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Leighton CEO: How We Bounced Back From China Slowdown

Katie Holliday
Tuesday, 12 Feb 2013 | 8:15 PM ET
Leighton: Asia Growth Offsets Mining Decline
As Leighton Holdings returns to profit in 2012, CEO Hamish Tyrwhitt tells CNBC why Australia's mining slowdown doesn't bother the firm thanks to rising commodity and infrastructure demand in Asia.

Leighton Holdings has attributed its return to growth on a re-focus on different Asian regions, after the China slowdown hit Australia's largest construction company hard last year.

Shares in the company jumped 4.5 percent to A$21.75 ($22.43) in the first 15 minutes of trade on Wednesday, following Leighton's return to profit. The company reported a full-year profit of A$450 million for 2012 compared to a loss of A$405.7 million in 2011.

The slowdown in China has taken a toll on the firm, forcing the global mining sector to scale back on expansion plans in the region. Last year, the Chinese GDP growth slowed to 7.4 percent in the third quarter of 2012, though it bounced back to 7.9 percent in the final quarter.

According to Leighton CEO Hamish Trywhitt, the company has refocused its strategy on more lucrative Asian regions, such as India and Indonesia.

(Read More: Australia Trade Deficit Shrinks, Exports to China Rise)

"Our strategy, as we experience slowdowns in certain areas, is we move into areas where there is growth," he said on CNBC Asia's "Squawk Box" on Wednesday.

"We are not exposed to the U.S., our primary focus is Australasia. We are still seeing good growth in Asia, driven by the urbanization in China but also in India and Indonesia. Longer term, we are optimistic about the growth in demand for commodities and resources," he said.

However, Trywhitt said his company was still finding opportunities in China.

"We have recently picked up a casino in Macau and we have got work in Hong Kong, Indonesia, India and the Middle East," he added.

(Read More: Macau Gambling Revenue Hits Record in December)

Leighton Holdings, which is Australia's largest construction company, experienced a turnaround in 2012, and has forecast even stronger returns in 2013.

The company suffered a difficult 2011, after losses from crucial projects, including delayed construction of a water desalination plant in the state of Victoria, and a road link to Brisbane airport in Queensland state - both now completed - generated roughly A$2 billion in losses for Leighton.

Leighton expects its 2013 underlying net profit to rise by as much as a third to A$520 million-A$600 million from A$448 million in 2012, following a recovery from its project losses and as construction markets in Asia and Australia continue to grow.

Trywhitt said he was proud of his company's turnaround and attributed its recovery to the cutting down of its debt levels. It aims to decrease its gearing level from 45 percent to 35 percent.

"We are not focusing on growth for growth's sake. We are focused on the bottom line. We are rebuilding the balance sheet and creating synergies and savings, we are not just focused on the top end of revenue growth," he said.