Leighton Holdings, Australia's biggest contractor, has cut its interim dividend after reporting a 25% slide in half year profits and revealing a 6% reduction in its full year earnings estimate.

The dividend was cut to 60c a share from 65c a share after earnings per share dropped to just 72c a share from 96.9c in the December, 2009 half year.

A combination of losses in the Middle East and one major Australian project, the impact of the strong Australian dollar, bad weather and the floods in Queensland hit the company's bottom line in the six months to December 31.

And the impact will be felt this half as well.

"The profit impact from the Queensland floods and excessive wet weather in Indonesia in the period to 31 December 2010 was approximately $40 million and, combined with other major wet weather events in the second half, is expected to impact on the Group's full year results by some $100 million for the full year," directors said yesterday.

To counter this the company under new CEO, David Stewart has cut non-essential spending, made some senior management and organisational changes and has started reviewing some of the company's investments

Leighton told the ASX yesterday it said it now expected annual profit of around $480 million, down from an earlier forecast of $510 million, as devastating floods have hit its mining contracting business in Queensland and a desalination project in Victoria.

The actual fall might be larger because its unclear if the decline forecast is in net profit after tax or in operating profit (i.e. before the profit on the sale of the Indian business)

Net profit fell to $216.7 million for December 2010 six months,