Lendlease restructures after 96 per cent profit dive
25 February 2019, Written by Business News Australia
Lendlease (ASX: LLC) has reported a disappointing first half of the financial year, with profit diving to $15.7 million from $425.6 million in the previous year.
This 96 per cent plummet has led management to announce a reconsideration of the value Lendlease's underperforming engineering and services business.
The company has determined the segment is "non-core" and no longer a required part of the group's strategy, but how it is offloaded is yet to be decided.
Group CEO and managing director Steve McCann says he is disappointed with the performance of the group's engineering business and its impact on the company's 1H19 results.
"This was a difficult period where cumulative issues in a number of engineering projects materially impacted the group's overall result," says McCann.
"The management team and I are very disappointed with this underperformance and are committed to working to restore securityholder value and confidence in Lendlease."
"Engineering and services comprises a large, high-quality team with execution skills and experience across a broad range projects. We're considering a range of options to provide clarity for our people while seeking to optimise securityholder value."
The total cost of the restructure of Lendlease will come between $450 million and $550 million before tax as a preliminary estimate.
Elsewhere in Lendlease the company reported its development pipeline was up 31 per cent to $74.5 billion and funds under management grew by 20 per cent to $34.1 billion.
The company secured two major projects in Sydney and Chicago during the half and was announced as the preferred partner for the $14.5 billion London Thamesmead Waterfront project and the $2.7 billion Birmingham Smithfield project.
Shares in Lendlease are down 4.86 per cent to $13.51 per share at 1.27pm AEDT.
Business News Australia
Author: Business News Australia