HOCHTIEF Asia Pacific Division
- 2008 another successful year for Leighton*
- Writedown on listed holdings
- Order backlog increased
- First 6 Star Green Star rating for green building
HOCHTIEF has a presence in the Australian and Asian markets as well as the Gulf states due to its majority interest in the Leighton Group. HOCHTIEF Asia Pacific impressed again in 2008 with strong performance and new orders totaling EUR 12.65 billion. Contributing in particular to the positive performance were the activities in the Gulf states, where the Al Habtoor Leighton Group does business. Leighton holds a 45 percent interest in the company.
The financial crisis led to delays in major planned projects in the Gulf region, among them Trump Tower in Dubai, a project awarded to the Al Habtoor Leighton Group that has been delayed until further notice. However, jobs at the company have not been affected to date thanks to the continued robust order backlog at Al Habtoor Leighton and the award of new projects, among them the expansion of Dubai Airport. However, payment patterns have deteriorated, particularly in Dubai.
Weaker demand for raw materials – especially from China – resulted in the first production cuts, and even mine closures in Australia. However, this has only marginally impacted on Leighton's activities, since the mine closures have affected mines that extract different minerals or those with higher production costs than Leighton's.
HOCHTIEF participates in new stock offering
In August 2008, Leighton Holdings issued new stock in the amount of EUR 410 million. HOCHTIEF invested in proportion to its prior ownership interest in the company, purchasing shares in the amount of nearly EUR 226 million. We thus continue to be Leighton's biggest shareholder with a stake of approximately 55 percent. The stock issue serves mainly to finance Leighton's growing contract mining business in Australia and Indonesia, a business segment featuring long-term contracts.Writedowns on listed commitments
In the fourth quarter, Leighton wrote down its interests in listed companies. This affected three concession companies for toll roads and two other holdings. The impairment losses were recognized against the backdrop of a marked decline in stock prices primarily of listed Group companies involved in concessions projects due to the financial crisis.These include projects launched in recent years by the Australian government with private partners to improve transportation infrastructure. Some of these projects also involve Leighton. However, the business prospects of these ventures, some of which are still under construction, have not changed and therefore the stock prices at yearend did not reflect the true value of the infrastructure projects. We do not consider the original value of these holdings to be impaired. Nonetheless Leighton decided to take this step as a precaution. Further writedowns cannot be ruled out, depending on the performance of the stock markets.
Successful first year for newly acquired companies
The companies newly acquired or established in 2007 and 2008 were successfully integrated into the Leighton Group in 2008. In contract mining, this included Marshalls, in the telecommunications sector, Silk.The acquisition of a 40 percent stake in leading Australian project developer Devine Limited in 2007 ensured Leighton's strategic positioning in the residential construction market and a stronger presence in the project development market. Devine is working with Leighton Properties to build a mixed-use property valued at around EUR 200 million in Brisbane. A second joint project involves developing a residential building in Townsville with a total of 1,800 residential units for an aggregate value of EUR 500 million.
The interest in mining services provider Macmahon is developing well: Several projects to be carried out in joint ventures are in the pipeline. Furthermore, the prospects are good for more joint projects in Australia and Asia.
