Leighton's Half Year Profit Falls 25 Pct To $218M

SYDNEY (AP) - Profits at construction and mining giant Leighton Holdings Ltd. fell 25 percent to 218 million Australian dollars ($218 million) in the second half of 2010 due to floods, a strong currency and wet weather in Indonesia that also will undermine its full year result, the company said Monday.

The result was down from AU$289 million for the same six months in 2009, despite revenue growing by 5 percent to AU$7.37 billion, the Sydney-based company said in a statement.

The world's largest contract miner forecast its profit for the full fiscal year ending June 30, 2011, would fall more than 20 percent below the previous year's record AU$612 million to "around AU$480 million."

Leighton, Australia's largest construction company, said cost overruns on its troubled AU$4.8 billion Airport Link road tunnel development in the Queensland state capital Brisbane as well as heavy rain in that resource-rich state and Indonesia had contributed to the half-year result.

Almost three-quarters of Queensland has since been declared a disaster area due to record flooding and a major cyclone that have disrupted Australia's coal exports.

Leighton's Middle East construction business continued to suffer during the six months from the global economic downturn, as had the Australian property market, the company said.

Leighton had written off AU$100 million from its 45 percent stake in the Gulf-based Al Habtoor Leighton Group, due to the lack of new work and losses on pre-acquisition projects.

Leighton chief executive David Stewart, who replaced Wal King on Feb. 1, said the result was disappointing, but the company had a record amount of work in hand.

Stewart said he was conducting a strategic review of some of Leighton's investments.

He had frozen discretionary spending and was seeking to cut overhead to return margins to "the sort of return on equity we have traditionally earned."

"We are bringing a rigorous approach to the existing and any new businesses and are focused on reducing costs and increasing margins so as to return Leighton to its historic performance levels," he said in a statement.

Leighton shares fell almost 2 percent in early trading after the announcement, but rebounded to end Monday almost 1 percent higher at AU$30.97.