Construction giant Leighton Holdings is counting on its diverse business interests to protect the company from the mining industry’s recent downturn, and will focus on expanding in Asia for its future sustainable growth. Leighton says the decision to put its spotlight on Asia stems from the fact it is the fastest growing region in the world and is expected to contribute around half of the global GDP by 2030.
“It is clear that we need to move our focus from an Australian-centric approach to one where we export our skills to markets where our services are valued and where we can add value,” says Leighton chief executive Hamish Tyrwhitt.
This announcement comes two weeks after mining services companies WorleyParsons and UGL both issued significant profit downgrades due to the slowdown in investment in Australia’s resources sector resulting from lower commodity prices.
Hamish Tyrwhitt says only 5% of Leighton’s revenue came from iron ore and coal contracts and he expects this ratio to continue into the future. “The benefit of the Leighton group is we have incredible diversification across geographic range and across sectors: it’s just not in mining but in company development and infrastructure.
“Leighton’s mining contracts are based upon the volumes the company moves, not on commodity prices, meaning the company can still expect to secure contracts as long as its clients are making money,” he says.
Chairman Bob Humphris says his experience in the coal industry as an engineer, miner and executive, has found that downturns sometimes benefit contractors. “I’ve been in the coal industry for 50 years and the coal price goes up and down. Sometimes there are more opportunities for contractors when the industry goes down. Companies don’t want to put the capital in and they get a bit more overburdened and they come and ask a contractor to do it.”