Currencies and AirportLink delays hit Leighton profits
By Chris Sleight02 November 2010
Leighton says delays on the AU$ 4 billion Brisbane AirportLink project and currency fluctuations will take AU$ 85 million (US$ 84 million) off its profits for the quarter to the end of September. The company says it expects post-tax profits for the period to come in at AU$ 47 million (US$ 47 million).
AirportLink is a 6.5 km public-private partnership (PPP) road project between Brisbane, Australia's central business district and the city's east-west arterial road, which leads to the airport. It is a complex scheme, with some 5.7 km of the road being built in twin-tunnels. Leighton's subsidiaries Thiess and John Holland are the contracting partners in the construction and operation consortium, which also includes infrastructure investor Macquarie Group.
Commenting on the current difficulties, Leighton Holdings CEO Wal King said, "We have encountered access and engineering difficulties that have delayed the works and increased the projected costs at completion. The problems encountered have contributed to a write-back in the forecast financial outcome of that project."
Mr King also added that the strengthening of the Australian Dollar was having an adverse effect on profits. "Around 20% to 25% of our income is earned overseas and most of this is denominated in - or linked to - the US Dollar, so the rise in the value of the Australian Dollar since June of approximately +1% has impacted our results," he said.
The company is hoping to claw back some profits in the quarter with the sale of a 35% stake in its Indian operations to an unnamed strategic local partner. "The expected profit from the sale will more than offset the operational issues experienced during the quarter and allow the company to report a full year profit in line with market expectations," said Mr King.