Leighton Holdings recent downgrading of its profit guidance has drawn a humbling apology from its board in front of angry shareholders.
During the company’s annual general meeting on Tuesday, many shareholders vented their frustrations with the company.
Leighton chairman Stephen Johns told the meeting the company’s entire portfolio of projects was under review and that further sales of non-core assets were likely.
“I’m speaking for myself but what I’m saying is relative to the 63,000 shareholders in the company who have really been bashed and knocked down a bit and down-trodden,” one shareholder said.
Mr Johns attributed many of Leighton’s problems to its rapid expansion since 2000, adding that new processes were in place to assess risks with any new projects.
These include the establishment of a tender review and risk committee to oversee all major tenders.
The company was also implementing remuneration and incentive arrangements for employees that discouraged what it termed inappropriate risk taking.
“Our entire portfolio of projects is under review,” Mr Johns said.
“Management is quantifying the risks inherent in these projects, with the goal of ensuring mitigation measures are in place.”
Mr Johns reiterated Leighton’s most recent profit forecast as he told shareholders the company was confident about the long-term strength of its business.
Leighton in March slashed $200 million from its August 2011 profit guidance of a net profit of between $600 million and $650 million for the 2012 financial year.
The company last August reported its first loss in 30 years.
The $405.7 million loss was driven by a $1.1 billion writedown on a host of projects, but came just two months after Leighton assured the market it expected a net profit of $480 million for 2010-11.
Chief executive Hamish Tyrwhitt on Tuesday told shareholders that poor productivity at the Victorian desalination project, due to inflexible industrial relations, and wet weather at its Brisbane toll road project caused some of the problems.
“I want to personally and sincerely apologise to each and every shareholder for the deterioration in these two projects,” Mr Tyrwhitt told the meeting.
Mr Tyrwhitt said further sales of non core operating activities and listed investments was likely.
Meanwhile, an investigation into allegations that a Leighton subsidiary made improper payments in an oil project in Iraq was continuing.
Mr Johns said it was “extremely disappointing” that Leighton had to report to the Australian Federal Police last November concerns relating to alleged improper payments made by Leighton Offshore.
This was in connection with work to expand offshore loading facilities for Iraq’s crude oil exports.
The Australian Companies and Securities Commission fined the company $300,000 in March this year for failing to follow compliance rules over issuing a $900 million earnings downgrade in April 2011 that plunged the company into a sharp and unexpected loss.
Although Leighton paid the fine, it did not admit liability.
Leighton shares closed 65 cents, or 3.76 per cent, higher at $17.94.
