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UPDATE 1-South Africa's Aveng plans shake-up after CEO quits
September 26, 2017 / 2:29 PM / in 23 days

UPDATE 1-South Africa's Aveng plans shake-up after CEO quits

* Chief executive resigns with immediate effect

* Aveng says to dispose of non-core assets (Recasts with strategy and operational review)

By Nqobile Dludla

JOHANNESBURG, Sept 26 (Reuters) - Loss-making South African construction company Aveng will look to sell non-core assets and review its civil engineering projects after its chief executive quit on Tuesday.

Work for South Africa’s building industry has slowed sharply as government contracts stall and weak commodity prices hit demand from the mining industry.

Shares in Aveng, which have slumped nearly 60 percent so far this year, fell a further 5 percent to 3.13 rand at 1425 GMT.

Aveng has initiated a strategic and operational review aimed at improving liquidity, production efficiencies and returning the business to profitability, said chairman and acting chief executive Eric Diack.

Diack assumed the additional role of interim CEO on Tuesday after the sudden resignation of Kobus Verster, who had been appointed to the top job in 2014.

“It’s not business as usual. We need to execute to plan, which we haven’t done for the last couple of years and we need to ensure that there are no surprises,” Diack told a news conference.

Aveng has been in business for more than 125 years and employs around 15,500 people, having cut around 1,400 jobs in its latest financial year.

Some of the non-core businesses or assets identified by Aveng include properties and businesses in which the group has a minority interest.

“The review will include the development of a sustainable capital and funding model, which will address the future funding of (Australian-based) McConnell Dowell and the Group’s convertible bond which matures in July 2019”.

The review includes identifying a number of products to export to different markets in order to enhance profit, reducing underperforming contracts, reorganising production capacity and simplifying organisational structures.

Aveng said headline loss per share for the year to the end of June fell to 1,625 cents per share compared with a loss per share of 75.2 cents at June 2016, as a result of impairments and revenue writedowns. (Reporting by Nqobile Dludla; Editing by Louise Heavens/Keith Weir)

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