Outstanding debt and the ability to win new work are two of the biggest problems afflicting Al Habtoor Leighton, the CEO of Leighton Holdings has said.
Speaking candidly in an interview with the Australian newspaper, Wal King said that Al Habtoor Leighton – the joint venture between the contracting giant and the UAE’s Al Habtoor Engineering – was still in negotiations to recover money owed from a series of projects.
The joint venture is still waiting to be paid from work carried out on Business Bay and the Qatar Equestrian centre, among other projects, but King said the Leighton Group had sufficient provisioning to cover outstanding debts at the joint venture.
The Australian speculated that the level of provisioning at the company had increased over the last six months, although King did not comment on this.
“There has been a level of provisioning against some of those outstanding debts. That is our best judgment at this point in time. Is it better or worse? I can’t tell you. I don’t think anybody can tell you…It is continuing negotiations,” King told the newspaper.
While some had expected Leighton to write down the $870m cost of its 45 percent stake in Al Habtoor Leighton, the firm did not opt to do so in its yearly accounts.
On being asked where the ‘next generation’ of work for the joint venture would come from, King stated: “That is also an unanswered question”.
In results released on Monday, the Leighton Group posted a 39 percent increase in profit after tax and minorities to $613m. In the company’s official statement, King said that the strong results had been based on a solid contribution from Australia, driven by infrastructure.
“Our offshore markets, with the exception of the Middle East, also made solid contributions to the result,” the CEO added.
“Notwithstanding the immediate challenges, the medium to long-term outlook for the Middle East is positive as oil prices remain around US$80 per barrel and global demand for LNG continues to increase.
Very substantial investments are being made, and will continue to be, in construction and infrastructure in the Middle East and the Al Habtoor Leighton Group is well positioned to pursue these.”
When contacted by Arabian Business to discuss King’s remarks and the first half, a senior official from Al Habtoor Leighton said that it was the joint venture’s policy not to release any of its results publically.
“I think the key message to take out of Leighton’s results and Wal King’s comments is that the Group remains upbeat about the prospects for the region and that we expect it to be an important element of the Group’s growth going forward,” said Chris Gordon, group general manager of strategy and corporate affairs at Al Habtoor Leighton.
“The key growth areas for Al Habtoor Leighton remain Abu Dhabi, Qatar, Saudi Arabia and Kuwait.”
Gordon declined to comment further on how much the joint venture is owed, and by whom.
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