Australia's largest construction company Leighton Holdings Ltd. (LEI.AU) on Monday largely blamed its troubled joint venture in Dubai for a 25% slump in first half profits, calling into question its strategy to expand in the Middle East ahead of the global financial crisis.
A writedown of its 45% stake in the Dubai, United Arab Emirates-based joint venture, Habtoor Leighton Group, took $100 million Australian dollars ($100.6 million) from its net profits, while the Sydney-based company cut its full-year earnings outlook by 5.8% to A$480 million, sending shares falling an initial 60 cents to A$30.11 before rebounding to close the day at A$30.97, up 0.85%.
The impairment is one of the most significant so far recognized by an international construction company in the Gulf emirate, where the financial crisis brought a local real estate boom to a screeching halt at the end of 2008 and forced the city state's rulers to seek financial assistance from oil-rich neighbor Abu Dhabi. Both sheikdoms form part of the United Arab Emirates.
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