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CIMIC's 2016 profit, dividends beat forecast

Nicholas Grove  |  08 Feb 2017Text size  Decrease  Increase  |  

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The engineering and construction firm's 2016 profit and dividends beat Morningstar's expectations following a "very successful year," with a total shareholder return of 48 per cent.


CIMIC Group (ASX: CIM) on Wednesday announced a net profit for 2016 of $580.3 million, up 11.5 per cent on 2015, at the top end of company guidance, and ahead of Morningstar's forecast for a profit of $575.9 million.

Earnings per share rose 14.9 per cent to 176.6 cents, while cash flows from operating activities stood at $1.2 billion, the engineering and construction services company said in a statement to the ASX.

CIMIC said it had a "robust pipeline" of work in hand, which stood at $34.0 billion, while also providing guidance for a 2017 net profit of $640 million to $700 million, up 10 to 21 per cent on 2016.

The company declared a fully franked final dividend of 62 cents a share to be paid on 4 July 2017, which brought 2016 dividends to 110 cents a share, up 14.6 per cent on 2015 and ahead of Morningstar's forecast of 105.1 cents.

Combining the rise in its share price and dividends paid in 2016, CIMIC delivered a total shareholder return of 48 per cent for the year.

Investors were pleased with the result, with shares in CIMIC up 4.3 per cent to $37.65 in early trading on Wednesday.

"CIMIC had a very successful year in 2016 and we have a bright outlook for 2017 and beyond," CIMIC chief executive officer Adolfo Valderas said.

"We secured several large projects around the globe, entrenching our position as a leader in the delivery of complex infrastructure, mining and minerals, services and PPP projects, and we expanded our offering into new geographies and markets.

"We have a solid basis for growth and our strategic acquisitions provide a platform for further expansion."

CIMIC said its integration of the recently acquired UGL is underway. Last month, CIMIC made an unconditional off-market takeover bid for Macmahon Holdings (ASX: MAH).

CIMIC said it has identified around $100 billion of tenders relevant to the company for 2017, with about $250 billion of projects coming to the market in 2018 and beyond.

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Nicholas Grove is a Morningstar journalist.

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