16/05/2008 - Australia's biggest construction company Leighton Holdings Ltd has confirmed that full-year profit will grow more than 30 per cent to a record, boosted by projects in India and the Middle East.
Leighton shares rose more than four per cent to a three-month high after the company revealed a 37 per cent increase in net operating profit to $375 million for the first nine months of fiscal 2008.
"The group's outlook remains very positive and we see an excess of opportunities," Leighton chief executive Wal King said.
"The Leighton Group has a diversified business which has great momentum and we therefore see that revenue growth for the next three years should be more than 10 per cent per annum."
King said Leighton was on track to grow full-year profit at least 30 per cent from last year's record $450 million, which represented a 63 per cent increase on the year before.
He first made the fiscal 2008 forecast at Leighton's annual general meeting in November.
The company, 54 per cent owned by German counterpart Hochtief, won contracts in Asia and Australia worth more than $2.8 billion during the March quarter.
Construction of an offshore pipeline and coal mine in India made up more than half the total.
Leighton also announced on Thursday that it had won a 1.55 billion United Arab Emirates (UAE) dirham ($A454 million) contract to build commercial, hotel and residential buildings in Dubai.
"The outlook for the company is very positive, with their projected 10 per cent revenue growth over the next three years," Macquarie Equities analyst John Purtell said.
"Their Middle East projects are ahead of plan in an area where there are a surplus of contract opportunities. Their Indian operations are probably the biggest at the moment."
Leighton has a solid foundation in the Middle East through its 45 per cent investment in UAE-based Al Habtoor, King said.
"We see enormous opportunities in the Gulf, which is undergoing an unprecedented construction boom," he said.
Leighton wrote down all of its $60 million investment in Connector Motorways, operator of Sydney's new but troubled Lane Cove Tunnel, and its $72 million holding in JF Infrastructure, including that group's stake in the tunnel operator.
Offsetting those losses, the Sydney-based company gained $150 million on the sale of the its Gulf Leighton operations to Al Habtoor.
Leighton shares closed up $2.10, or 4.14 per cent, to $52.81, the highest since February 8.
Leighton said revenue for the nine-month period rose 16 per cent to $10 billion.
Work in hand was $28.1 billion compared with the $19 billion at the corresponding point in 2007.
Leighton's result "reflects the upward momentum of work in hand and ... a well diversified portfolio," Macquarie's Purtell said.
Leighton is eyeing more than $7 billion worth of projects, including the Brisbane airport link toll road and desalination plants in Victoria and South Australia.
The company is also bidding for almost $3 billion of contracts to build military accommodation and hospitals.
King welcomed the federal government's three infrastructure funds announced in the budget on Tuesday - Building Australia, health and education - which will provide more than $40 billion for capital investment.
"Leading forecasters suggest that Australia needs to invest up to $380 billion over the next decade rebuilding major public infrastructure," King said.
He said Leighton's balance sheet remained strong with total assets of $6.4 billion and gross cash of $443 million.
Source: AAP NewsWire
