War is over, Leighton's boss declares
New Leighton Holdings chairman Bob Humphris has moved to dispel fears that its directors remain at war with its German parent Hochtief, insisting the relationship was "collegiate" despite the abrupt resignation of three fellow directors two months ago.
And Leighton, the country's largest construction company, bucked the recent spate of contractors downgrading their profit guidance amid waning mining investment levels. But it said it would shift its focus away from slowing home markets and into Asia to sustain its growth.
The company maintained its full-year net profit guidance of between $520 million and $600 million.
Stepping into the breach to chair the company's annual meeting in Sydney on Monday, Mr Humphris oversaw proceedings that saw the formal election of Grupo ACS stalwart and Hochtief chief executive Marcelino Fernandez Verdes to Leighton's board, despite a 14 per cent protest vote.
ACS wrested control of Hochtief - and therefore Leighton - after a protracted hostile takeover last year.
Proxy advisers ISS Governance and Ownership Matters had urged shareholders to vote against the election of Mr Fernandez Verdes over independence concerns before the meeting.
"I can work with Marcelino," Mr Humphris said after the meeting in Sydney on Monday. "We are similar ... we are both stubborn. We just have to work through these issues."
The introduction of Mr Fernandez Verdes, who ousted Frank Stieler as Hochtief chief and took his place on Leighton's board in Australia, helped contribute to the tension that precipitated the breakdown in relationships with, and the subsequent departures of, former chairman Stephen Johns and independent directors Wayne Osborn and Ian Macfarlane in March.
The three experienced company directors resigned in protest at what they considered to be undue interference in the independent operation of Leighton's board when Hochtief, via Mr Fernandez Verdes, knocked back their nominated pick for an independent director vacancy.
"I guess we were surprised, shaken and shocked," Mr Humphris said of the directors' decision to walk out. "And the knee-jerk reaction was one of support."
Mr Humphris and his deputy, Paula Dwyer, both voiced their concern at the time, but decided to stay on. "Both Paula and I interpreted the relevant events differently," he said. "[We] believed that it was in the best interests of all shareholders for us to stay on and support the company."
The affirmation of profit guidance by Leighton in what it conceded was a "challenging macro-economic environment" was well received by investors, pushing the company's share price up 66¢, or 3.7 per cent, to $18.67.
Fellow Australian global contractors WorleyParsons and UGL were both forced into significant profit downgrades last week on the back of their underperforming domestic businesses, and have both signalled scaling back their local operations and focusing their growth elsewhere.
Leighton chief executive Hamish Tyrwhitt said diversity of projects meant Leighton had relatively small exposure to coal and iron ore projects.