Leighton reaffirms FY guidance

Leighton Holdings has reaffirmed it is on track to deliver its guidance of underlying net profit after tax within the range of $540 million to $620m for the full year.

Addressing shareholders at the construction group's annual general meeting, chief executive Marcelino Fernández Verdes said the 2014 year had begun well after positive results for the three months to March 31, with an increase in margin and underlying net profit.

"But we will look to accelerate the pace of change which will position us for improved results in the longer term," Mr Fernández said.

"We are focused on improving margins and profitability.

"We don’t need to be the largest company in terms of revenue, but we do want to be the largest in terms of profitability and cash collection."

The meeting follows majority shareholder Hochtief's sweetened offer to lift its holding in the construction group, and after former chief executive Hamish Tyrwhitt was replaced by Mr Fernández.

Chairman Robert Humphris flagged retirement plans at the meeting, saying he was committed to overseeing an orderly transition.

"This is likely to be my last AGM," Mr Humphris said.

"I am now looking forward to scaling back on board meetings and corporate schedules."

Mr Humphris said his board colleagues who quit in March 2013 "resigned with great percipience".

He thanked deputy chairman Paula Dwyer for her support during that time, saying he and Ms Dwyer believed it was their duty to remain on the board in the interests of all shareholders.

Chairman defends Leighton's reputation

Mr Humphris defended Leighton's reputation, which has been tarnished in the past year by allegations of corruption in its international business and two class actions.

He said the corruption allegations were of deep concern, even though they had been "sensationalised" in media reports.

The allegations were reported to the Australian Federal Police by Leighton two and a half years ago, and those investigations are continuing.

One class action, relating to Leighton's significant downgrade of its financial guidance in 2011, was settled by the company on Friday.

Leighton is seeking legal rulings to end the other class action, which relates to its disclosure of the corruption allegations.

Mr Humphris said Leighton had about 53,000 employees, and therefore would have issues in its business "from time to time".

"We can't always make our people do the right thing," he said.

"Some will transgress.

"But we can set standards, then communicate and enforce them."

New chief executive to cut costs

Mr Fernández has vowed to cut costs and recover outstanding payments as parent company Hochtief takes greater control of Leighton, telling shareholders the company's new management team was conducting a complete review.

"We aim to reduce costs, recover outstanding monies and strengthen the balance sheet," he said.

A particular focus of the review is to improve efficiency in the business, Mr Fernández said.

"What we want to do is simplify and streamline the business, ensuring that we have the most appropriate and efficient structure in place to deliver our services to our clients."

Those measures are likely to involve job cuts, although no clear plans for restructuring have been announced.

Leighton has also long been weighed down by unpaid fees from clients.

The group made a net profit of $508.7m in 2013.