Sydney: Australia’s biggest building contractor, Leighton Holdings, unveiled a profit warning and plans to sell part of its Indian business on Tuesday, sending its shares down by 10%.
Leighton, whose German parent Hochtief is fending off a takeover bid from Spanish builder ACS, announced the impending sale of 35% of its India business in the context of wanting to make up for a quarterly profit stumble.
It said in a statement, which appeared as investors were distracted by a local interest-rate decision, said cost blowouts at an Australian airport project and a strong local dollar had contributed to hurt September-quarter earnings.
The company said after-tax operating profits for the year to end-June 2011 would come in at around A$510 million ($504 million), short of market expectations for around A$664 million -- unless Leighton can sell the stake in its Indian business.
“Negotiations for the sale of a stake in the group’s Indian business are also expected to be finalised in the next few weeks which should allow the company to report a full year profit result in line with market expectations,” Leighton said.
Operating profits had also been hurt by a separate recent profit warning from one of Leighton’s listed affiliates, mining services firm MacMahon Holdings, Leighton said.
The firm did not specify the gain expected on the impending sale of the India stake, but said this would more than offset the combined A$85 million hit to earnings in the September quarter.
The Indian business accounted for just 2.4% of the group’s operating revenues in 2009/10.
“Details of the terms, including the profit, will be released when the Indian sale is completed,” Leighton said.