Hochtief forecasts outperformance
By Helen Wright14 February 2011
Hochtief said it expects to exceed its 2010 targets "comfortably", reassuring the market after its Australian subsidiary Leighton reported a -25% drop in earnings for the six months to 31 December.
Hochtief said it expected consolidated net profit, sales, new orders and order backlog for 2010 to be "well above the prior-year figures despite the adverse effects on the profits at Leighton". The German contractor did not include figures in its statement.
Leighton said ongoing difficult conditions in the Middle East construction market and Australian property markets had contributed to the AU$ -72 million (US$ -72 million) drop in profits to AU$ 217 million (US$ 218 million) for last six months of 2010.
Chief executive David Stewart said that the result had also been overshadowed by difficult weather conditions in Australia, which halted construction works on major projects. The company estimated that the flooding in Queensland would cost it AUS$ 100 million (US$ 100 million) for the full year.
"While the result was disappointing, we are unable to control weather conditions and have approached our challenges in a proactive manner. Work in hand has grown to record levels and demand for our construction, mining and operating and maintenance services continues to grow," said Mr Stewart.
Leighton's work in hand grew +10% in the six-month period to AU$ 45,6 billion (US$ 45,7 billion).
The company also provided some commentary on the takeover of its parent by Spanish contractor Actividades des Construcción y Servicios (ACS).
On 3 February, ACS announced that it had secured 33,5% of the issued shares in Hochtief at the close of its takeover offer, and intended to build a majority stake in the group in the coming months.
"Leighton considers ACS may shortly be in a position to affect the management direction of Hochtief, including potentially Hochtief's majority shareholding in Leighton," the company said.
Both Hochtief and Leighton have fought for the group's current governance arrangements to remain in place, and ACS pledged during the offer period to ensure that existing governance arrangements would continue after it gained control of the group.
"The independent directors of Leighton expect the current arrangements with Hochtief to continue and believe this is well understood by the market. They also believe that the ACS undertakings will result in a continuation of such arrangements," Leighton said.
The statement came after Hochtief CEO Herbert Luetkestratkoettertold WAZ media group on 4 February that he envisaged remaining at the helm of the company in spite of the ACS takeover.