Leighton could ditch John Holland amid structure shake-up

Leighton Holdings has released the strategic blueprint which will form its new business model, and says that sell-offs or mergers are likely in its aim to streamline.

A major shake-up at the company was first announced in March when the CEO of Leighton’s majority shareholder, Hochtief, took over as head of the company.

Marcelino Fernandez Verdes said cutting costs and accelerating change at the company was a top priority, initiating a review of Leighton’s operating model.

Leighton businesses such as Thiess, John Holland and Leighton Contractors were all subject to review.

Verdes said efforts would centre around cutting costs, recovering outstanding monies, and strengthening the balance sheet.

Outlining his plan today, Verdes said the company was analysing options for its services, property and John Holland businesses including the potential divestment or introduction of new partners to these firms.

Duplication will be stripped out of its business arms, and the company will focus on key areas – construction, mining, engineering and public private partnerships – with a view to group similar activities and remove complexities.

The company said it will combine its current PPP capabilities to create a “focused industry-leading business”.

While engineering will also get special attention with plans to “further develop these capabilities to provide more innovative solutions for our clients”.

“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,” Verdes said.

“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. “

Verdes also pinpointed the need to further develop the “entrepreneurial approach” of its project managers to include a greater focus on cash and cost control. He said this would include the implementation of internal business systems.

The company has previously said the review could lead to job losses.

Verdes said a transition plan for the new operating structure was being developed and the company was engaging with key stakeholders.

Leighton is now more than 70 per cent owned by Spanish-controlled Hochtief.

It employs more than 53,000 people world-wide, excluding contractors. 

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