Australian construction giant Leighton Holdings has hailed what it says is a great comeback after several years of disappointing performance, delivering a more than tripling of profits and a more than doubling of margins in the second quarter compared with the previous corresponding period last year.
In its latest announcement, the company says it booked a net profit after tax (NPAT) for the six months to June of $366 million – up 218 percent from the same period in 2012 ($115 million).
Underlying profit, meanwhile, more than doubled from $115 million to $255.3 million whilst underlying net profit margins rose from 1.0 percent to 2.2 percent.
Leighton’s turnaround follows several years of turbulence within the company.
Over recent years, it suffered heavy losses amid write-downs on major projects such as the Brisbane Airport Link and the Victorian Desalination Plant as well as persistent troubles with its Middle Eastern joint venture.
In addition, the company suffered a walk-out of independent directors earlier this year amid complaints about interference in the company’s governance from controlling shareholder Hochtief and its parent, Spanish construction giant ACS.
Company Chief Executive Officer Hamish Tyrwhitt welcomed the latest result, saying the group’s diversity has seen it through a difficult period.
“The higher revenue, margin and net profit achieved during the first half shows the clear turnaround of our business” Tyrwhitt says.
“There are still challenges within our business. However, for each challenge we have a clear pathway to resolution and we are making good progress."
Leighton says its transition is progressing well. The company says it has hived off more than 70 percent of its telecommunications assets and focused on securing quality work and that its Middle Eastern joint venture is now at least breaking even – albeit with the overall value of work on hand slipping five percent to $40.1 billion and gearing of 36 percent remaining above its 25-35 percent target.
Tyrwhitt says the Group is undertaking a number of initiatives which will improve efficiency and deliver savings of $200 million per annum, including reducing working capital, implementing greater centralisation and group-wide focus in purchasing, business support services and vehicle fleet management and ensuring the optimal management structure for each addressable market.
The group says it is on track to deliver full year NPAT in calendar 2012/13 and is looking to capitalise on long term opportunities in Asia.
“Once the rebase phase of our strategy is complete, Leighton will be well positioned for our next phase of growth” Tyrwhitt says.
“The Asia region is projected to experience significant economic expansion over the coming years. This expansion will require considerable infrastructure investment. With 38 years’ experience in Asia we are well positioned, geographically and operationally, in what will be one of the key growth markets of the world during the next 50 years.”