This article first appeared on GuruFocus .
-
Revenue:AUD2.3 billion, down from AUD2.6 billion in the prior year.
-
Operating Earnings (EBIT):Profit of $19.3 million, a turnaround from a $60 million loss in the prior year.
-
Headline Loss:$4 million, compared to an $84 million loss 12 months ago.
-
Loss Per Share:$0.03, versus $0.646 a year ago.
-
Net Cash:Delivered $160 million, in line with guidance.
-
Work in Hand:Remains over $3 billion.
-
Gross Margin:Gross earnings margin of 6.5%, still below target.
-
Net Loss for the Year:$15.7 million, an improvement of $92 million from the prior period loss.
-
Taxes:$13.6 million, largely associated with taxes paid in New Zealand.
-
Capital Expenditure:$81 million, focused on infrastructure ($19 million) and mining ($61.7 million).
-
Cash from Operations:$92 million generated.
-
Liquidity:Closing balance of $225 million.
-
Infrastructure Revenue:$1.45 billion, with a reduction in Australia and improvement in New Zealand.
-
Building Segment Margin:Earnings margin of 11.5%, with 100% of projects profitable.
-
Building Work in Hand:$517 million, down from $864 million last year.
-
New Zealand and Pacific Islands Earnings:$27.8 million, exceeding performance targets.
-
New Zealand and Pacific Islands Work in Hand:Over $1.1 billion, up 40%.
-
Mining Impairment:$10 million impairment in the year.
-
Aveng Africa Provisions:Reduced from ZAR420 million in 2021 to about ZAR140 million in 2026.
-
Outstanding Guarantees:Down to ZAR62 million from close to ZAR6 billion in 2016-2018.
-
Warning! GuruFocus has detected 3 Warning Signs with FRA:UG8.
-
Is FRA:UG8 fairly valued? Test your thesis with our free DCF calculator.
Release Date: August 24, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Operating earnings improved by nearly $80 million, swinging from a $60 million loss to a $19.3 million profit.
-
Order book remains strong at over $3 billion, with new work aligned to a revised risk appetite.
-
New Zealand and Pacific Islands infrastructure business delivered exceptional EBIT of $27.8 million and secured $1.1 billion in new work.
-
Building segment achieved an exceptional 11.5% earnings margin, with 92% of projects delivering above margin.
-
Significant derisking in Africa, with legacy liabilities reduced by 51% and the Leonardo arbitration concluded with no further liability expected.
Negative Points
-
Revenue declined to AUD2.3 billion from AUD2.6 billion, impacted by reduced infrastructure spending in Australia.
-
Kidston project continues to weigh on results, with an additional loss recognized and ongoing commercial disputes.
-
Headline loss of $4 million persists, though improved from an $84 million loss a year ago.
-
Building order book fell to $517 million from $864 million, requiring new wins to sustain growth.
-
Moolmans' Tshipi contract remains unprofitable, with only marginal prospects through June 2027.
Q & A Highlights
Q: What is the total estimated loss Aveng will make on the Kidston project? A: Adrian Macartney (CFO) confirmed that the total loss booked on the Kidston project is $117 million. The company is still in discussions with the client regarding commercial claims, but some are now in formal dispute.
Q: Southeast Asia has been a good hunting ground for McConnell Dowell historically. What has happened for you now to withdraw from the region? A: David Simpson (Interim Group CEO) explained that the region as a whole has not been profitable for several years, particularly in the last financial year. The competitive landscape has changed with low-cost competitors from other parts of Asia, and the company was unable to secure head contractor positions that met its delivery standards. After multiple management changes failed to rectify the losses, the decision was made to cease bidding and wind down operations.
Q: The building margins of 8.5% are truly exceptional. What drove this, and could such levels be maintained if the order book rebuilds? A: David Simpson (Interim Group CEO) attributed the exceptional margins to the discipline of Managing Director Michael Clemenger and his team, who are highly selective in their bidding and maintain strong relationships with subcontractors. While 92% of projects currently deliver above tender expectations, Simpson noted that while these are the best margins he has seen in his career, they will likely normalize over the next few periods.
Q: How have the resolutions achieved in Tshipi impacted negotiations to dispose of Moolmans? A: Adrian Macartney (CFO) stated that discussions regarding the disposal of Moolmans have been suspended. The current focus is on ensuring operational delivery and resolving commercial aspects on both contracts. The company is now exploring new opportunities in Southern Africa, including Namibia, Botswana, and the Northern Cape.
Q: What measures have been put in place to deal with project contract, unforeseen overruns, penalties, and costs? A: David Simpson (Interim Group CEO) detailed a comprehensive risk management framework now embedded in the organization. This includes a "go/no-go" tender process aligned with a revised risk appetite, multiple review stages within divisions and the executive team, and oversight by a Board subcommittee for high-value or high-risk tenders. Post-contract, the company has implemented PMO project reviews, internal and external audits, CEO start-up reviews, and monthly/quarterly business reviews to prevent cost and time overruns.
Q: What are the new project prospects for Moolmans? Is there no new bidding taking place? A: Adrian Macartney (CFO) confirmed that Moolmans is actively exploring new opportunities in Namibia and Botswana, as well as with existing clients. He noted improving prospects in the Northern Cape as government addresses rail and export infrastructure, which has previously hampered production.
Q: When can shareholders expect to see returns, a dividend, or a share buyback, as many investors have backed Aveng for 9-10 years and have only seen continuous losses? A: David Simpson (Interim Group CEO) acknowledged the long wait for returns but highlighted the significant progress made in the past eight months, including Board renewal, difficult cost-cutting decisions, and the implementation of robust risk management. He expressed confidence in the current Board, the incoming CEO Fraser Wyllie, and the executive team to carry the company forward, emphasizing that the business is now set up at a lower cost with better risk management and strong future opportunities.
Q: Why should investors still trust the current Board of Directors, especially given the share price performance over the last three to five years? A: David Simpson (Interim Group CEO) defended the Board, citing its active role in driving difficult decisions around costs, structure, and the exit from Southeast Asia. He noted the high quality of new Board members and their deep understanding of the markets, expressing confidence that the Board will guide the company effectively into the future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
