JSE-listed international engineering-led contractor Aveng has warned shareholders that it is likely to report a loss for the financial year ending June 30, mainly as a result of challenges with the Kidston pumped hydro project and the Jurong regional line project.

Aveng in February reported that the two projects, which fall under the Infrastructure Southeast Asia and the Infrastructure Australia businesses, respectively, had accounted for a loss of R885-million for the six-month period to December 31, 2024.

"The rest of the portfolio of Infrastructure projects continue to perform; however, the segment will report a loss for the second half, albeit at a lower level than the first half," Aveng states in a June 9 trading statement.

It points out that the New Zealand & Pacific Islands business unit continues to deliver a strong performance during the second half of the year.

"The business unit expects to report continued strong profitability although margins will soften compared to those reported in the first half. Operating profit is expected to reflect an improvement on the comparative period, being the prior year," it adds.

The Australia business unit, meanwhile, reported a break-even result in the first half of the current financial year, driven by increased forecast cost to complete and a resulting loss on the Kidston project, in Queensland.

"During the second half, progress on the project has continued to face pressure and was hampered by the impacts of a persistent tropical low-pressure system in the area, leading to severe flooding across the region.

"Achieving estimated productivities has continued to be a challenge as a consequence of both the disruption and the complex nature of the work. As a result of the events in the period, the programme to completion has been extended by a number of months and the estimated cost to complete the project has increased. The Australia business unit recognised a further loss on this project in the period," Aveng states.

It adds that many of the issues facing the project and leading to additional costs and delays are beyond the control of the project and are the subject of commercial claims and negotiations with the client.

Further, two other projects in Queensland were impacted on by the significant rainfall and flooding during the period, leading to commercial claims and adjustment to project profitability.

"The Australia business unit continues to deliver profitably across its portfolio of projects excluding the Kidston project. Following the recognition of the further loss at Kidston, the Australia business unit will report an operating loss for the year.

"In Southeast Asia, the Jurong project for the Land Transport Authority in Singapore continues to achieve project milestones in line with the revised project plan and at expected cost," the company notes.

Aveng says trading conditions across the Infrastructure and Building segments continue to improve, albeit against a backdrop of uncertainty associated with geopolitical tensions and increasingly protectionist global trade policies.

Aveng is the preferred or sole-source bidder on more than A$2-billion of new work, with about half of this expected to be awarded by the end of the September quarter - the first quarter of the company's 2026 financial year.

This will augment the A$1.2-billion of new work secured to date in the current financial year.

Meanwhile, Aveng remains in negotiations with interested parties on the sale of its Moolmans contract mining business.

It also continues to explore a range of options for the separation of McConnell Dowell. These include a merger with a third party, a partial or outright sale or a separate independent listing.