Leighton Holdings Ltd. (LEI), Australia’s largest construction company, rose the most in four months after reiterating its profit forecast and announcing plans to restructure a Middle East venture.
The builder, controlled by Hochtief AG (HOT) which is in turn controlled by ACS Actividades de Construccion y Servicios SA, climbed 3.8 percent, the biggest gain since Jan. 17, to A$17.94 at the close in Sydney.
Leighton stuck by its forecast for profit of A$400 million ($396 million) to A$450 million this year as construction demand in Australia and Asia withstands the European financial crisis hitting the markets in which Hochtief and ACS are dominant.
“Hochtief and ACS need Leighton’s dividends as much as anyone else,” Dean Paatsch, co-founder of shareholder advisory group Ownership Matters, said by phone from Melbourne before the announcement. “It’s nice to have a controlling shareholder who’s got aligned incentives.”
The company also said it plans to divide Middle East venture Al Habtoor Leighton Group into two, with one company focusing on ongoing projects and the other chasing debts. The company plans to have the ongoing business “IPO ready” by 2016, he said, without saying whether it will hold a share sale.
Chairman Stephen Johns said weakness in the European economy would not affect the Australian company directly.
“Our operations in Australia are completely quarantined from Europe,” he told media after the company’s annual shareholder meeting in Sydney today.
“Whilst obviously Europe is going to effect the whole world economy, the world financial systems, and our own share markets, we do not have operations there.”
Leighton also intends to increase cooperation between its operating units in Australia and to ensure they focus more on their main businesses.
The company is working to improve the businesses after delays and cost overruns at a Brisbane Airport road and a desalination plant in Victoria state caused the company to reduce its profit guidance by A$254 million in March.
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