Spanish-controlled constructor and contract miner CIMIC (the old Leighton Holdings) has rewarded shareholders for a second period with a 25% increase in interim dividends as revenues grew in all of its core businesses lifting half year profit by 22%.
When the half year results for contractor and engineering group CIMIC (the old Leighton Holdings) were slipped out on Tuesday night, well after trading had closed, they looked odd – a small rise in profit on a 30% plus plunge in revenue.
First-half net profit was below expectations. Mining division strength stood out, delivering 26% growth in pre-tax profit. Operating cash flow was well below expectations. The company has indicated it is moving to alliance-style, rather than fixed-price, contracts which have a more even cash flow profile.
Macquarie downgrades to Neutral from Outperform as the stock is now trading close to its target. The broker believes the share price has also caught up with the traditional correlation to earnings. Target is raised to $50.90 from $50.26.
The company reported a firm third quarter, in line with UBS estimates. 2018 net profit guidance of $720-780m is reiterated. CIMIC is benefiting from strong construction and services as well as a strengthening contract mining market.