Cimic (ASX:CIM) share price races 5% higher on financial result

The global engineering company’s shares are continuing their ascent this week.

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The Cimic Group Ltd (ASX: CIM) share price is surging higher today following the release of its 6-month financial result.

At the time of writing, the global engineering company’s shares are up 4.79% to $19.91. In comparison, the S&P/ASX200 Index (ASX: XJO) is up 1.19% to 7,338 points.

Let’s take a closer look at what the company announced to the ASX this morning.

How did Cimic perform for the first-half of FY21?

In today’s release, Cimic reported its financial result for the last 6 months ending 30 June 2021.

According to the update, group revenue jumped to $7.1 billion, up 10.6% when compared to this time last year. The company’s Australian Construction and Services business recorded a strong uptick in revenue which led the charge.

Earnings before interest, tax, depreciation and amortisation (EBITDA) stood at $464.5 million, compared to $442 million in H1 FY20.

Net Profit After Tax (NPAT) came to $208 million versus $205.3 million in the prior comparable term.

As such, EBITDA, Profit Before Tax (PBT) and NPAT margins remained resilient at 10.1%, 5.4%, and 4.5% respectively.

Free operating cash flow increased by $166.3 million to a loss of $115.9 million. Previously, the company recorded negative $282.2 million in free operating cash flow during H1 FY20. The positive shift reflected management’s efforts in winning new projects and reducing capital expenditure and finance costs.

Cimic declared a strong balance sheet of $4.3 billion in liquidity, comprising $3.2 billion in cash and $1.1 billion in undrawn bank facilities. Net debt stood at $272.2 million at the end of June.

The company also declared an interim dividend of 42 cents per share, franked at 20% payable to eligible shareholders. This represents a 62.8% payout ratio on the H1 FY21 financial result.

Cimic group executive chair and CEO Juan Santamaria commented on the result:

Growth in revenue and profit during the first half of the year, along with a significant increase to our orderbook, provides Cimic with a confident outlook for 2021 and beyond.

The strong performance of our Australian Construction and Services segments supported the increase in revenue and resulted in an improvement in operating cash generation in the second quarter.

Outlook

Cimic noted its core businesses remain positive with numerous stimulus packages by governments in the Construction and Services markets. In addition, around $470 billion of tenders are to be bided/awarded for the remainder of 2021 and beyond.

The company reaffirmed its full-year NPAT guidance of $400 million to $430 million, subject to market conditions.

Mr Santamaria added:

We’re seeing an increased volume of work coming to the market as a result of the various economic stimulus packages. The $10.4 billion in new work we secured in the past six months exceeds the $6.8 billion won in the 12 months to the end of 2020 and there is a substantial pipeline of work yet to be awarded

Cimic share price update

The last 12 months have seen the Cimic share price fall by around 12%, and 18% year-to-date.

Cimic presides a market capitalisation of roughly $6.2 billion, making it the 84th largest company on the ASX.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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