Cimic Group Ltd (ASX: CIM) released its full-year 2018 results after-trading hours on Tuesday. Here’s your 2-minute guide before the market opens on Wednesday.
Cimic is a major international construction and mining contractor with brands like UGL, CPB Contractors, Thiess and Sedgman under its banner. It’s a well-known company on the ASX with a history that dates back to 1899.
Here Are the Six Key Points
- Revenue was up 9.2% year-on-year for a total of $14.7 billion in 2018
- NPAT was also up 11.2% to $780.6 million
- Free operating cash flow of $1.2 billion, up 18% year-on-year
- 156c full-year dividend fully franked, up 16% year-on-year
- Gross debt hit the lowest level since 2007, at $523 million
- Earnings per share increased by 11.2% to 240.7c.
Analyst Targets
Expect investors to react favourably Wednesday morning when the market opens. Based on analyst estimates from Bloomberg, Cimic beat expectations for both NPAT and dividends. NPAT estimates were $770.7 million and dividends 151c. Earlier guidance for NPAT was between $720 million and $780 million, so Cimic’s results place it at the high-end of guidance.
Management Commentary
Cimic Group Executive Chairman Marcelino Fernandez Verdes stated that Cimic’s, “collaborative approach has driven an excellent result for our shareholders, is providing exciting opportunities for our people, and will power the next phase of our transformation through digitisation and innovation.”
Chief Executive Officer Michael Wright was optimistic about future potential, stating, “We have a growing and diverse portfolio of work in hand across our core businesses.” He went on, writing, “our work in hand grew to $36.7 billion at the end of 2018, driven by a $1.8 billion increase in Operating Company projects, which are our core markets.”
Outlook
CPB Contractors, part of the Cimic Group, were successful in their bid to design and construct the Wagga Wagga Health Service Stage 3 Redevelopment Project. Project revenue is expected to come in at $107 million, with construction commencing in February 2019. This success comes on the back of CPB’s recent contract with Coffs Harbour Hospital Expansion Main Works.
Cimic also won multiple other contracts late in 2018. Among them were the Westconnex Rozelle Interchange, Caval Ridge Coal Mine, Olive Downs Coking Coal Project and BMA Coal Mines. Those contracts alone total nearly $4.5 billion, giving Cimic plenty of work to do in 2019.
Guidance for 2019 NPAT is $790-$840 million. Seeing that Cimic reached the top-end of guidance for 2018, it wouldn’t be surprising to see them do the same in 2019.
My Take
The Cimic Group 2018 report seems to be a positive one, highlighting solid growth throughout all segments of the business. It seems likely that the share price will react positively tomorrow on the back of higher-than-expected NPAT and dividend growth, and 2019 is shaping up to be a good year for the company.
Before you consider buying Cimic shares, read this…
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