This article is from the Australian Property Journal archive
Property giant Lendlease has swung to an interim profit as it remains on track to deliver $2.8 billion in capital recycling initiatives as part of its business restructure.
Lendlease posted an operating profit after tax of $122 million for the first half, up by $133 million, operating earnings per security of 17.7c, and an interim distribution of 6.0c.
Statutory profit was $48 million, which included negative property revaluations of $74 million, and was up from the prior corresponding period (pcp)’s $136 million loss.
Lendlease has been exiting its troubled overseas operations and is looking to focus on its higher performing local projects. It recently announced the sale of its UK construction business, which will complete its exit from international construction operations.
At the start of this month, Lendlease also announced the $235 million sale of its infrastructure financing business Capella Capital to Japanese company Sojitz Corporation.
The business simplification strategy was announced in May last year on the back of unrelenting pressure from key shareholders following a string of soft results.
“Our results for 1H25 reflect significant progress in-line with our strategy announced last year, as well as a return to statutory profit. We continue to move at pace to simplify the group and focus on improving our operational performance,” said group CEO Tony Lombardo.
“Our priorities remain strengthening our balance sheet, returning capital to securityholders and redeploying capital to grow future earnings.”
Group earnings per security of 54c to 62c is anticipated in FY25. The range includes approximately 18c secured in 1H25 and 36c to 44c anticipated in the second half.
Gearing was at 27% and is expected to materially decrease in the second half, moving down towards, but remaining above, the top end of the target 5% to 15% range, and is expected to be within the target range by the end of FY26.
Segment operating EBITDA increased by 39% to $375 million in the first half, including an investments, development and construction contribution of $341 million. Improved development and investments earnings were partially offset by lower contributions from construction and the capital release unit.
The investments segment operating EBITDA of $228 million was up 148%, led by the establishment of the new Vita Partners Life Sciences joint venture and associated S$1.6 billion portfolio acquisition.
Development earnings increased by $162 million to $138 million, with a key contribution from the settlement of Residences Two at its One Sydney Harbour luxury development.
Lendlease recently received FIRB approval for the $1.06 billion sale of 12 land lease communities in NSW, Queensland and Western Australia to Stockland and and Supalai.
Its construction segment earnings result of $25 million in the red was down $83 million, due to losses predominantly on two projects, which were impacted by material construction cost inflation, subcontractor insolvencies and productivity issues.
Meanwhile, construction is underway at its $500 million build-to-rent development in Melbourne’s Docklands, shortly after Lendlease announced its partnership with Japan’s Nippon Steel to deliver the project; and nearby it has been given the green light from the Victorian government to build 915 apartments that will complete its Collins Wharf project.
