CIMIC Group’s Stock Down On Its Fiscal 2018 Results – All That Investors Need To Know

CIMIC Group’s Stock Down On Its Fiscal 2018 Results - All That Investors Need To Know

Australia’s leading contractor CIMIC Group Limited (ASX: CIM) presented its annual results for the year ended 31st December 2018 on Tuesday, 5 February 2019. The company has touched the upper end of its FY2018 profit guidance of $720 million to $780 million, posting bottom line growth of 11% to the NPAT of $781 million in FY18.

But it seems, investors were waiting for a further stronger outcome as the stock price has slipped by 0.174% or $0.080 to last trade at $45.900 on 5 February 2019.

The Group has reported a revenue of $14.7 billion, up 9% year on year, with all Operating Companies recording growth. The improvement in the company’s financial performance reflects the integrated approach that brings the expertise of its operating companies together.

As in securing the line-wide rail works for the Sydney Metro City and Southwest project, the company adopted a joint approach with CPB Contractors and UGL, working together to provide a unique solution for its client. The company has also delivered a collaborative solution for Metro Tunnel project in Victoria, integrating the rail expertise of UGL, CPB Contractors and EIC Activities.

Moreover, the company has strengthened its balance sheet with the strong cash generation and the lowest level of gross debt since 2007. This translates a cash flow from operating activities of $1.9 billion, up 22%, representing 109% cash conversion of EBITDA. Its free operating cash flow was $1.2 billion, up 18%, and gross debt was $523 million.

With the focus on providing end-to-end capabilities to its clients, the company’s work in hand grew to $36.7 billion at the end of FY18. It includes new work in hand awarded in 2018 worth $17.9 billion and operating company work in hand increasing by 6% or $1.8 billion on the previous corresponding period. Whereas, on margins front, the contractor has maintained the Stable EBIT, PBT and NPAT margins of 7.8%, 7.3% and 5.3% respectively for Fiscal 2018.

Reflecting the strong profit result and cash generation, CIMIC’s Board of Directors have declared a final fully franked dividend of 86 cents per share, up 15% year on year. It took a total dividend for FY18 to 156 cents per share, up 16% year on year, representing a payout ratio of 64.8%. The company informed that payment of final dividend will be made on 4 July 2019 to the shareholders on the record date of 14 June 2019.

The company’s management advised that there are at least $130 billion of tenders relevant to CIMIC Group expected to be bid and awarded in 2019, and around $300 billion of projects are coming to the market in 2020 and beyond, including about $120 billion worth of PPP projects.

For 2019, the company has placed its NPAT guidance to the range of $790 million to $840 million. Further, the Annual General Meeting of the company is scheduled to be held on 11 April 2019.

CIM stock last traded at a PE of 20.100 x with a market capitalization of $14.91 billion as at 5 February 2019. The stock has witnessed a negative price change of 2.42% over the past 12 months.


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