Leighton's keeps going despite road block

LEIGHTON Holdings has delivered an operating profit after tax of $375 million for the nine months to March 31, in spite of a $132 million write down.

Leighton’s audited result is $100 million higher when compared to $273 million profit recorded during the same period last year.

The result was delivered on the back of $10 billion in revenue, up 16% from $8.6 billion, and work in hand was $28.1 billion, up 48% from $19 billion at the same time last year.

Chief executive Wal King said the result is a positive indicator for the full year and is consistent with the company’s guidance that 2008 profit will be up by at least 30% on last year’s record result of $450 million.

King’s optimistic view resulted in buoyant demand for Leighton’s, the group’s shares closed $2.10 higher at $52.81 yesterday.

“This demonstrates the momentum of our contracting operations in Australia and Asia, and the strength of the group’s portfolio of contracts, assets and other development activities.

“Included in the result is the write down of 100% of the group’s direct investment in Connector

Motorways of $60 million and a write down in our investment in JF Infrastructure of $72 million, which also includes their investment in Connector Motorways,” he added.

Meanwhile, King said the group is in an enviable position in that its portfolio can be managed to ensure optimal value realisation from assets, developments and operating performance.

“The group’s outlook remains very positive and we see an excess of opportunities in resources, infrastructure and property, both here in Australia and across Asia.

“Investment in infrastructure will continue to be driven by a growing population, past underinvestment and a commitment by governments to resolve some of the existing bottlenecks and deficiencies. We welcome the Federal Government’s recent budget announcement of three new funds that will provide more than $40 billion for capital investment in infrastructure, education and health to strengthen the economy,” he continued.

“Leading forecasters suggest that Australia needs to invest up to $A380 billion over the next decade rebuilding major public infrastructure. Construction levels across the infrastructure market are forecast to stay strong for the next five years stimulated by Australia’s sustained economic growth. Major projects that are in bidding or will be bid include the $3 billion+ Airport Link in Brisbane, a $3 billion desalination plant in Vic and a $1 billion desalination plant in SA.

“The medical, educational and defence sectors of the non-residential property market should benefit from continued investment from governments. Major projects under bid include the Department of Defence’s $1.2 billion Single LEAP project, the $700 million Royal North Shore Hospital in Sydney and the $1 billion Fiona Stanley Hospital in WA,” King said.

King said the group also see enormous opportunities in the Gulf, which is undergoing an unprecedented construction boom and is set to grow through the 45% investment in Al Habtoor.

“The group’s balance sheet is a source of competitive advantage and has remained strong with total assets of $6.4 billion and gross cash of $443 million. We have a great array of opportunities, both in Australia and Asia, and will continue to match our capital planning with these growth opportunities.

“We remain on track for an increase in profit for the full year of at least 30% on last year’s $450 million, which was up 63% on the previous year. The Leighton Group has a diversified business which has great momentum and we therefore see that revenue growth for the next 3 years should be more than 10% per annum,” King concluded.

Australian Property Journal