Cimic Annual Profit Hits Top End of Expectations -- Update

   By Rhiannon Hoyle 
 

SYDNEY--Cimic Group Ltd. (CIM.AU) reported a 23% decline in annual profit following the sale of some businesses, but said earnings were at the top end of expectations as the company drove down costs to bolster margins.

Cimic, Australia's biggest construction company, reported a net profit of 520.4 million Australian dollars (US$367.8 million) for the year through December. That compared to A$676.5 million the year earlier, before Cimic sold some businesses including its John Holland building division.

Earnings were at the top end of an earlier company projection of A$450 million-A$520 million. Cimic forecast profits to rise to between A$520 million and A$580 million this year.

"We have improved margins by reducing overheads and effectively managing financial and other costs," said Chief Executive Marcelino Fernández Verdes. Cimic's profit margin improved by 150 basis points to 6.3%, the company said.

"Our activity focused operating model, and increased attention to cash and cost control, delivered a solid result and has put us in a strong net cash position," said Mr. Fernández Verdes.

The company declared a final dividend of 50 Australian cents a share. Cimic is majority owned by Germany's Hochtief AG (HOT.XE), which is controlled by Spain's Actividades de Construccion y Servicios S.A. (ASC.MC).

Cimic has in recent years grappled with a slide in the value of its contract-mining order book, and has instead focused on winning infrastructure projects to build everything from casinos in Macau to airports in the Middle East.

Still, on Wednesday the company said its cost-cutting efforts were helping Cimic win new work on mines in countries such as Australia and Indonesia. The group secured total new deals worth A$14.13 billion during 2015, taking its year-end pipeline of work to A$29 billion, it said.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

February 09, 2016 17:51 ET (22:51 GMT)

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