COVID-19 has wiped more than two billion dollars off the annual revenue of Australia’s biggest construction company and has wiped hundreds of millions of dollars off its profit.

Releasing its annual result for 2020, construction giant CIMIC has reported a $A2.1 billion or 14.2 percent drop in underlying revenue from $A10.806 billion to $9.000 billion and a drop in underlying profit after tax of 25 percent from $800.3 billion to $600.5 billion.

The underlying results exclude numerous one-off items.

Most notably, these include a gain which CIMIC realised on the sale of 50 percent of its share of mining services giant Thiess and the resolution its legal battle to recover cost blowouts and delays which occurred on construction of a jetty for the Gorgon natural gas project in Western Australia.

Add these items back in and the group recorded a statutory net profit after tax of $620.1 million – up from a loss of $1.040 billion in 2019 which included a $1.8 billion write-down on CIMIC’s troubled Middle Eastern business.

In an analyst presentation, the company said its decline in revenue was driven by COVID-19, which has seen delays in projects being awarded and a slowdown in volumes of work.

The pain has been felt across the company’s construction, services and corporate divisions.

CIMIC’s construction division is run through its CPB Contractors brand and has operations spanning Australia, New Zealand and Asia across major project segments including roads, rail, tunnelling, defence, building and resources.

Its services division incorporates its Sedgman and UGL brands which operate across minerals processing and end-to-end asset solutions (mainly civil infrastructure).

Meanwhile, its corporate segment represents the corporate head office and transactions relating to finance and treasury along with brands such as Pacific Partnerships (public-private partnerships) and EIC (engineering) along with contributions from strategic investments in Thiess (50 percent), Venita (46.9 percent), Leighton Properties and Devine Group (59.1 percent).

The COVID slowdown has also impacted CIMIC’s pipeline of work, which has fallen from $32.6 billon on a comparable basis in 2019 (excluding work held by the 50 percent of Thiess which was sold in 2020) to $30.8 billion in 2020.

Meanwhile, CIMIC continues to face difficulties with its 45 percent stake in Dubai based Middle Easter joint venture BIC Contracting, of which it announced its intention to quit and wrote down $1.8 billion in January last year.

The Australian reported on Monday that BIC’s Qatar joint venture Leighton Contracting Qatar had been slapped with more than 350 legal claims demanding the payment of unpaid debts worth more than $US1 billion ($A1.3 billion).

An administrator has been appointed and has reportedly been served with the claims.

There has been concern that CIMIC’s troubles in the nation has sparked a humanitarian crisis in Qatar amid concerns that hundreds of workers have been unpaid for months – many of whom are immigrant workers who are unable to leave the country.

It is believed that the litigation may complicate CIMIC’s efforts to sell its stake in the joint venture for which a short list of bidders has been drawn up.

Going forward, Leighton is more optimistic about the outlook for 2021.

It expects underlying earnings to increase from $372 million in 2020 (excluding the 50 percent stake in Thiess which it sold during the year) to between $400 and $430 million in 2021.

It points to a recovery in new work on construction and services along with a significant pipeline of public infrastructure projects.

CIMIC Group Executive Chairman and Chief Executive Officer Juan Santamaria painted an upbeat picture.

“Throughout 2020 we worked closely with public and private clients to safely deliver projects in line with health protocols and to ensure our activities continued to underpin the economic recovery from COVID-19, he said.

“While the pandemic had a bearing on revenues and the award of new projects during 2020, we have a strong level of work in hand of $30.1 billion, providing approximately two years’ worth of work and a positive outlook for the future.”