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What’s the outlook for CIMIC following Q1 results?

We look at some of the key figures from CIMIC's first quarter earnings release.

CIMIC share price rises on Q1 release

Building and construction giant CIMIC Group (CIM) today saw its share price trade some 3.76%, or 86 cents higher, to $23.89 per share in the first 15 minutes of trade, after releasing its first results to the market.

Here, CIMIC revealed revenues of $3.3 billion against Q1 earnings (NPAT) of $166 million – down from $181 million in Q1 2019.

CIM’s earnings per share (EPS) hit 51.3 cents per share during the quarter – down 8.1%.

Even though earnings were down, the firm touted robust profit margins, boasting an earnings (EBITDA) margin of 15.8% and noted that its 'EBITDA cash conversion pre-factoring in LTM' had significantly improved.

Commenting on these results – CIMIC’s CEO – Jaun Santamaria said:

‘During the first quarter, we maintained a disciplined focus on sustaining a strong balance sheet, generating cash, and taking a rigorous approach to tender, project delivery and risk management.’

Opportunity remains, uncertainty still looms

Looking forward, while management noted that CIMIC’s outlook remains positive in its core markets, given the current economic uncertainty as a result of the coronavirus, the firm’s management said that at present, they would not be providing 2020 profit guidance.

'Once we have better visibility of the consequences of COVID-19 on the business, we will provide an update to 2020 profit guidance, if required,’ it was noted.

Guidance or not, during the quarter the firm was awarded $2.5 billion worth of new work, taking the firm’s total work in hand to $36.1 billion.

Some of the firm’s new projects include: the MacKay Northern Access Upgrade in Queensland; the South Gippsland Highway update in Victoria; and the Port Wakefield to Port Augusta Regional Projects Alliance (RPA) in South Australia.

While total work in hand remains flat relative to Q1 2019; this time last year CIMIC took on a significantly higher $4.2 billion worth of new work. Make of that what you will.

Even when considering that data, the firm’s management said, the:

‘Mining market [is] proving resilient; stimulus packages announced by governments in core Construction and Services markets with additional opportunities through strong PPP pipeline.'

Moreover, the company noted that as of March, there were approximately $90 billion worth of tenders expected to be bid on/ and or awarded to during the rest of CY20. Looking further out, the company noted that approximately $400 billion worth of projects were expected to hit the market in CY21 and beyond.

How to trade CIMIC – long or short

What do you make of this market announcement: do you see a bullish or bearish opportunity? Trade accordingly. You can use CFDs to trade CIMIC and other ASX-listed mid-caps – LONG or SHORT through IG’s world-class trading platform now.

For example, to buy (long) or sell (short) CIMIC using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘CIMIC’ or ‘CIM’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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