Shares in Leighton Holdings defied the broader market sell-off yesterday and rose after the company said it would be back in the black soon.
The shares jumped more than 4% to a day’s high of $23.98 before settling back and closing up 68c at $23.55, a rise of 2.9%.
That was in a market that fell a sharp 1.3% yesterday.
The company told the ASX in its third quarter report that despite the previously announced write downs and losses it expected to return to profit in 2012.
"Looking forward, the Leighton Group is in solid shape with most of our major markets – particularly Australian infrastructure and resources, and the bulk of Asia – proving very attractive. At the end of March, work in hand stood at a record $46 billion which has a strong level of embedded profitability," said CEO Mr David Stewart.
"Since December 2010, the Leighton Group been awarded an additional $4.6bn in new work and currently there are approximately $4bn in contracts where the Group is in a preferred position. Leighton also has over $7bn worth of projects that are highly likely to be awarded in the next 12 months.
"We expect to return to profitability in 2011/12 and are currently forecasting to report a profit after tax in the range of $600 – $650 million," Mr Stewart forecast.
"The outlook for infrastructure spending in Australia remains positive with growth expected in transport and utilities during 2011 and 2012.
"Spending on transport infrastructure is forecast to grow through to 2012 with particularly large increases expected in rail and ports.
"Calendar 2011 is expected to see strong growth in demand for iron ore and coking coal, underpinning prospects for contract mining.
"Thermal coal production in Australia is forecast to rise sharply in 2011, boosted by the completion of new mines, expanded port capacity in NSW and strong increases in demand from China and India.
"The strength of commodity demand and prices has driven a surge in construction, particularly in LNG and coal seam methane where our companies are currently helping to construct the Gorgon, Devil Creek and Curtis Island projects, and have been working on the Pluto project.
"This boom in resources related construction is expected to continue throughout 2011 and beyond," Mr Stewart said in yesterday’s statement.
Leighton, majority-owned by Germany’s Hochtief, reported a net loss of $382 million for the nine months to March 31, down from a profit of $400 million a year earlier.
The result includes an expected loss on its Airport Link road project in Brisbane, a tiny profit on its Victorian desalination project and operating losses for Habtoor Leighton Group in Dubai.
The company reiterated it expects a full-year loss of $427 million.
Leighton also said Hochtief has appointed its new chief executive Frank Stieler to the board of Leighton as a non-executive director, replacing Hochtief’s former chief, Herbert Lutkestratkotter.
Contrary to media speculation, former high profile CEO Wal King was not named to the board. Newspaper reports and broking rumours had claimed Hochtief’s new big shareholder, Spanish construction group ACS, wanted to put King, who retired in January after 23 years, on the Leighton board.
Mr Stewart added, "The Company is not planning to pay a final dividend but we do expect to return to paying a dividend in the 2012 financial year, reflecting our positive view of the outlook".
