Leighton HY14 net margin Up to 2.7%

By Joseph R. Fonseca
Monday, July 28, 2014
The Leighton Group reported an increase in total revenue

 

Leighton Holdings announced its results for the six months to 30 June 2014.
 

* Total revenue of $11.9 billion, up on HY13
* EBITDAiii of $843 million. Comparable EBITDAiv of $945 million, up on HY13
* NPAT of $291 million. Underlying NPAT of $319 million, up on HY13
* Net margin (UNPAT to total revenue) of 2.7%, an absolute increase of 0.5% on HY13
* Gearing of 37.1%. Comparable gearing of 36.5%, improved from June 2013
* New contracts, extensions and variationsvii of $7.8 billion and a strong pipeline:

   - Preferred bidder positions of $5 billion
   - 12 month tender pipeline 33% higher than at the FY13 result
   - Largest ever pipeline of tenders greater than $1 billionviii under preparation
* Interim dividend of 57 cents per share, 25% franked, an increase of 27% on HY13.

The Leighton Group reported an increase in total revenue during HY14 of 3% on HY13, driven primarily by growth in construction work, which rose 5% to $7.7 billion.

Executive Chairman and Chief Executive Officer Marcelino Fernández Verdes said: “I’m pleased to report the Leighton Group net margin again expanded during the period, continuing a steady improvement from 1.0% in HY12 to 2.7% in HY14. We expect to further increase net margin as we simplify the structure of the Group.”

The Group’s focus on capital management and the redeployment of mining fleet resulted in a reduction in capital expenditure of 22%.Comparable gearing was 36.5% at 30 June 2014, an improvement from 44.7% at 30 June 2013.

Mr Fernández Verdes said: “Reducing working capital remains a focus. We are improving the approach to working capital management on new projects and seeking to strengthen the balance sheet through the options we are considering as part of the Strategic Review.”

The Group maintained its strong market share during the period, securing $7.8 billion of new contracts, extensions and variations, and it has preferred bidder position on $5 billion in contracts, compared to $3 billion in June 2013.

Mr Fernández Verdes said: “Some $125 billion in new infrastructure project spending is expected by the end of the decade in Australia, including Federal Government commitments and the private and State investment that is expected to follow. Similarly, in our markets in Asia and the Middle East, governments continue spending on infrastructure. This expenditure will be underpinned by the emergence of new, more attractive PPP models, in which we will seek to take on roles as an equity participant, contractor and asset manager.

“We are already seeing the positive impact of the Federal Government’s infrastructure initiatives, with our 12 month tender pipeline approximately 33% higher than the equivalent pipeline at the time of the FY13 result, and, looking further ahead, we have under preparation the largest pipeline of $1 billion-plus tenders in Leighton’s history.

 

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