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Leighton Holdings H1 Profit More Than Triples; Backs Full-year Outlook

8/14/2013 12:40 AM ET

Construction giant Leighton Holdings Ltd. (LGTHF.PK,LEI.AX), the Australian unit of Germany's Hochtief (HOCFF.PK), reported a profit for the first half of fiscal 2013 that more than tripled from last year. Looking ahead, the company maintained its underlying earnings outlook for the full year.

Leighton also more than doubled its interim dividend. However, the company's shares are down more than 5 percent in Wednesday's trading on the Australian stock exchange.

Hamish Tyrwhitt, chief executive officer of the company said, "Leighton's diversity - not just by market sector, geography and brand, but also by contract type and size, activity, and customer - allowed the Group to withstand headwinds in contract mining during the period and enabled us to deliver an improved operating performance."

For the six months to June 30, 2013, Leighton reported profit attributable to members of the parent entity of A$366.2 million or 108.0 cents, up from A$114.6 million or 34.0 cents in the year-ago period.

The latest quarter's results were boosted by a gain on sale of the company's telecommunication assets.

During the first half of the year, Leighton sold 70.1 percent of its non-core telecommunications assets to Ontario Teachers' Pension Plan and retained the remaining 29.1 percent stake to access the upside value created by the new joint venture ownership structure. The company said that proceeds from the sale were used to strengthen its balance sheet and reduce gearing.

Underlying net profit after tax for the half-year were A$255 million, up sharply from A$115 million in the prior year.

Total revenue for the period grew 4 percent to A$11.49 billion from A$11.07 billion in the previous year. Revenue-Group advanced to A$10.53 billion from A$9.93 billion a year earlier.

Leighton said it generated higher revenues despite the 12 percent downturn in revenue from contract mining during the period. According to the company, the challenging macroeconomic environment and volatility in commodity prices drove an overall net reduction in contract mining work in hand of A$3.7 billion, or 20 per cent, across the Group.

Construction contracting services generated a 15 percent increase in revenues to A$7.27 billion, while mining contract services recorded a 13 percent decline in revenues to A$2.29 billion.

As at the end of the half-year period, Leighton had A$40.1 billion of work in hand, a further A$7.8 billion in contracts beyond five years, and preferred bidder positions of A$3.1 billion. However, Leighton's work in hand was down 5 percent from March 31, 2013. The company also said it received A$3.9 billion of contracts during the six weeks after June 30, 2013.

Leighton's gearing for the period declined to 36 percent from 47.7 percent percent at March 31, 2013.

The company lifted the interim dividend to 45 cents from 20 cents paid in the prior year. The interim dividend is 50 percent franked and will be paid on October 3, 2013.

Looking ahead to fiscal 2013, Leighton affirmed its previously-issued guidance for underlying net profit after tax in a range of A$520 million to A$600 million, excluding gains/losses from asset sales and impairments, and a gearing level within the target band of 25 percent to 35 percent by year-end.

The company expects the improvement in gearing to be driven by a solid operating performance in the second half of 2013, supported by operating cash inflows, and balance sheet initiatives. The company also said it was focusing on five fundamental areas and expects savings of about A$200 million to be realized in the year.

Habtoor Leighton Group's focus continues to be the collection of receivables and 'IPO-ready 2016' remains the target, the company added.

In Wednesday's regular trading session on the Australian Securities Exchange, LEI.AX is trading at A$16.31, down A$0.96 or 5.56 percent on a volume of 2.22 million shares.

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by RTT Staff Writer

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