LendLease half-yearly profit plunges on troubled engineering arm
Construction firm LendLease Group reported a 96.3 per cent drop in first-half profit, hurt by the continued underperformance of its local engineering and services businesses.
Net profit after tax for the six months ended December 31 came in at $15.7 million, down from $425.6 million in the previous year, the company said in a statement.
The company, which has operations spanning from Australia to the United States, approved an interim dividend of 12¢ a share, down from 34¢ a share last year. Revenue fell 10.7 per cent to $7.76 billion.
Lendlease last year said it was looking at all options to exit its troubled engineering business after it took a $350 million hit on the division following problems on a series of large-scale public works projects.
Lendlease said on Monday the engineering and services business would be reported as non-core in the fiscal 2019 results and beyond following a strategic review. Restructuring the overall business could cost between $450 million and $550 million before tax, it said.
The company expects its earnings from the development segment to be skewed to the second half of the financial year.
The construction group faces headwinds from a drop in building approvals owing to a steep decline in the domestic real estate market. Fears of an oversupply brought infrastructure projects in Australia to a five-year low in December, prompting profit downgrades from a number of LendLease’s rivals.
Its shares dropped as much as 8.4 per cent to $13, their lowest level since February 12.
Australia’s largest buildings material supplier, Boral, said earlier this month it no longer expected earnings growth in Australia for 2019, owing to major setbacks at big projects, while cement maker James Hardie Industries reported a 10 per cent drop in half-yearly operating profit.
Reuters with BusinessDay and AAP