18 Apr 2011

Building group in crisis

7:03 am on 18 April 2011

Australia's biggest building group is facing tough challenges. Leighton Holdings warned last week of a net loss of nearly $A500 million this financial year.

Radio New Zealand's Sydney correspondent says Leighton blamed the shortfall on delays and cost over-runs while building an airport link road in Brisbane and a desalination plant in Victoria, as well as charges against a project in the Middle East.

After a two-day trading halt while it raised much-needed capital in a discounted share issue, Leighton shares plunged 12% in a day.

So bad was the result that the chief executive of majority shareholder, Hochtief Construction of Germany, resigned.

Leighton Holdings was the darling of the market a few years back. It surfed the wave of a construction boom and posted 23 consecutive years of profit growth. Now it faces its biggest crisis.