Annual profits

COCIM executives cash in after 11% increase in annual profits

Mr. Fernandez Verdes, who received a special bonus of $ 3 million in 2016, cashed 960,000 of his stock appreciation rights in 2017 and has until March 13 to exercise the remaining 240,000, which are worth up to $ 7.75 million.

CIMIC, which released its annual results for the year to December 2018 Tuesday night, hit the top of its forecast range for net income of $ 720 million to $ 780 million. He predicts net profits of $ 790-840 million in 2019.

Macquarie Wealth Management analysts said results were “strong,” with the company’s mining and minerals processing division outperforming its construction or services businesses.

Mining profits rose 27% to $ 430.9 million from a year earlier, boosted by projects in Indonesia, Mongolia, the United States, Chile and Botswana as well as Australia.

Executive Chairman Marcelino Fernandez Verdes, who is the CEO of CIMIC’s Spanish parent company, ACS, does not receive a salary but is entitled to an annual stipend (which will be $ 475,243 in 2019); 1.2 million share appreciation rights; and “the payment of a discretionary bonus at any time”. Dom Lorrimer

Construction profits only rose 0.4% to $ 626.1 million, while services profits – which include maintenance and asset management income – fell 3.2 % to $ 159.5 million.

CIMIC continues to win new infrastructure projects in Australia, such as construction work on Sydney’s new Rozelle interchange that will join the WestConnex freeway, but Macquarie has warned that future work in Hong Kong is threatened by a government investigation into alleged flaws in the Leighton MTR construction project in Asia.

MTR, which is majority owned by the Hong Kong government and operates most of the city’s railways, revealed in May 2018 that the construction of a platform slab at Hung Hom Station on the New Sha Tin at Central railroad was of poor quality, with inadequate steel support structures.

Leighton Asia – headquartered in Hong Kong and part of the CPB Contractors division of CIMIC – is the main contractor at Hung Hom station, having won a HK $ 5.2 billion contract to build new platforms -forms.

Construction issues under investigation with Hong Kong government council accusing Leighton Asia of “corporate arrogance” and mismanagement of the project, according to the South China Morning Post.

Macquarie, who estimates that Hong Kong contributes around $ 2 billion of CIMIC’s $ 36.7 billion work-in-progress, said the company’s existing backlog of work in Hong Kong would limit any impact on profits by 2019.

But he warned that there was a “potential risk” to the company’s profit growth in 2020-21 depending on the outcome of the survey and CIMIC’s ability to offset a potential drop in employment in Hong Kong.

CIMIC said its maximum credit risk exposure for receivables rose to $ 1.6 billion in Asia-Pacific, from $ 1.26 billion a year earlier, but fell to $ 2.28 billion. dollars in other parts of the world compared to $ 3 billion a year earlier.

Some $ 640.7 million in non-current loan receivables is owed by CIMIC’s Middle East joint venture, BIC Contracting LLC (formerly known as Habtoor Leighton Group).


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