SYDNEY, May 7 (Reuters) - Leighton Holdings Ltd, Australia’s biggest construction company, on Monday posted a first-quarter net profit of A$123 million and maintained its full-year guidance.
Leighton, which is controlled by Spain’s ACS, reported a loss of A$80 million in the previous corresponding quarter. The company returned to an annual profit last year after a period plagued by troubled construction projects.
Leighton said more than A$4 billion of work was awarded during the first quarter, taking total work in hand to A$42.2 billion, a net decline of A$1.3 billion from December 2012.
The company said the decline reflected both its decision to select projects with good margins rather than targeting topline growth and a softening in the overall level of contract awards in construction and contract mining.
Leighton’s fully-owned subsidiary Thiess revealed in February it was losing its contract to operate Xstrata’s Collinsville coal mine in Queensland, a loss of around A$650 million.
The company took a further hit to the order books in April when BHP Billiton decided to replace it with a smaller contractor to save costs at its Peak Downs coal mine in Queensland.
Leighton said its gearing, a measure of debt levels, jumped to 47.7 percent from 35 percent, driven by early payment of the equity in a Brisbane toll road, the company’s final dividend payment, and seasonal deterioration in working capital.
However, the company maintained its full-year forecast of underlying profit in the range of A$520 million-A$600 million, up from A$448 million in 2012, and a gearing level within its target band of 25 to 35 percent.
Chief Executive Hamish Tyrwhitt said the company was confident its ‘stabilise, rebase and grow’ strategy was working in a challenging environment.
“Throughout the remainder of the year, we will continue to build our operating model and progress net margin expansion and cash flow initiatives,” he said in a statement.
Leighton was stalled in recent years by problems with two of its major projects, the BrisConnections toll road and a desalination plant in Victoria. Along with hefty impairment charges at Middle Eastern venture Habtoor Leighton Group, the projects led to more than A$1.3 billion of losses.
Leighton agreed in March to sell around 70 percent of its telecommunications assets to Canada’s Ontario Teachers’ Pension Plan, in a deal valuing the assets at A$885 million, to cut debt.
The company has also been tarred by a public spat with some of the board and majority owner Hochtief AG.
Chairman Stephen Jones quit in March because he felt the German builder no longer supported Leighton’s independence. Company secretary Richard Willcock and two other non-executive directors have also resigned.
Hochtief, which owns 53.4 percent of Leighton, is in turn controlled by ACS by a 54 percent stake.