Lendlease reports 41 per cent profit dive

Lendlease has reported a profit 41 per cent lower than last year, after difficulties for the engineering arm of the business, but is optimistic about the residential market.

The global construction and property firm revealed its after-tax profit fell 41 per cent to $467 million for the year to June 30, down from the $793 million reported a year earlier.

GALLERY  

Lendlease chief executive Steve McCann has attributed the group’s poor performance to its non-core operations, particularly its engineering and services business, which is currently being negotiated for sale.

The engineering business posted an after-tax loss of $337 million, but excluding this Lendlease says its core business recorded a profit of $804 million.

“As the separation process progresses, we remain committed to delivering the best possible outcome for our clients, employees and security holders,” McCann said of the process.

However, Mr McCann is optimistic about future profits, claiming that better conditions are ahead for the residential market.

Following a downturn Australia’s housing market was “nearing the bottom” of the cycle.

“We expect to see that translate into sales in the coming months,” he said.

Mr McCann said that on the back of apartment-defects crises in Sydney, that there has been a move towards well-known developers with a track record.

“Broadening our urbanisation expertise into targeted international gateway cities has driven strong growth in the group’s long dated development pipeline, with some tremendous wins from both government and private sector clients,” McCann said.

At an increase from last financial year there were 1,623 residential for sale apartment settlements, with Victoria Harbour in Melbourne, Darling Harbour in Sydney, and Elephant Park in London making up the majority.

Three major urbanisation projects were added during the year in Sydney, Milan and Chicago.

“There is a visibility in our future earnings growth through these projects,” Mr McCann said.

The group’s share price rose 10.26 per cent to close at $14.93, with investors sharing the CEO’s optimism.

Images courtesy of Lendlease

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