Leighton first-half profit slips

Construction group reaffirms underlying FY profit guidance as H1 result beats expectations.

Leighton Holdings has reaffirmed its full-year underlying profit guidance despite posting a decline in first-half profit in the construction group's first results since shareholder Hochtief took control of the company.

In the six months to June 30, Leighton posted a net profit of $291.3 million, a 20% decline on the previous corresponding period's $366.2m. However, the first-half result came in ahead of analyst expectations, which centred on a profit of $271.4m.

The results reflected a $28m hit on post-tax restructuring costs and property impairments in the current half, in contrast with a $107m benefit in the first half of 2013 from the sale of Leighton's telco assets. 

Revenue in the period was $11.05 billion, a 5% increase on the $10.52bn in the first half of 2013.

The construction group unveiled an underlying profit in the half of $319m, a 25% increase on the previous year, and said it was on track to achieve an underlying net profit after tax in the range of $540m to $620m.

The group will pay a 25%-franked interim dividend of 57c per share on October 3, to shareholders on the register at September 15.

In March, a bloody boardroom battle claimed the scalps of former Leighton chief executive and chief financial officer Hamish Tyrwhitt and Peter Gregg respectively when majority shareholder Hochtief used its proportional bid to oust the former executives.

Hochtief now holds almost 70% of Leighton’s share registry and chief executive Marcelino Fernandez Verdes serves as executive chairman after he replaced former independent chairman Robert Humphris in June.

The executive overhaul  and assault on Leighton’s share register was a long-fought victory for Spanish construction giant Grupo ACS, which controls Hochtief, as it seeks to integrate Leighton more closely into its global operations.

Leighton’s Spanish conquistadors have made no secret of their desire to sell off assets in a bid to strengthen the group’s balance. Leighton previously announced a strategic review its John Holland, and Services businesses, while only a month ago the group announced its intention to sell its 50.6% stake in Queensland-based residential property developer Devine. A spokesperson fro Leighton told Business Spectator there were no material updates on either review to report as yet.

Mr Fernández Verdes said the group was benefiting from Australian state and federal government's increasing focus on infrastructure.

"We are already seeing the positive impact of the federal government's infrastructure initiatives, with our 12-month tender pipeline approximately 33% higher than the equivalent pipeline at the time of the fiscal 2013 result, and, looking further ahead, we have under preparation the largest pipeline of $1 billion-plus tenders in Leighton's history," he said.

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