Construction major CIMIC group posts 25% jump in 9 months’ profit

Australia’s CIMIC Group posted a sharp jump in profits in the nine-months ended on Sep.30. Formerly known as Leighton Holdings, before its acquisition by Spanish firm Grupo ACS, it was later renamed as CIMIC in 2014.

According to the financial results, net profit after tax was $393 million, marking a 25.2 percent increase compared to the same period in 2014. Earnings before interest and tax shot up by 13.7 percent and touched $650 million during the nine month period vis a vis the previous period, reports The Australian.

“We are delivering a steady and sustainable increase in our margins and continuing our focus on cash collection, reducing net debt and improving our working capital position,” Chief Executive Marcelino Fernández Verdes said.

Cost efficiency

The company was able to reduce capital expenditure by $331million as compared to the previous period. The CIMIC also confirmed the guidance for a full-year result between $450 million and $520 million. Its net debt also fell to $215 million over the third quarter from $323 million.

The construction group had a total work order of about $28.8 billion as of September 30 and some $10 billion worth tenders are in the pipeline, which include Perth's Forrestfield-Airport Link.

Some of its upcoming projects are the new tunnel for Sydney's M5 motorway, under the WestConnex project, as a joint venture with Spain's Dragados and Korea's Samsung C&T.

Deputy CEO appointed

Meanwhile, the CIMIC group named Adolfo Valderas as its new deputy chief executive after promoting from his role of chief operating officer.

“I am confident that Adolfo will leverage the many opportunities before us to the benefit of shareholders, clients and employees, thus ensuring the success of the CIMIC operating model,” the CEO said.

Valderas is a civil engineer and has been CIMIC's chief operating officer since December 2013. He was one of the senior executives deputed to Australia by CIMIC's Spanish parent, Grupo ACS to settle the March 2014 acquisition of Leighton Holdings, reports The Sydney Morning Herald.

Valderas has vast experience and was with Spanish infrastructure group Iridium and Spanish construction group Dragados. CIMIC's shares have been trading at a high since April 2011. They rose 38¢ on Oct.29 to touch $27.05.

Danny Younis, an analyst with Shaw and Partners said there is a possibility of CIMIC's controlling shareholder Hochtief swooping the remaining 30 percent of the construction group as the balance sheet is strong now.

Ben Brownette, the analyst with Commonwealth Bank said CIMIC's strong cash-flow at $500 million in the third quarter and a pipeline of shortlisted work is “impressive.”

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