Government spending on large infrastructure projects is likely to rise because of the soccer tournament, the multibillion-rand Gautrain speed rail project and new projects to increase capacity at Eskom and Transnet.

Speaking at Aveng's presentation of its results for the six months ended December 31, Grim said government spending had been slow in the period under review.

He said provincial governments and municipalities had been especially slow to spend.

The situation would, however, change before the end of the year, and Aveng was in a better position to take advantage of the opportunities arising from increased government spending, he said.

"Our order book is within the target range of 70%-100% and gives us flexibility to participate in government infrastructure projects."

Grim said the construction cluster, comprising the engineering, construction and mining operations of Grinaker LTA and McConnell, had turned the corner. The cluster reduced its operating loss from R186m to R18m.

The listed building and construction group yesterday reported a 12% increase in revenue from R5,9bn in 2003 to R6,6bn. Headline earnings were up 55% from R85,7m to R132,5m. Grim said a good performance from the group's various businesses, including cement supplier Holcim, contributed to the rise in headline earnings.

He said high consumer demand in the local market because of low interest rates led to a good performance by the group's cement and steel businesses.

Cement demand was starting to wane, he said. The cement sector had started to grow at a slower rate than in the previous six months. In the six months under review, the company invested in 500,000 tons of additional production.

Grim said the sector was, however, unlikely to see another rise in tonnage this year.

But he said the strong rand had negatively affected "currency-sensitive" sectors such as mining, energy and exports.

The rand appreciated 10% during the six months under review. He said the strong rand also affected international revenues from projects that were awarded at weaker currency levels.