Leighton Climbs as Infrastructure Spending Boosts Earnings

Leighton Holdings Ltd., Australia’s largest construction company, gained the most in more than five months after new infrastructure contracts helped lift profits.

Net income was A$508.7 million ($455 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 result a year earlier. Excluding one-time items, net income climbed 30 percent to A$584 million.

Leighton hopes to benefit from the Australian government’s promise of increased infrastructure spending as work on large mining and gas-export projects winds down. While the value of upcoming contracts fell 3 percent from a year earlier to A$42 billion, it grew 5 percent in the second half amid A$2 billion of new infrastructure contracts and a A$1 billion increase in property development work.

Infrastructure “creates jobs and creates economic growth,” Chief Executive Officer Hamish Tyrwhitt said in an interview today. “Infrastructure is in the nation’s interest.”

Leighton climbed 4.9 percent to A$17.21 at the close in Sydney, the biggest gain since Sept. 3. The shares have advanced 6.8 percent this year, outstripping the 1.1 percent increase in the S&P/ASX 200 index.

Finance costs increased 19 percent to A$255 million, compared with 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. That compared with a targeted range of 25 percent to 35 percent.

Net profit excluding one-time items in the 2014 fiscal year would be between A$540 million and A$620 million, Tyrwhitt said in the statement.

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