Leighton down 56% for FY09 first half

LEIGHTON Holdings today announced a 56% decrease in profits to $111 million for the first half of fiscal 2009, but chief executive officer Wal King remains upbeat about the long-term health of the engineering and construction sector.

Staff Reporter

The result comes as Leighton subsidiary Thiess announced it has won a $US1.52 billion ($A2.3 million) contract extension by PT Arutmin Indonesia for the operation of the Senakin and Satui Coal Mines in South Kalimantan, Indonesia.

PT Arutmin Indonesia is a subsidiary of the Indonesian oil, gas and coal-focused company Bumi Resources.

In releasing its results today, Leighton said the loss was due to the write-down of $239 million in investments in ConnectEast, RiverCity Motorway, BrisConnections, Devine and Macmahon, and a reduced property development contribution.

King said the group’s total revenue, including joint ventures and associates, was up 40% to $9.1 billion (compared to $6.5 billion last year).

“The group’s major markets generating revenue were infrastructure ($5.2 billion), resources ($2.5 billion), and building and property ($1.5 billion),” King said.

“The operating result ($387 million before impairments) reflected good contributions from the construction of infrastructure projects in Australia, the contract mining of iron ore and coal in Australia, and construction in the Gulf region through the 45 per cent stake in the Al Habtoor Leighton Group,” King said.

King said Leighton’s work in hand as at December 31, 2008 stood at $37.5 billion, which compares with $30.3 billion at June 30, 2008 and $26.7 billion at December 31, 2007.

“The order book was boosted by the award of some $14 billion worth of new work, extensions and variations during the period,” King said.

“The major construction projects awarded included the $4 billion Airport Link Project in Brisbane, the $721 million Royal North Shore Hospital in New South Wales, and $3.5 billion for the Dubai Pearl and $2 billion for the New Concourse 3 at the Dubai Airport in the Al Habtoor Leighton Group,” he said.

“New mining contracts or extensions were awarded at the Bayan FKP coal mine in Indonesia, and the Curragh North and Moorvale coal mines in Queensland,” he said.

“The group’s longer-term outlook remains solid, based on a record level of work in hand, a strong competitive position and a forecast rebound in the group’s core markets from the current uncertainty of the global financial crisis.

“The total engineering construction market is expected to continue growing into 2009 based on the substantial capital works programs of the various state governments and investment in mining and heavy engineering projects.

“Two consortia, including Thiess and John Holland, have been shortlisted for the design, construction, financing, operation and maintenance of Victoria’s $3 billion Desalination Plant Project,” King said.

“The longer-term outlook for commodity volumes remains positive despite a substantial reduction in prices.

“While recent cutbacks have been announced by some iron ore and coal producers, the fundamentals for long-term growth, and therefore for the group, are sound.”

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