Asset sales by the new management of construction giant Leighton have boosted annual profit and offset lower earnings from its mining operations.
The Spanish-owned company's net profit rose 33 per cent in 2014 to $676.5 million, after realising pre-tax gains of almost $1 billion from the sale of John Holland and a 50 per cent stake in Thiess Services and Leighton Contractors.
When one-off items including those sales are excluded, underlying profit rose six per cent to $620 million, as earnings from construction work rose but mining operations were impacted by cost cutting across the industry as commodity prices plunged.
Leighton said its contract mining division was experiencing challenging times, and no significant improvement is expected over the coming two years.
"The momentum shift from resources to infrastructure construction in Australia may soften revenue in the short term," the company said.
It expects infrastructure construction to become Australia's most important source of economic growth in the coming five years, due to large transport projects in the eastern states and the federal government's stated focus on infrastructure.
Leighton's overseas operations, primarily in the Middle East and Asia, are also expected to grow. The company has forecast a net profit of between $450 million and $520 million in 2015.
Since parent company Hochtief increased its stake in Leighton to almost 70 per cent in mid-2014, it has been looking to cut costs and improve its balance sheet, and that helped deliver a three per cent fall in expenses in 2014.
Cost saving measures, such as the reduction of management layers and bureaucracy, will continue in 2015, it said.
LEIGHTON'S RESTRUCTURE BOOSTS BOTTOM LINE
- Net profit of $676.5m, up 33 pct from $508.7m in 2013
- Revenue of $18.4b, up four per cent from $17.8b
- Final dividend of 68 cents per share, up from 60 cents