CIMIC Group (ASX:CIM) announced to the ASX this morning that it has improved results for the first half of 2015 and $7billion in new work, confirming previous guidance. The group also reported strong operating cash flow which, together with proceeds from divestments, enabled $1 billion of debt repayments. CIMIC further de-risked, deleveraged and strengthened its balance sheet during the second quarter, with gearing and net contract debtors improving.
During the period, CIMIC secured $7billion of new contracts, extensions and variations. Amongst others, this included a $900 million award for Sydney’s M4 East Motorway and a $474 million award for works on the Shatin to Central Line in Hong Kong. The company was also awarded a $1.2 billion contract to develop a boundary control point between Hong Kong and China, the largest project won by its Hong Kong business as a sole contractor. The mining business also signed a $175 million services agreement for a copper mine in Chile. CIMIC confirms 2015 forecast NPAT in the range of $450 million to $520 million, subject to market conditions.
CIMIC Executive Chairman and CEO Mr Marcelino Fernandez said: “In 2014 we delivered phase one of CIMIC’s transformation be reorganising our operating model into a streamlined, simplified and efficient structure, and substantially strengthened and de-risking the balance sheet. Phase two continues the focus on standardisation, simplification and streamlining by making improvements to the efficiency of our business and IT systems, further reducing costs, and enhancing the capital discipline within our Operating Companies.”
CIMIC’s continual growth of work in hand over the last year has resulted in a volatile yet evident uptrend in its share price. The company’s share price has declined markedly since the high of late 2010 however has shown consistent growth over the last 18 months. Following this morning’s announcement the company’s share price rallied however has since settled and is currently trading 1.5 per cent above opening price (11.30am AEST).
Author: Ben Visser
Jul 23, 2015
Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.