Leighton Holdings’ senior management is on the same message: 2010 will be a year of ‘marking time’ before growth returns in 2011.
That was the message yesterday in the 2009 annual report from chairman David Mortimer and CEO Wal King.
Both see earnings this financial year steady on the $610 million earned in 2009.
Both wrote in the company’s annual report, released yesterday that the present year will be a steadying period for the country’s biggest contractor and contract miner.
It was a repetition of the message the company revealed in its profit announcement in August.
"In summary, for the 2010 financial year the Group expects full year revenue to exceed $19bn and a net profit after tax of around $600m, subject to any further asset impairments," Mr Mortimer wrote in the annual report.
"This result would represent a similar level of operating performance to 2009 which provides a good base for the long term," he said.
"The Group’s outlook for the 2010 financial year remains solid despite the impacts of the GFC.
"While the underlying growth rates of some of the Group’s core markets will reduce in 2010, high levels of work in hand, significant spending by Governments to stimulate economic activity – both in Australia and overseas – and a resurgence of growth in China, supports a fl at operating performance in 2010 before the Group returns to growth.
"The Leighton Group has successfully weathered an extremely turbulent year brought on by the global financial crisis (GFC).
"While our profit result has been below our initial expectations, the Group’s operating performance remains solid and we have much to be proud of this year," Mr Mortimer wrote.
And Mr King told shareholders:
"The Group’s long-term outlook remains positive based on a strong competitive position in its core markets, a solid level of work in hand and a forecast rebound from the GFC.
"Substantial government spending on infrastructure – across both Australia and Asia, demand for resources fuelled by the economic growth of China, and an eventual recovery in the property market augurs well for the Group’s prospects.
"In the longer term, the Leighton Group is well positioned, after a relatively flat operating performance in 2010, to revert to growth in 2011 and beyond, and to continue to deliver positive returns to shareholders," Mr King said.
The group earned an operating profit after tax of $610m in 2009 (and a reduced profit after tax and minority interests for the year of $440m (versus $608m last year) and a fully franked final dividend of 55 cents per share.
"The profit was impacted by a reduced property development contribution and previously flagged investment impairments," Mr King wrote.
"This is the Group’s third largest profit and recorded in a period when many peer companies and other businesses have reported losses.
"Even with the investment impairments the Group earned an average return on shareholders’ funds of 23%," he added.
At June 30 in hand was $37 billion, compared with $30.3 billion at the end of the 2008 financial year and $37.5 billion at the end of calendar 2007.
The order book was boosted by the award of some $25 billion worth of new work, extensions and variations during 2008-09.
Mr Mortimer said that despite the 2009 result being impacted by a reduced property development contribution and an impairment of investment values for ConnectEast, RiverCity Motorway, BrisConnections, Devine and Macmahon to the tune of impairments of $245 million pre-tax, "the Group remains committed to taking stakes in selected infrastructure projects but on a much more risk averse basis. Future investments will be more tightly limited in terms of dollars and percentage commitments."
Leighton shares ended up 56 cents at $36.91 yesterday.
