Hochtief, ACS Shares Fall as Profit-Inflation Allegations Hit Australian Subsidiary

   By Cristina Roca 
 

Shares in Hochtief AG (HOT.XE) traded sharply lower Monday after shares in its Australian subsidiary CIMIC Group Ltd. (CIM.AU) took a beating following allegations that it has inflated its pretax profit by A$1 billion ($701.5 million) over the past two years.

At 1130 GMT, Hochtief shares traded 9% lower at EUR118.90, making the German construction company the biggest loser of the Stoxx 600 index. Shares in Hochtief's parent, Actividades de Construccion y Servicios S.A. (ACS.MC), traded 4% lower at EUR38.52.

On Tuesday last week, GMT Research said it estimated that CIMIC has "inflated reported pretax profit by roughly 100% over the past two years." The Hong-Kong-based research firm said that the construction company had refused to give "substantive" answers to its questions.

Over the past weekend, Australian newspapers picked up on GMT's report, leading CIMIC's shares to open lower on the Australian ASX index Monday.

In a letter to the Australian Securities Exchange, CIMIC said Monday that it is in compliance with disclosure obligations, and referred investors to its past financial reports and disclosures. Shares in the company ended Monday's session 7.1% lower at AUD46.50.

Write to Cristina Roca at [e-mail]; @_cristinaroca

(END) Dow Jones Newswires

May 06, 2019 08:14 ET (12:14 GMT)

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