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Hochtief Sees EUR 0.8 Bln Impact In FY19 As Unit CIMIC Plans To Exit Middle East

German construction major Hochtief AG (HOCFF.PK) announced Thursday that it plans to recognise a one-off, post-tax, impact of around 0.8 billion euros in fiscal 2019 as part of the plan by its 72.8 percent-owned unit CIMIC Group to exit the Middle East region.

CIMIC is mulling sale of its non-controlling 45 percent interest in BIC Contracting or BICC, a company operating in the Middle East. The company noted that discussions continue with a shortlist of potential acquirers for all or part of BICC.

As part of its plans to exit the region, CIMIC will recognize a one-off post-tax impact of around 1.1 billion euros in fiscal 2019, representing all of CIMIC's exposure in relation to BICC. The impact includes an expected cash outlay, net of tax, of around 0.4 billion euros during 2020.

Excluding the BICC impact, CIMIC expects to report net profit after tax for 2019 of around A$800 million, in line with its 2019 guidance.

CIMIC will not declare a final dividend for 2019.

Meanwhile, Hochtief expects to report a 2019 nominal net profit, excluding the BICC impact, of approximately 625 million euros, up from last year's 543 million euros. Operational net profit for 2019 is expected to be around 660 million euros, in line with its 2019 guidance in the range of 640 million euros to 680 million euros.

CIMIC, after completing an extensive strategic review of its financial investment in BICC, has initiated a confidential M&A process for its stake in BICC.

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

CIMIC has reassessed its financial exposure to BICC, mainly shareholder loans and financial guarantees.

Going forward, CIMIC has decided to focus its resources and capital allocation on growth opportunities in its main core markets and geographies, such as Australia, New Zealand and Asia Pacific.

Hochtief said it expects to announce its 2019 financial results on February 11.

Further, Hochtief intends to propose a dividend for fiscal 2019 of 5.8 euros per share, up 16 percent year-on-year.

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