Leighton says a change in leadership style is necessary to re-energise the construction company and return it to profitability, after its chief executive was sacked just eight months into the job.
A unanimous board decision on Wednesday night terminated the contract of David Stewart, who took over from long-time chief executive Wal King in January.
Earlier that day the company’s chairman of five years, David Mortimer, stepped down effective immediately.
Mr Stewart presided over Australia’s biggest construction company’s worst result, a loss of $408.8 million for the 12 months to June 30.
The sudden resignation of the two men at the top of the world’s largest contract miner is a disruption Leighton can ill afford, as it battles to return to profitability, analysts say.
Shares in Leighton fell 3.3 per cent to close at $20.61, the lowest in two weeks.
Leighton’s head of Asian operations, Hamish Tyrwhitt, 48, will take over immediately from Mr Stewart.
Mr Tyrwhitt said he was confident he had the full support of Leighton’s board.
“What they see in me and what they are looking for, really, is my leadership style,” he said on Thursday.
He described that leadership style as “can do” with “a thorough knowledge of the business” and “all about our people”.
Mr Tyrwhitt has worked across all of Leighton’s operating companies, except Theiss, since joining as an engineering graduate in Western Australia in 1985.
Stephen Johns, a non-executive director on the Leighton board, will succeed Mr Mortimer as chairman.
Mr Johns said the board had come to the view that a change in chief executive was “desirable, in order to optimise the opportunities” and that “Hamish is the person to take us forward”.
Mr Tyrwhitt would focus on the completion of the problematic Airport Link motorway in Brisbane and Victorian desalination projects over the next 12 months.
“David Stewart took on a very difficult role and had a number of major issues to deal with, which were not anticipated by anybody in the company,” Mr Johns said.
Leighton had lost money because the risks of “those very large projects, probably in hindsight, were not anticipated,” Mr Johns said.
The company would now review the way it approached risk analysis when tendering for major projects.
Morningstar analyst Ross McMillan said Mr Tyrwhitt’s project execution skills would be essential in tackling the problems faced in completing the Brisbane Airport Link and Victorian desalination projects.
Mr Tyrwhitt had “done exceptionally” well as the managing director of Leighton Asia since 2007, Mr McMillan said.
“I think they feel that Hamish has a greater feel (for the company) and greater confidence of the board and the company,” he said.
CityIndex chief market analyst Peter Esho said Leighton’s reputation as was on the line.
“We think the recent management and board changes are a disruption to a business which needs to be focused on getting it right this year,” Mr Esho said.
“Contractors are in the business of pricing risk and it doesn’t take much of an error, like recent events have shown, to completely wipe out one year’s earnings base.”
Leighton re-confirmed its guidance for the 12 months to June 30, 2012, of a net profit of between $600 million and $650 million.
Mr Esho said the company had to turn a huge loss into the forecast profit in 2012 while ensuring its $46 billion worth of projects didn’t suffer from disruptions.
