Construction group Lendlease’s profit tumbles due to pandemic, engineering exit

Construction giant Lendlease has taken a massive earnings hit, posting a full-year loss partly blamed on the coronavirus pandemic.

Construction giant Lendlease has posted a full-year earnings slump, saying the disappointing result is due to the cost of selling its non-core engineering business and the impact of COVID-19.

The company posted a statutory net loss of $310 million for 2019-20 after spending $368 million on the planned exit from its engineering division, which is now expected to cost a whopping $550 million before tax.

Its core business, however, achieved a net profit of $96 million.

Lendlease said the hit to its construction business was felt the most overseas, particularly in cities with mandated shutdowns.

“This included lower productivity, projects being put on hold and delays in the commencement or securing of new projects.”

Its investment portfolio suffered from falling real estate values amid deteriorating market conditions.

Lendlease chief executive Steve McCann said despite the “disappointing” financial result, the company had been able to secure two major urbanisation projects in London and San Francisco at a rough value of $37 billion.

“Our core business is at an exciting point with a development pipeline of $113 billion and a growing number of major urbanisation projects in our international gateway cities across the US and Europe in particular,” he said.

“We are well placed to double our current $36 billion funds under management as this pipeline is delivered.”

Lendlease said it expected the pandemic would continue to suppress earnings in the first half of the current financial year.

The company has issued a final dividend of 3.3 cents per share, bringing the total 2020 financial year dividend payout to 33.3 cents per share.