Construction and contract mining group CIMIC has flagged a boost in annual profit of up to 21 per cent in 2017 after delivering a solid rise in profits for the year just ended.
CIMIC executive chairman Marcelino Fernandez Verdes said the group anticipates strong growth in services, especially in the road and rail infrastructure, oil and gas, water, defence and renewable energy sectors.
The company forecast net profit of $640 million to $700 million for 2017, up 10 to 21 per cent on 2016.
CIMIC made an annual net profit $580.3 million in 2016, up 12 per cent on the prior year.
Its shares gained $2.74, or 7.6 per cent, to $38.85.
Mr Fernandez Verdes said CIMIC has a solid foundation for growth, with the acquisitions of diversified services provider UGL and mineral processing firm Sedgman in 2016 providing a platform for expansion.
CIMIC said its clients are continuing to invest and it had identified around $100 billion of tenders for 2017, while there are about $250 billion worth of projects coming to the market in 2018 and beyond.
CIMIC achieved the top end of its guidance for 2016, despite revenue for the 12 months to December 31 falling 18 per cent from the prior year.
The trend for revenue was positive, up 17.8 per cent in the fourth quarter of 2016, compared to the third quarter.
CIMIC has $34 billion worth of work in hand. The acquisition of UGL contributed $4.9 billion to that figure.
Mr Fernandez Verdez said CIMIC had performed strongly in 2016, winning profitable work, executing a share buyback and completing two acquisitions.
“Our performance was reflected in a 43.8 per cent increase in CIMIC’s share price during the year,” he said.
Projects won by CIMIC in 2016 included the construction of Canberra Light Rail in the ACT, the removal of some level crossings in Victoria, and the construction of the Tseung Kwan O – Lam Tin Tunnel in Hong Kong.
CIMIC also won mining and processing contracts in Canada and Chile.
Major services contracts acquired through UGL include the metro rail network maintenance in NSW and Victoria.
CIMIC EXPECTS 2017 PROFIT TO LIFT UP TO 21PCT
- 2016 annual profit up 12pct to $580.3m
- Revenue down 18pct to $10.85b