The Cimic Group Ltd (ASX: CIM) share price was trading as much as 20.53% lower today after the company announced its intention to exit the Middle East region. Here’s what you need to know.
About Cimic Group Ltd
Formerly Leighton Holdings Limited, CIMIC Group is the parent company of Australia’s largest project development and contracting group.
The company is an international contractor with operations in telecommunications, engineering, property, mining and environmental services industries.
CIMIC operates multiple brands such as UGL, CBP Contractors, Thiess and Sedgman.
What Happened?
This morning, CIMIC announced its intention to divest its 45% interest in BIC Contracting (BICC), a company operating in the Middle East region.
CIMIC will exit the Middle East region and now focus its resources and capital allocation on growth opportunities in its main core markets and geographies — Australia, New Zealand and Asia Pacific.
As a result, the company will recognise a one-off, post-tax impact of around $1.8 billion in its 2019 financial statements, representing all of CIMIC’s exposure in relation to BICC. This impact includes expected cash outlay net of tax of around $700 million during 2020.
According to management, CIMIC has committed facilities and cash available to meet all obligations as required.
Due to the financial impact of CIMIC’s exposure to BICC, the company has decided it will not declare a final dividend for 2019.
FY19 Guidance
Excluding the BICC impact, CIMIC expects to report net profit after tax (NPAT) for 2019 of around $800 million, in-line with its previous 2019 guidance.
The company expects to announce its 2019 financial results on 4 February 2020.
The CIMIC share price was closed the day 19.87% lower with shares last trading at $28.03
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