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UPDATE 3-Hochtief ups 2010 orders goal as Australia buoys Q2

Published 08/16/2010, 06:40 AM

* Hochtief sees 2010 new orders and backlog up vs 2009

* Leighton contribs 73 pc of Q2 new orders, most of profit

* Q2 new orders 9.5 bln eur ($12.1 bln) vs poll avg 4.85 bln

* Q2 pretax profit 181 million eur vs poll avg 180 million

* Hochtief shares rise 5.65 pct, outperforming sector

(Adds new contract in Australia)

By Maria Sheahan

FRANKFURT, Aug 16 (Reuters) - Hochtief, Germany's biggest construction company, raised its 2010 outlook for new orders after receiving several large contracts in Australia and Asia in the second quarter.

"Alongside strong growth in contract mining in the Asia-Pacific region, the company is benefiting from sustained strong demand for construction services on infrastructure projects in Australia," Hochtief said on Monday.

While Australian unit Leighton bucked a recent trend towards weaker domestic construction activity by pulling in more contracts, Hochtief's European orders shrank by more than two-thirds in the second quarter, with the outlook remaining weak despite strong economic growth.

Hochtief now expects 2010 new orders will exceed the 2009 level of 22.5 billion euros ($28.7 billion), rather than slightly declining. It still sees pretax profit dropping slightly after coming in just above estimates in the quarter.

Infrastructure companies have been bolstered by lavish stimulus spending during the global economic crisis but were expected to feel the brunt of public works cuts as governments try to keep public finances under control.

Australia's construction activity, for example, contracted in June and July as public building was hit by the withdrawal of stimulus spending after expanding for three straight months from March through May.

Hochtief seemed immune to the recent weakness. It announced on Monday it won a 577 million euro contract to build a section of the Hunter Expressway in New South Wales, Australia, which is due to be opened for traffic at the end of 2013.

The group's quarterly new orders were almost double the volume that had been expected in a Reuters poll, with close to three-quarters of orders coming from the Asia Pacific region, raising hopes for robust sales in the years ahead.

Quarterly new orders at the Australian unit included a major contract to work on a section of Melbourne's ring road, a project to upgrade the electrical distribution network of western Australia's Perth and a contract to provide coal mining services in Indonesia.

Leighton also accounted for about 84 percent of Hochtief's quarterly pretax profit, helping offset weaker growth in Europe and North America.

EUROPEAN WEAKNESS

Shares in Hochtief jumped 5.65 percent to 52.43 euros by 1027 GMT, while the STOXX Europe 600 Construction & Materials index was up 0.3 percent.

Leighton's shares rallied on Monday after the company reported a 39 percent rise in full-year profit, helped by mining services and infrastructure projects.

Hochtief's biggest German rival Bilfinger Berger, which postponed plans to take its Australian unit public, raised its outlook last week as it continued to cut its exposure to the construction sector.

Europe's construction sector is expected to contract for a third consecutive year in 2010, and Germany, whose economy bolstered the region's growth in the second quarter, will be no exception.

"Construction demand in Germany is not expected to show a sustained recovery in the medium term," Hochtief said, adding it would focus on cutting costs to remain profitable there.

France's Vinci, the world's largest construction group, saw an acquisition offset a drop in European construction projects.

Investors are looking to other European players reporting earnings this week to give an indication whether the infrastructure industry is heading for a cliff as stimulus programmes run out.

Austria's Wienerberger, the world's biggest brick maker, cement makers Cimpor and Holcim as well as Dutch Boskalis will publish results this week. (Reporting by Maria Sheahan; Editing by Jon Loades-Carter, Sharon Lindores) ($1=.7836 Euro)

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