Leighton Holdings — a leading international contractor in telecommunications, engineering and infrastructure, building and property, mining and resources industries — yesterday outlined a strategic blueprint for the future of its business, which rests on three core principles: strengthening the balance sheet; streamlining the operating model; and improving project delivery.
“We are in the process of undertaking an in-depth review, which has led us to the strategic blueprint that we are announcing today. We are maintaining our focus on recovering existing receivables and on improving our approach to working capital management. In addition, we are analysing options for our Services, Property and John Holland businesses, including the potential divestment or introduction of new partners to these businesses,” Executive Chairman and Chief Executive Officer Marcelino Fernández Verdes said in an ASX announcement.
“As part of this process we have engaged external advisors and will be having discussions with potential investors. Cash receipts from receivables and divestments will be used to reduce our gearing and strengthen our balance sheet so as to increase our competitiveness.”
He said the company was streamlining its operating model and group similar activities to establish dedicated businesses focused on construction, mining, engineering and establishing Public Private Partnerships (PPPs).
“The Services, Property and John Holland businesses will be subject to the outcome of the strategic review and a final decision is yet to be made. Streamlining our operating model will allow us to better leverage the existing expertise that resides across the Group’s diverse operations and increase our transparency. By reorganising these activities we will create economies of scale, thereby lowering our cost base and helping to improve our competitive advantage and create value for the benefit of all stakeholders,” said Mr Fernández Verdes.
“We will combine our existing PPP capabilities to create a focused industry-leading business. This new business will form a key component of our growth as we see numerous construction and investment opportunities in the large and expanding PPP markets in Australia and overseas.”
He also added that the company was committed to foster the engineering skills within their ranks to provide more innovative solutions for future clients. He said promoting greater self-reliance on their engineering skills would enhance the company’s ability to mitigate and manage contract risk.
“We are focused on improving project delivery by further developing the entrepreneurial approach of our project managers including a greater focus on cash and cost control. This will be supported by the standardisation of our business processes and systems.”
“We are now developing our transition plan for our new operating structure and will be engaging with our key stakeholders. While this work is underway, and in the future, our Operating Companies remain focused on continuing to safely and efficiently provide services to our clients,” Mr Fernández Verdes said.