By Cristina Roca
Shares in Spain’s Actividades de Construccion y Servicios SA and its subsidiary Hochtief AG fell on Thursday after CIMIC Group Ltd. said it would exit the Middle East region and book a large writedown.
The Australian construction company /zigman2/quotes/209671427/delayed AU:CIM +1.89% , which is majority-owned by Germany’s Hochtief /zigman2/quotes/205338461/delayed DE:HOT -1.35% which is in turn controlled by ACS /zigman2/quotes/201788030/delayed ES:ACS -1.68% , saw its shares fall 20% earlier on Thursday after saying it would recognize a writedown of 1.8 billion Australian dollars ($1.23 billion) in its 2019 results due Feb. 4.
ACS shares traded 4.8% lower at EUR32.08, while Hochtief shares traded 8% lower at EUR121.39.
This news is likely to dominate sentiment on ACS shares during Thursday’s trading session, overshadowing the positive news of the company’s EUR2.2 billion solar energy deal with Galp Energia SGPS S/A /zigman2/quotes/206136034/delayed PT:GALP -0.73% , Renta 4 Banco analyst Angel Perez Llamazares said. The Spanish firm views a drop in ACS’s share price as an opportunity to buy.
ACS said Thursday that it will take a hit of about EUR400 million due to the CIMIC writedown.
Despite the charge, ACS expects a net profit of more than EUR950 million for 2019, in line with its expectations, the construction-and-infrastructure company said. Sales, Ebitda and EBIT for the year shouldn’t be affected by the news, ACS added.
ACS said it will keep its shareholder returns at 65% of its net profit despite its Australian subsidiary suspending its final dividend as a result of the writedown.