Leighton Holdings Ltd. (LEI), Australia’s largest construction company, slumped by the most in almost a year after cutting its 2012 profit forecast, citing increased costs due to wet weather and lower-than-expected productivity.
Leighton’s shares plunged 6.7 percent to A$22.16 at the 4:10 p.m. close of trading in Sydney, the biggest drop since April 14, and the second-largest decline on the benchmark S&P/ASX 200 index.
The Sydney-based company’s underlying profit in the year ending Dec. 31 will be between A$400 million ($416 million) and A$450 million, it said in a statement to the Australian stock exchange today. The forecast is down from the A$600 million to A$650 million range the Sydney-based company provided in January.
The cuts are due to “very frustrating” issues with Leighton’s Brisbane Airport Link and a Victorian desalination project, the company’s Chief Executive Officer Hamish Tyrwhitt said in the statement.
“Wet weather in Brisbane, productivity below expectations at both sites combined with the complexity of the commissioning of the integrated systems at Airport Link have seen an unanticipated increase in forecast costs,” Tyrwhitt said.
Leighton’s German parent Hochtief AG (HOT) also cut its net income forecast to just under 180 million euros ($240 million) in the year ending Dec. 31, from a previous expectation for net income of close to 288 million euros.
The company reiterated its expectations for new orders, order backlog and sales in a statement. Hochtief shares fell 3.2 percent to 48.655 euros at the close of trading in Frankfurt yesterday.
Leighton’s net income after tax excluding capital gains and impairments will be A$100 million to A$150 million in the six months ending June 30, it said. Airport Link will see a deterioration of A$148 million before tax, and the desalination project A$106 million, according to the statement.
Leighton last month reported a profit of A$340 million for the six months ended Dec. 31. Hochtief, controlled by ACS Actividades de Construccion & Servicios SA, had a loss of 160 million euros in 2011 and canceled its dividend, partly due to additional charges at Leighton.
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