L&T Reports 95% of Projects Remain On Track Amid Middle East Conflict, Supply Chain Disruptions a Key Concern

Larsen & Toubro (L&T) Mitigates Middle East Conflict Impact

Key Highlights

• 95% of L&T's projects in the Middle East are continuing to function, with no major business impact from the ongoing conflict.
• 5% of projects have work stalled due to logistical issues and risk factors, but do not contribute significantly to the company's $11.4 billion revenue.
• L&T has flagged logistics and supply chain as key challenges, with revenue risks if the situation remains unchanged.

Supply Chain Challenges

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• Disruptions in supply lines have been reported in the last two weeks, with shipping lines shut due to the conflict.
• Sourcing material from within the Gulf countries is not impacted, but getting material from other regions, including China and Europe, is a challenge.
• The company is exploring alternatives to the problems created in the Strait of Hormuz, including utilizing ports in Oman.

Revenue and Profit Margins

• L&T does not see any immediate impact on revenues, but there is a risk of revenue deferment if logistical issues are not resolved in three months.
• The company hopes to pass on the increase in costs to customers, but declined to comment on profit margins impact.

Business Opportunities

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• L&T sees business opportunities in reconstruction, faster ordering of new projects, and shift to alternative sources of energy like renewables and newer evacuation routes for oil and gas.
• If Iran integrates better with the world and there are no sanctions, it will provide a lucrative business opportunity for L&T.

Company Overview

• L&T has 8,000 staffers and 2,000 family members, with an additional 20,000 contractual workers at its sites in the Middle East.
• The company has been operating in the Middle East for over three decades and considers it a "second home".