The CIMIC Group Ltd (ASX: CIM) share price continued its poor run and sank to a 52-week low of $32.82 on Thursday.
But the global contractor’s shares could rebound this morning after the release of a late announcement yesterday.
What did CIMIC announce?
After the market close on Thursday CIMIC announced that its services company, UGL, has been awarded new rail and mining services contracts across Australia. In total these contracts are expected to generate combined revenues of approximately $260 million.
According to the release, in the rail sector UGL has secured additional work in operations, maintenance, and manufacturing services.
Its joint venture has been awarded a contract extension by Transport for NSW to increase the size of the New Intercity Fleet. This will see the joint venture build and maintain additional passenger cars, increasing the total New Intercity Fleet to more than 550 carriages. Maintenance services will then be provided for 15 years from the first train delivery.
Another rail contract is with Pacific National and will see UGL build four new diesel locomotives.
In the mining services sector UGL has been awarded contracts to deliver multi-disciplinary services for up to three years. These include mechanical and piping, electrical and instrumentation, painting, and insulation services.
The managing director of the UGL business, Jason Spears, was very pleased with the new contracts.
He said: “We are extremely pleased to be recognised as a trusted and established partner to our clients in the rail and mining services sectors. These contracts reflect our strong ongoing relationships, and our reputation for the delivery of outcomes focused on safety, quality, technical innovation and expertise, and reliability.”
Why is the CIMC share price at a 52-week low?
CIMIC’s shares have come under pressure recently following the release of a disappointing half year result last month.
In the first half of FY 2019 CIMIC delivered a 1% increase in net profit after tax to $367 million. This was well short of the market’s expectations.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.