Australia’s biggest construction company, Cimic, has replaced chief executive Michael Wright following an AUD$1 billion (US$671 million) annual loss. This loss was mainly due to issues with its Middle East operations.
In January Cimic told investors that it would take a AUD$1.8 billion (US$1.2 billion) post-tax write down (a reduction in the value of an asset) on its Middle Eastern joint venture, BIC Contracting, after being unable to recover debts owed on projects built by former executives during in Dubai in the 2000s.
Wright, who had been chief executive for two years, will be replaced by Juan Santamaria.
Cimic plans to sell its non-controlling 45% stake in BIC Contracting with Cimic executive chairman Marcelino Fernandez Verdes saying that exiting the Middle East, “is the appropriate long-term decision for our business and for our shareholders.”
Cimic has been criticised for using ‘reverse factoring’ in its accountancy methods – this allows companies to delay paying bills to creditors by making arrangements for suppliers to be paid early by financial institutions and therefore artificially inflating cash balances.
The construction company is building some of Australia’s largest infrastructure projects including Sydney’s Westconnex motorway and the Melbourne Metro. The company’s full year results saw a 24% fall in construction profits.