Leighton Q1 Net Profit Rises, Australia

Leighton announced Net Profit after Tax of $123 million for the first quarter of financial year 2013, compared to a loss of $80 million in the prior comparable period. Revenue was $5.4 billion, compared to $5.1 billion in the prior comparable period.

Chief Executive Officer, Mr Hamish Tyrwhitt, said that it was pleasing to report a rise in NPAT margin in quarter one, to 2.3 per cent compared to the full year 2012 margin of 1.9 per cent.

“This result reflects the advantages of the Group’s diverse business portfolio, benefitting from both our geographic spread and the range of sectors in which we operate. It was delivered against the backdrop of a challenging macroeconomic environment especially in contract mining and some adverse weather conditions in Queensland and Western Australia,” Mr Tyrwhitt said.

“Our work in hand was $42.2 billion, with over $4 billion of work awarded during the period. We are not targeting top-line growth, rather we are onboarding projects with good margins as demonstrated by a closing project margin-in-hand of over 10 per cent. The net decline of $1.3 billion from December 2012 reflects this discipline but also indicates a softening in the overall level of contract awards in construction and contract mining.

“During the quarter, we continued our capital recycling initiatives by reaching agreement for the sale of our telecommunication infrastructure assets. The sale will unlock an enterprise value of around $885 million and, through retaining a 30 per cent share in the joint venture, we will continue to have ongoing exposure to this sector,” Mr Tyrwhitt said.

The Group’s gearing increased from 35.0 per cent to 47.7 per cent in the quarter, driven by the early payment of the equity in BrisConnections and the scheduled final dividend payment, each of $200 million, together with seasonal deterioration in working capital. It also reflects an increased level of net project underclaims from both scope growth and contract variations.

Mr Tyrwhitt said, “Management of underclaims was noted as a key focus at the time of our 2012 results. Importantly, we have detailed plans in place to reduce these underclaims and expect resolution on a number of the claims during the remainder of the year.

“Notwithstanding current market conditions, we remain on track to deliver a full year underlying NPAT within our previous guidance range of $520 to $600 million and a gearing level within the target band of 25 to 35 per cent by year-end.

“The importance of our ‘stabilise, rebase and grow’ strategy in today’s challenging environment is self-evident. Throughout the remainder of the year, we will continue to rebuild our operating model and progress net margin expansion and cash flow initiatives, in order to realise further improvements in 2014 and beyond. Rebased, we will have the right platform to leverage longterm growth domestically and internationally and to deliver sustainable returns to our shareholders,” Mr Tyrwhitt concluded.

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LNG World News Staff, May 7, 2013; Image: Leighton