CIMIC Group reports $208m after-tax profit in first half of 2021

CR2SM project is the first project in Australia featuring a Diverging Diamond Interchange. — CIMIC Group company CPB Contractors was selected by the Queensland Government to deliver the Bruce Highway Upgrade – Cooroy to Curra Section D.

The CIMIC Group has reported net-profit-after-tax (NPAT) of $208 million in the six months to 30 June 2021, with the Group’s revenue growing 10.6 per cent to $7.1 billion compared to the same period last year.

Announcing the six-monthly financial results on ASX today, the company noted its previous year revenue was adjusted to reflect Thiess as a 50 per cent equity accounted joint venture.

In October last year, CIMIC Group signed an agreement to sell half of its mining services business, Thiess, to London-based funds management firm Elliott Advisors, valuing the unit Thiess at $4.3 billion.

CIMIC Group Executive Chairman and Chief Executive Officer Juan Santamaria said CIMIC’s revenue growth in the HY21 was due to strong growth in the company’s construction and services activities in Australia.

“The strong performance of our Australian Construction and Services segments supported the increase in revenue and resulted in an improvement in operating cash generation in the second quarter,” he noted.

In May, CIMIC Group, through its subsidiaries CPB Contractors and UGL won a contract from NSW Government to deliver stage 1 of Sydney’s M6 motorway in a joint venture with Ghella. The design and construction contract for the motorway is set to generate approximately $1.95 billion to the CIMIC Group companies.

CIMIC’s CPB Contractors is also part of the consortium selected to deliver the $7-9 billion tunnelling work on the North East Link Project in Melbourne – with a total expected value of $4 billion for CIMIC Group.

Mr Santamaria said taking part in public-private partnership tenders such as the North East Link project was instrumental in the company’s strong performance during the period.

CIMIC Group also recently made an offer to buy Brazil Farming’s share in the residential property group, the Devine Group, for $15.6 million (24¢ per share), a move that Mr Santamaria said would further boost the company’s liquidity status.

“Recent strategic achievements include compulsory acquisition status on our offer for Devine, appointment of advisers to review strategic options for Ventia, growth in the services sector, and ongoing work on multiple PPP tenders with success at North East Link,” he noted.

CIMIC was awarded new work of $10.4 billion during the first six months of 2021, which brought the company’s total work in hand to $33.3 billion.

Apart from the M6 Motorway Stage 1 contract ($1.95 billion) and the North East Link Primary Package ($4 billion), other contracts announced in the HY21 period include the CopperString 2.0 a high-voltage transmission network in Queensland (potential revenue of $1.7 billion), the Country Regional Network in New South Wales ($1.5 billion) and Mount Pleasant Operation in New South Wales ($925 million).

CIMIC Group is expecting to generate $289 million revenue from Bruce Highway Upgrade Section D, with another $150 million from a build-to-rent residential tower above Sydney Metro’s Pitt Street Station. Queensland’s Kidston clean energy transmission line valued at $150 million, Gippsland Rail Upgrade in Victoria valued at $124 million and Ferny Grove Central development project in Queensland valued at $100 million are other contracts awarded to CIMIC Group over the past six months.

Mr Santamaria said the company was experiencing increased volume of work coming to the market as a result of the various economic stimulus packages.

“The $10.4 billion in new work we secured in the past six months exceeds the $6.8 billion won in the 12 months to the end of 2020 and there is a substantial pipeline of work yet to be awarded.”