Construction company Leighton Holdings said it is not worried about the effects of mining services companies downgrading profit forecasts.
The company said it has different business ventures to fall back on if the mining boom ended and also acknowledged the cyclical nature of the mining industry.
Mining services companies WorleyParsons and UGL announced considerable profit downgrades last week in the wake of investment slowdown in the resources sector in Australia owing to lower commodity prices.
But Leighton chief executive Hamish Tyrwhitt said iron ore and coal contracts comprised only five per cent of the company’s profits and predicted this would remain in the future, The Australian reported.
“The benefit of the Leighton group is we have incredible diversification across geographic range and across sectors,” he said.
“It’s just not in mining but in company development (and) infrastructure.”
Tyrwhitt added the company’s mining contracts did not rely on commodity prices but operated on the volumes the company moved.
He said the company would continue getting contracts providing Leighton’s clients were making money.
The company planned to concentrate on growing in Asia for its future progress, Tyrwhitt said.
“Without doubt, Asia is the fastest growing region in the world and is expected to contribute around half of global GDP by 2030 and two thirds by 2060,” he said.
He said Australia needs to look globally if the company is to continue in the long term.
“It is clear that we need to move our focus from Australian-centric approach to one where we export our skills to markets where our services are valued and where we can add value,” he said.
Chairman Bob Humphris said his experience in the coal industry as an engineer, miner and executive have shown him slowdowns can sometimes advantage contractors.
“I’ve been in the coal industry for 50 years and the coal price goes up and down,” he said.
“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.”