID projects. New Zealand and the Pacific Islands have shown consistent operational excellence. - Scott Cummins, CEO
Q: What is the outlook for the building segment?
A: Built Environs, which accounts for 13% of Group revenue, has seen a significant increase in revenue. All projects across the portfolio are profitable, and operating earnings are above plan due to good project execution. - Scott Cummins, CEO
Q: Can you provide an update on the mining segment?
A: The mining segment accounts for 9% of Group revenue. Despite scaling down two contracts, revenue and positive earnings have increased. The Gamsberg contract is performing well, and we are exploring contracts with existing customers to increase volumes and profitability. - Scott Cummins, CEO
Q: What are the strategic plans for Aveng Ltd moving forward?
A: Aveng plans to create two independent and separate entities: McConnell Dowell (including Built Environs) for Infrastructure and Building segments, and Aveng Limited for the Moolmans mining segment. This will allow each entity to access appropriate pools of capital for long-term sustainable growth. - Scott Cummins, CEO
Q: How has the company managed its financial position?
A: The company has no term debt and maintains strong cash balances. Operating free cash flow is AUD97.9 million, and net cash is AUD173 million. The company has also managed to save costs through office consolidations and headcount reductions. - Adrian Macartney, CFO
Q: What are the key market trends and opportunities?
A: The infrastructure market is seeing a shift towards energy transition, water, wastewater, climate resilience, and defense sectors. The building market in Australia and New Zealand remains strong due to government spending. The mining environment in South Africa shows renewed optimism with the formation of the government of National Unity. - Scott Cummins, CEO
Q: How is the company addressing diversity, equity, and inclusion?
A: Aveng has established a diversity, equity, and inclusion group and framework. 43% of the Southeast Asia senior leadership team are women, and 33% of the corporate functional group are women. The company continues to localize the Southeast Asian team with 71% now Southeast Asia. - Scott Cummins, CEO
Q: What are the company's ESG initiatives?
A: Aveng has invested AUD44 million with social enterprises and engages heavily with schools, community groups, and not-for-profits. The company has also streamlined its governance structure and is focusing on improving safety performance across all projects. - Scott Cummins, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
