The CIMIC Group Ltd (ASX: CIM) share price is edging higher today after the company announced it has been awarded two major rail sector contracts. At the time of writing, CIMIC shares are up by 0.68% at $20.64.
Details of the new rail contracts
CIMIC announced today that its two new rail contracts are set to generate total revenue exceeding $180 million. These contracts have been awarded in relation to the operations and maintenance of Adelaide’s North-South tram and bus network as part of a consortium that consists of Transit Systems, CIMIC’s subsidiary UGL, and John Holland.
Over the past decade or so, UGL has a gained a solid reputation for the manufacturing, operating and maintenance of heavy and light rail across Australia.
Operations and maintenance on the Adelaide trams network by this consortium will be performed for a period of eight years, beginning July this year.
In addition to the rail contracts, CIMIC also announced that UGL has secured a contract to manufacture new locomotives for Qube Holdings Ltd (ASX: QUB). The period of the contract is 18 months and the new locomotives are scheduled to be built in Newcastle, NSW.
Commenting on today’s announcement, CIMIC Group Chief Executive Officer Juan Santamaria said:
“Our selection by the Department of Planning, Transport and Infrastructure to operate and maintain Adelaide’s trams is testament to CIMIC’s expertise and experience in the heavy and light rail industry and our ability to deliver safe and reliable transportation for the travelling public.”
“CIMIC’s long history of manufacturing is key to our success in Newcastle. We’re proud that CIMIC has had a presence in NSW for more than 120 years, including a strong presence in Newcastle,” he added.
Previous contract wins
The new contracts today come on the back of another major announcement by the company at the beginning of last week.
On March 2, CIMIC announced that its CPB Contractors business had been selected by the South Australian Government to deliver three projects under the Port Wakefield to Port Augusta Regional Projects Alliance (RPA).
The projects are funded by the South Australian and Australian governments and are anticipated to generate revenue of approximately $237 million to the CPB Contractors business. Work on the projects is scheduled to be completed by 2022.
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Motley Fool contributor Phil Harpur 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.