Leighton Holdings, which operates in the UAE and across the region, said yesterday that late payments from clients had grown in the first six months of the year, hitting cash flow at Australia's largest builder.
Leighton, which has projects in Australia, Asia and the Middle East, said receivables, or outstanding payments for a company, rose to A$4.4 billion (Dh14.75bn) at June 30, from A$3.8bn for all of 2012.
Receivables grew due to rising numbers of private-sector projects, "scope growth" on certain resources projects and the "complexity and time-consuming nature of valuing and negotiating project variations", the company said.
"They booked the revenue but they are not getting the cash flow. Clients have not paid them yet," said Shane Delphine, an investment manager at Karara Capital.
Investors were disappointed the level of receivables had not improved from 2012, he added.
The Dubai arm of Leighton last week launched a series of suits seeking more than Dh1bn in compensation for late payments on a hotel project in the Qatari capital Doha.
"We will mitigate any potential country risk by our core competency and by our client selection," Leighton's chief executive Hamish Tyrwhitt told Reuters when asked about the payment concerns.
Leighton shares dropped as much as 7 per cent after the result.
The company also said that the "timely conversion of receivables into cash is a key focus for the remainder of 2013", as it reported a doubled underlying net profit for the first half.
Current projects in the Middle East include the People Mover System in Qatar, construction of accommodation at Zakum Offshore oilfield, and building Al Mafraq Hospital in Abu Dhabi.
Leighton, which is controlled by Spain's ACS, posted an underlying net profit for the six months ending June 30 of A$255m, excluding asset sales and impairments.
The result fell below analysts' forecasts for A$287.5 million, according to Thomson Reuters data, even though it was more than double the A$115m reported a year ago.
Leighton reaffirmed its 2013 full-year guidance for underlying net profit of A$520m to A$600m, and a gearing level of 25 to 35 per cent by the year end.
It raised its interim dividend to A$0.45 per share, from A$0.20 per share a year ago.
Leighton's majority owner Hochtief, Germany's largest construction company, increased its stake in the company last month, taking advantage of a share price slump to raise its exposure to fast-growing Asian markets. Hochtief, which now owns 56.4 per cent of Leighton, is, in turn, controlled by ACS.
New orders at Hochtief's Asia Pacific division fell 48 per cent while orders increased in North America and Europe.
* Reuters, Bloomberg News