It reported a net cash inflow of $1.2 billion and a gross pre-tax profit was $973 million.
The result wasn’t all down to asset sales. Earnings before income tax were $1.4 billion, a 38% increase from 2013, driven by solid project performances and overhead efficiencies from revenue of $24 billion, broadly in line with 2013.
EBIT from continuing operations, before its new $675 million contract debtors’ provision, was $824 million, a 35% increase from 2013, while $1.4 billion of cash was generated from operating activities in 2014, a 26% improvement on 2013.
Executive chairman Marcelino Fernandez Verdes, who has overseen Leighton’s transformation since the new management team was installed last year, said the company had produced a sustainable reduction in overheads and de-risked the balance sheet.
“Our restructuring activities will be ongoing in 2015 with further improvements to our margin expansion initiatives to be delivered,” he said.
“Our underlying business remains solid as evidenced by a 4% increase in revenue from continuing operations versus 2013, underpinned by a strong performance in construction where revenue increased by 10%.”
Overall trade and other receivables have been reduced by $1.6 billion since December 2013.
Work in hand from continuing operations was over $30 billion at the end of 2014, with a move away from resources to infrastructure development in Australia underway.
The firm said the domestic construction market outlook will be the most important source of growth over the next five years in Australia, underpinned by large urban passenger transport projects in the eastern states, however the picture for resources is less rosy.
While the Australian mining sector helped to drive the resources boom of the past decade and had substantially increased production capacity and export volumes the recent pressure on commodity prices meant the sector was now focused on the production efficiencies.
Leighton’s work as a contract miner is primarily linked to production, and it is now focused on improving efficiency and productivity, with a recovery in resources possible in 2016-17 due to a combination of a weaker Australian dollar and strengthening commodity prices.
“The group continues to see its strongest pipeline of tenders with individual values of over $1 billion, reflecting the expected beneficial impact of the federal government’s infrastructure initiatives,” Fernandez Verdes said.
“Our markets are continuing to offer an exciting range of new project opportunities, particularly as governments in Australia and Asia roll out initiatives to address significant infrastructure deficits, and the group has a substantial pipeline of tenders under preparation.”
Leighton expects to report a net profit after tax between $450 million and $520 million in 2015.
“The forecast range is driven by substantial improvement in margins, from improved project delivery, continuation of the current cost saving program and reduced finance costs from the deleveraging of the balance sheet,” Fernandez Verdes said.
The group has decided to pay a 53 cent franked dividend plus a further 15c special dividend recognising its divestments.
That should deliver a hefty payday to Spain’s Grupo ACS, which owns 70% of Leighton.