World economy to keep growing: Leighton

The world economy will continue growing on the industrialisation of developing countries such as China, benefiting Australia's biggest construction company Leighton Holdings Ltd, chief executive Wal King says.

"You have South America growing, China growing, India growing," Mr King said.

"Whilst there will be some moderation, we don't expect the total world to slip into some sort of downward spiral and the US recession, if there is a recession, will be shortlived."

Leighton forecast net profit will grow at least 15 per cent this year from the $607.9 million reported last week as the Sydney-based company benefits from spending on infrastructure and resource development.

"Here in Australia we're very fortunate to have the resource boom supporting everything we're doing," Mr King said.

Leighton also will seek to raise $700 million through a share offer to equity holders to buy equipment for contract mining and pay back $200 million of debt.

Mr King said Leighton decided to do the capital raising around 15 to 18 months ago to strengthen the balance sheet as the company was in the process of buying a stake in United Arab Emirates-based engineering firm Al Habtoor.

Leighton had delayed the raising after the credit crunch hit to see if debt markets would settle down, Mr King said.

"This year we became more serious about our program, bearing in mind the forward opportunities we have," he said.

Leighton said in its results that work in hand increased to a record $34.5 billion as the company won infrastructure and resource related projects in Australia, the Middle East, India and Indonesia. The company estimated that 90 per cent of its 2008/9 revenue was already contracted.

In the Middle East, the biggest risks related to the implementation of projects because of the skills shortage there, Mr King said.

"The construction programs are just so enormous that you have skills shortages," Mr King said.

"You (also) have rising costs of materials."

Leighton shares are in a trading halt till August 20 and last traded at $42.36, having fallen 31 per cent this year. The S&P/ASX 200 Index has declined 21 per cent in the same time.