CIMIC in $1.8b writedown

The country's largest construction company has reported a loss of $1.8 billion, blaming tough market conditions in the Middle East.

CIMIC announced the writedown in a submission on the ASX saying the decision to exit the Middle East market came after completing an extensive strategic review of its 45% interest in BIC Contracting (BICC).

"After thorough evaluation of all available options, CIMIC has decided to exit the region and to focus its resources and capital allocation on growth opportunities in its main core markers and geographies (Australia, New Zealand and Asia Pacific)," the company said.

"CIMIC 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."

The impact includes an expected cash outlay net of tax or around $700 million during 2020, as further liabilities materialise for the company.

"...in the context of an accelerated deterioration of local market conditions, BICC is engaging in confidential discussions with its lenders, creditors, clients and other stakeholders," the release said.

CIMIC said it has committed facilities and cash available and will be able to meet all its obligations.

The company added that, excluding the $1.8 billion impact, it expects to report a net profit of around $800 million, keeping in line with its 2019 guidance.

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