Construction giant Leighton Holdings Limited (ASX: LEI) announced overnight that its 45% owned associate Habtoor Leighton Group had been awarded a contract valued at US$300 million for energy infrastructure development work in Qatar. Leighton has been though some turbulent times recently with a new chief executive appointing new managing directors across the business. This as new majority owner, Hochtief, implements its control over the business.
The boardroom battles followed allegations of corporate malpractice and previous forays into the Middle East which delivered poor returns. The new boss has vowed to cut costs, strengthen the balance sheet and improve project delivery. A recently released strategic update also largely focused on the the quest to improve cash profit through reducing management layers and cutting bureaucracy. The group has targeted March 2015 as the time by which it expects to see the results of these initiatives.
As Australia's dominant provider of large scale construction and infrastructure projects some pegged Leighton as a potential beneficiary of the new federal government's infrastructure spending plans. However, with the chopping and changing amongst senior management, Leighton's ability to capitalise on a new wave of infrastructure spending is far from guaranteed.
Leighton is forecasting net profit in the region of $540 million to $620 million in 2014 as margin expansion initiatives already implemented take effect. As at Q1 2014 gearing was reported at 39%, a level the company blamed on seasonal working capital requirements. The business is forecast to grow earnings per share and dividends out to 2016 and the new management's evident determination to implement change and improve margins may bode well for the future. It's not the only business with an improving outlook though, in fact the below company has been building…
