By Jason Benham and Praveen Menon www.reuters.com
Dubai construction firm Al Habtoor Leighton, an affiliate of Australia’s Leighton Holdings (LEI.AX), is eyeing two contract wins in Saudi Arabia worth up to 10 billion riyals each ($2.67 billion) by year end, its top executive said.
The firm also hopes to announce onshore projects in Iraq by the end of 2011 and will bid for work on Qatar’s $36 billion railway and metro project as it aims to have 50 percent of its work outside the United Arab Emirates by the end of 2012.
“We would think that in the next 6 to 12 months there will be a couple of substantial orders (in Saudi),” Laurie Voyer, chief executive and managing director told the Reuters Real Estate and Infrastructure Summit in Dubai on Wednesday.
“I’d be surprised if its not in the scale of 5-10 billion riyals,” he said, adding that the contracts would likely be infrastructure and development projects.
Saudi Arabia, the biggest Arab economy, is facing a massive housing problem due to rapid population growth and an inflow of expatriate workers coming to the kingdom which is rolling out a $400 billion infrastructure spending plan.
Dubai builder Arabtec (ARTC.DU) told the summit on Monday it is looking to eventually more than double its workforce to 25,000 in Saudi Arabia.
Construction firms have been rapidly expanding operations outside the United Arab Emirates, where house prices in Dubai, the emirate hardest hit by the financial crisis, plunged some 60 percent from their peaks in 2008, and billions of dollars worth of projects were put on hold or canceled.
Voyer said the firm expected to increase its current order book to 25 billion dirhams ($6.81 billion) by year-end from 20 billion dirhams currently as it looks to win more contracts in the Gulf Arab region.
Al Habtoor won its first contract in Iraq last year and its first in Saudi Arabia in 2009.
Voyer said the firm is keen to participate in Qatar’s railway and metro project, tenders for which are expected to be out in the next two months.
“For the Doha metro there is lot of registration for interest and industry sounding going on at the moment. We are staying near the front line on that. We will participate in this.”
He said the company may look to pitch for tenders on tunneling, track work and building stations all of which Leighton has traditionally done in Australia.
Voyer added that the company has already bid for the UAE’s 40 billion dirham rail network called Etihad Rail.
“It’s being evaluated at the minute,” he said.
Construction of the first phase is expected to begin in the second half of 2011.
NO UAE WRITEDOWNS
Voyer said Al Habtoor Leighton is not looking to announce writedowns for its projects in the United Arab Emirates and that it would unlikely need further cash from its parent firm.
Leighton, Australia’s biggest contractor, is a unit of Germany’s largest builder Hochtief (HOTG.DE), in which Spain’s ACS (ACS.MC) took a majority stake last week drawing the curtain on a takeover saga that has lasted more than 9 months.
Voyer said in April it may need a cash injection from its parent firm if its ongoing legacy projects are not paid on time.
“There is some money outstanding in Dubai … it’s digestible. We’ve got plans to recover that money and it could take 3 or 4 years to get back,” Voyer said on Wednesday, declining to say how much the company is owed.
($1=3.750 Saudi Arabian Riyal)
($1=3.673 Uae Dirham)
(Additional reporting by Sara Anabtawi; Editing by Hans-Juergen Peters)