Leighton Trims Debts as Underlying Profit Rises

   By Rhiannon Hoyle 
 

SYDNEY--Leighton Holdings Ltd. (LEI.AU), Australia's biggest construction company, signaled further progress in reducing its debt pile as it targeted contract wins in Australia where state governments are spending big on new roads and rail lines.

Sydney-based Leighton has been working to rebuild its balance sheet and bolster its flagging share price after taking a hit in recent years from problematic infrastructure projects and the global financial crisis. It has been sharpening its focus on major construction contracts such as airports and Asian casinos as global mining sector investment slows.

On Thursday, the company reported an unaudited net profit of 430.2 million Australian dollars (US$377.5 million) for the nine months through September, down 3% on a year earlier when profits were bolstered by the sale of a majority stake in its telecommunications assets. Underlying net profit for the period rose 21% to A$470.0 million, it said, as the company cut capital expenditure and widened its margins.

Leighton, controlled by Germany's Hochtief AG (HOT.XE), said it had reduced net debt to A$949.8 million at Sept. 30 from A$1.49 billion a year ago.

"Looking at the balance sheet and cash flow, it is very pleasing to note that gearing has continued its positive trend this year," falling to 33.7% in September from 39.4% the year earlier, said Chief Executive Marcelino Fernandez Verdes. Gearing reflects the company's debts relative to equity.

"The net debt reduction was driven by operating cash in-flow, reduced capital expenditure and the collection of receivables, with payables remaining stable," he said in a stock-exchange filing.

Leighton said government and private-sector investment in Australian infrastructure was helping prop up its project pipeline, having secured contracts on a rail development in Australia's New South Wales state and a prison in neighboring Victoria. Work-in-hand was A$37.7 billion at the end of September, flat on three months earlier, it said.

Write to Rhiannon Hoyle at [e-mail]

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