Pandemic woes compound Lendlease's engineering hit
Lendlease swung to both statutory and operating losses in the year to June, as global effects of the COVID-19 pandemic hit the diversified builder, developer and investor across all areas of its business, compounding a hit from the sale of its loss-making engineering business.
Sydney-based Lendlease on Monday posted a net loss after tax of $310 million, down from its $467 million net profit a year earlier, and a pretax loss on continuing operations of $536 million compared with a profit of $755 million, figures chief executive Steve McCann called “disappointing”.
The company declared a final dividend of 3.3c, bringing its yearly total to 33.3??. A year earlier, it declared a final dividend of 30c, making for a full-year payout of 42??.
While the “solid” first half of the year included the agreement to sell its troubled engineering business for $160 million – a transaction on which Lendlease would make an after-tax $368 million loss, the company said on Monday – the second half was problematic for the global company.
Lendlease suffered delays in development opportunities across its urbanisation pipeline and its residential communities division experienced “weak” trading conditions. Its construction business was hit hardest in countries where mandated shutdowns affected sites more than they have in Australia.
“This included lower productivity, projects being put on hold and delays in the commencement or securing of new projects,” Lendlease said.
The company’s investment portfolio was also impacted by declining real estate values as a result of deteriorating market conditions.
Earnings in the current six-month period would be hit by the uncertain effects of the pandemic said Lendlease.
“While the duration of the impacts of the pandemic is uncertain, near term effects from COVID-19 are continuing and we expect current conditions to suppress first half earnings,” it said.
“The group entered 2020-21 in a strong financial position and is well positioned to execute delivery of the global development pipeline and take advantage of new investment opportunities as market conditions improve.”
In April the company tapped global markets in a $1.15 billion capital raising to shore up its finances.
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