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With an expected upturn in infrastructure projects, Leighton Holdings
chief executive Wal King said his company was now more intent on keeping a lid
on construction costs rather than looking for new contracts.
Leighton's work-in-hand is at a record $9.3 billion, with an additional $1.5
billion to $2 billion of work in the pipeline.
Mr King said Leighton was wary of the potential cost blowouts that could
occur with the expected boom in non-residential construction, particularly with
expected building material price rises and skilled labour shortages.
``Growth in terms of volume is not an issue for us in the next two or three
years, we just need to ensure that profitability follows.
``We don't want to increase our capacity all that much. From a volume
perspective we're very much on a growth trajectory anyway," Mr King said.
At its general meeting yesterday, Leighton reported an unaudited net profit
of $34.7 million for the first quarter on revenues of $1.4 billion, with Mr King
tipping revenues for the group to rise 15 per cent to $6 billion over 2002-03.
With the profit largely in line with expectations, analysts expect Leighton
to post a full-year net profit between $190 million and $200 million, compared
to $169 million in 2001-02.
But with the profits from the large-scale infrastructure contracts Leighton
has recently signed such as the AMC smelter and North-West Shelf liquefied gas
project not expected to start flowing for several months, Mr King said: ``The
year we'll be thinking about is 2003-04."
Mr King said he expected if the due diligence goes well Leighton subsidiary
John Holland would acquire the Walter Construction Group from Germany's Walter
Bau AG by January 1.
He said Holland would pay ``a fraction" of the $100 million asking price
that has been reported, with analysts pricing the business between $10 million
and $20 million.
The acquisition will add $850 million or some two months worth of
work-in-hand to Leighton's books.
Leighton also reaffirmed its commitment to its 20 per cent stake in the
troubled $850 million NextGen network, even expressing its hopes the investment
might post a return within three years. After writing down its stake to $47
million and outlaying $58 million in loans for the network, Leighton said it
would conduct another review of NextGen in December and June next year.
``The position that we're following is to support NextGen, that the cable
will be finished next year. If it does get substantial traffic [when completed],
obviously people will want to buy our shares. If it doesn't get substantial
traffic, well, that's another issue.
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