AUSTRALIA'S largest mining and building contractor, Leighton Holdings, remains confident that a resurgence in activity in the resource sector will continue after reporting a half-year profit that was better than expected.
Echoing recent comments from mining heavyweights Rio Tinto and BHP Billiton, Leighton's chief executive, Wal King, said the resource sector was ''largely back to its best'' after a slowdown last year.
Leighton yesterday posted a net profit of $289 million for the six months to December, up from $111 million in the first half of 2008-09 when it booked asset write-downs.
The improved result reflected the impact on infrastructure construction of the federal government's economic stimulus, as well as good conditions in contract mining in Australia and Indonesia, and construction in Hong Kong.
The company blamed a 1 per cent fall in total revenue to $9 billion on currency fluctuations.
Despite Mr King's upbeat sentiment, Leighton fell $1.01, or 3 per cent, to $37.29 yesterday, reflecting investor disappointment that its order book of $38.4 billion as at December 31 was not higher, as well as unfulfilled expectations of slightly more bullish earnings guidance.
Mr King said although the biggest risk to recovery in the world's economy was a premature withdrawal of government stimulus packages, he was confident the ''fires will keep burning''.
''The only clear thing coming out of this is that we are in the right part of the world,'' he said, referring to the Australian economy's links to resilient Asian nations.
''You can't absolutely rule out a double dip,'' he said. ''But what we are seeing at the moment in the resource sector [is that] we can't get enough equipment … to satisfy the needs.''
Mr King said Leighton would next week announce details of a contract in Australia worth about $1 billion.
He also expects to gain significant work in Hong Kong, where the government is injecting large sums into infrastructure projects that have been delayed.
''It looks like the company is well positioned to win big work,'' said Austock analyst Heath Andrews. ''We are banking on a return to growth next year and it looks like it's on target for its guidance.''
But Leighton again had its result hit by its property arm, which suffered a loss of $18 million for the half, compared with a loss of $12 million in the same half in 2008-09. However, it is forecasting a return to profitability next financial year.
''We believe there will be a further small loss over the remainder of the year but next year the property business should return to profit,'' Mr King said.
The company's Middle East business was also a disappointment after its half-year profit slumped to $5 million, from $88 million previously.
The company issued slightly improved guidance for a net profit of more than $600 million for the full year and revenue of about $19 billion.
