* H1 net profit A$216.7 mln v A$363 mln broker forecasts
* Sees full year net profit around A$480 mln
* Says reviewing investment strategy
* Aims to cut overhead costs, curb spending to help margins
* Shares drop 2.4 percent (Adds details, CEO comment, share price)
MELBOURNE, Feb 14 (Reuters) - Leighton Holdings , Australia's biggest contractor, reported a 25 percent fall in first-half profit and cut its full-year forecast by 6 percent due to recent Australian floods, knocking its shares down on Monday.
New Chief Executive David Stewart said while the result was disappointing, the long term outlook was strong as the mining boom and infrastructure spending in Australia would keep up solid demand for Leighton's services in 2011 and beyond.
"We are bringing a rigorous approach to the existing -- and any new -- businesses and are focused on reducing costs and increasing margins so as to return Leighton to its historic performance levels," Stewart said, putting his stamp on the company run for the last 23 years by vaunted CEO Wal King.
The company, majority-owned by German construction group Hochtief , plans to cut overhead costs, freeze discretionary spending and curb capital spending to help improve its margins, at a time when at least one broker has warned that sharply rising labour costs could hurt its margins further.
Hochtief has been fighting an attempt by Spanish construction group ACS to take control, with Leighton seen as the main prize in the group.
In line with broker expectations, the company cut the book value of its stake in the Middle East joint venture Habtoor Leighton Group by 11 percent to A$845 million.
Leighton said it was reviewing some of its investments, but did not say if that included its stakes in contractor Macmahon Holdings , residential property developer Devine and resources engineering company Sedgman .
It now expects annual profit of around A$480 million ($481.2 million), down from an earlier forecast of A$510 million, as devastating floods have hit its mining contracting business in Queensland and a desalination project in Victoria.
Net profit fell to A$216.7 million for July-December 2010 from A$288.9 million a year earlier. Backing out gains from a recent stake sale in India, the result fell well short of analysts' forecasts.
The bottom line was hit by losses on its Airport Link road project in Brisbane due to access, design and engineering problems, the writedown on its Middle East joint venture, and flooding that hit mining projects in Queensland.
Leighton's shares fell as much as 2.4 percent to a nearly six-month low and last traded down 0.7 percent at A$30.50.
($1 = 0.998 Australian Dollars) (Reporting by Sonali Paul; Editing by Balazs Koranyi)