Feb. 20 (Bloomberg) --Leighton Holdings Ltd. (LEI), Australia’s largest construction company, posted annual earnings that missed analyst estimates as rising interest payments ate away the benefits from improving cost control.
Net income was A$508.7 million ($457.7 million) in the year ended Dec. 31, the Sydney-based company said in a regulatory statement today. That’s a 13 percent increase from the A$450.1 million profit a year earlier, and missed the A$559 million average of six analyst estimates compiled by Bloomberg.
Leighton hopes to benefit from the Australian government’s promise of increased infrastructure spending as work on large mining and gas-export projects such as Chevron Corp.’s Gorgon natural gas development winds down. The value of upcoming contracts, or work in hand, fell 3 percent to A$42.2 billion at Dec. 31, Leighton said.
Leighton was facing “tough macroeconomic conditions” Chief Executive Officer Hamish Tyrwhitt said in the statement. The company would be resilient thanks to its “diversification by brand, sector, geography, client, contract type and contract size,” he said.
Finance costs increased 19 percent to A$255 million, compared to the 8.3 percent improvement in revenue to A$22.6 billion. Leighton’s gearing, which rose to a higher-than-expected level in November, was 29 percent at the end of the financial year, according to the statement.
Leighton shares closed at A$16.41 in Sydney yesterday, marking a 1.9 percent rise so far this year that’s outstripped the 1.1 percent improvement in the S&P/ASX 200 index.
Net profit in the 2014 fiscal year would be in a range of A$540 million to A$620 million, Tyrwhitt said in the statement.
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