Construction and contract mining giant Leighton Holdings says it is through the financial crisis and looking to make the most of project opportunities in Australia and Asia.
Leighton upgraded its annual net profit guidance after its first half net profit soared by 160 per cent to $288.88 million, from $111.15 million in the previous corresponding period.
The previous first half result included writedowns totalling $239 million on a number of the group’s investments in toll roads and subsidiaries due to the impact of the global financial crisis.
Chief executive Wal King said he expected net profit for the 2009/10 financial year to be in excess of $600 million, an improvement on his previous guidance of a profit of about $600 million.
‘‘In excess is in excess,’’ he said when pressed for a more exact figure.
Annual revenue is expected to be around $19 billion after dropping one per cent in the first half to $9.012 billion.
‘‘I did say at this time last year when we had impairments that a few of our tail feathers were being singed, we’re through that,’’ Mr King told journalists today. ‘‘You can see the momentum of the business is continuing to increase.’’
Despite the upgrade, and the increase in the interim dividend to 65 cents from 60 cents a year ago, Leighton’s shares fell.
They lost $1.01, or 2.6 per cent, to close at $37.29.
Analysts said the stock’s recent strength made it a prime target for the wider market’s profit taking.
Infrastructure construction delivered more than half of Leighton’s revenue in the six months to December, with government stimulus continuing to fuel the sector.
Infrastructure activity is expected to increase by 20 per cent in calendar 2010, the company said, mainly on government spending on education, transport and water utilities.
The resources sector in Australia and Asia had returned to strong activity and Leighton did not have enough equipment to serve the demand from miners, Mr King said.
‘‘Whereas 18 months ago the world was coming to an end and we were cancelling equipment, we are in fact back in full production now in terms of our fleets,’’ he said.
The property sector remains challenging for the group, with Leighton Properties posting a loss before tax of $18 million, down from a pre-tax loss of $12 million in the previous corresponding period.
A full year loss for the division is expected before a return to profit in 2010/11, depending on the rate of economic recovery.
Uncertainty remains in the global economy but Australia is well placed with its wealth of resources and growing Asian neighbours, Mr King said.
‘‘The only clear thing coming out of this is we are in the right part of the world,’’ he said. ‘‘My anticipation (for the wider economy) is a tentative year then hopefully more positive next year.’’
If there were to be another economic downturn before a full recovery Leighton is well placed financially to weather such a storm, Mr King said.
‘‘In the unlikely event that there was a dip, we’ve got the wherewithal to take the pain,’’ he said.
Leighton’s work in hand at December 31 was worth $38.4 billion, compared to $38.2 billion held three months earlier. Leighton expects to have about $40 billion of work in hand by the end of June.
Mr King, 65 and in his 23rd year as Leighton CEO, again dodged questions about when he may retire.
‘‘It’s like a drought, every day is closer to rain,’’ he said.
AAP
