Cimic reports lift in first quarter revenue and net profit on the eve of its expected takeover

On the eve of its expected $1.5bn takeover, construction giant Cimic has delivered a $108m first quarter net profit on the back of growth in its building and services businesses.

Cimic generated a $108m net profit on the back of growth in its building and services businesses.

Australia’s largest construction company has reported a lift in first quarter revenue and net profit just days after settling a $492m legal dispute and on the eve of its expected takeover.

Cimic announced Thursday that it had generated a $108m net profit on the back of growth in its building and services businesses in the three months to March 31.

The result was up from a $100m profit in the same period last year. Revenues climbed 7 per cent to $2.3bn.

The company also restated its guidance for the full-year, tipping a net profit of between $425m and $460m based on a “strong level of work in hand and positive outlook across the group’s core markets’’.

Cimic generated a $108m net profit on the back of growth in its building and services businesses.

“We are looking at a strong pipeline of opportunities ahead driven by government investment in infrastructure,’’ chief executive Juan Santamaria said.

“Projects coming to market typically have more equitable sharing of risk, however skills shortages and the escalation of material and fuel costs remain a focus.

“We are seeking to mitigate the impact by upskilling and cross-skilling our people, securing supply contracts upfront, procuring and storing materials or commodities, or undertaking financial hedging.”

Earlier this week Cimic agreed to pay $492m to resolve an LNG deal that had gone bad due to work on a power plant, which suffered from cost blowouts, delays and construction problems.

Meanwhile, a $1.5bn takeover bid from Cimic’s major shareholder, German construction group Hochtief AG, is set to close on April 26.

Hochtief, which is owned by Spanish firm ACS, already controls nearly 95 per cent of the stock.

Some investors at the Cimic AGM earlier this month complained that the $22 per share offer undervalued the company, which will be delisted from the ASX once the deal is done.

The stock, which was trading above $50 just three years ago, has suffered as Cimic was forced to write down a number of major projects, including a $1.8bn hit to its work in the Middle East.

Morningstar equities analyst Mark Taylor described the offer as “disappointing’’ for longtime shareholders and said it undervalues the company.

“We now recommend shareholders accept the offer before it is scheduled to close on April 26, rather than waiting to be compulsorily acquired at an uncertain time,“ Morningstar said in a note to clients.

Originally published as Cimic reports lift in first quarter revenue and net profit on the eve of its expected takeover