Aveng is continuing its “constructive engagement” with Holcim over a proposed R6.82bn deal aimed at giving Holcim South Africa a black-controlling shareholder. 
 
Carl Grim, Aveng’s chief executive, said this meant the firms were talking to each and not writing lawyers’ letters.  
 
Aveng, South Africa’s biggest construction and engineering firm, is a 46 per cent shareholder in Holcim SA. It has a pre-emptive right to the shares that  Holcim of Switzerland is planning to sell to a black economic empowerment (BEE) consortium led by Eltie Links, the former trade negotiator and South African ambassador to the EU.  
 
In terms of the proposed transaction, announced on August 24,  Holcim  intends to dispose of 85 per cent of its 54 per cent stake in Holcim SA to the BEE consortium.  
 
The discussions with Holcim Switzerland were “very sensitive”, Grim said yesterday at a presentation on Aveng’s financial results for the six month to December.  
 
An acceleration in the turnaround in McConnell Dowell, the group’s Australian construction subsidiary, and strong market fundamentals boosted Aveng’s interim financial performance. It reported a 130 per cent increase in headline earnings a share to R1.159.  
 
Revenue rose by 39 per cent to R10.6bn. Operating profit improved by 197 per cent to R463m.  
 
Grim said the strong turnaround in operating profit margins to 4.4 per cent from 2.1 per cent resulted in stronger cash flows.  
 
“Cash generated from operations more than doubled to R712 million as the group focused on increasing the effectiveness of working capital management,” he said. 
 
“This is a precursor to increasing future profitability, demonstrating the success of the operating reviews undertaken in both our Australian and South African construction clusters.”  
 
Aveng did not declare an interim dividend, in line with its policy to consider the payment of a single annual dividend after the release of its annual results. 
 
McConnell Dowell increased its revenue by 167 percent to R2.8 billion and its operating margins to 4.4 percent from 2.7 percent, following a review of the business. 
 
Grim said local construction revenue increased by 14 percent to R4.2 billion, while operating profit increased to a profit of R33 million from a loss of R95 million. 
 
The operating margin of 0.8 percent improved from a reported operating loss of 2.5 percent.  
 
Demand from motor manufacturers and strong fundamentals in the construction industry benefited Aveng’s steel and allied cluster, comprising Trident Steel and the Aveng manufacturing companies.  
 
The cluster reported a 42 percent increase in operating profit to R316 million, off a 25 percent increase in revenue to R3.5 billion.  
 
Holcim SA produced solid results, increasing revenue by 17 percent to R2.7 billion and operating profit by 32 percent to R799 million.  
 
Aveng closed down 85c to R36.95 yesterday, in line with the 2.92 percent decline in the construction and building materials sector.