“Historically, they’ve actually delivered great products,” said Jason Kururangi, senior research analyst at Milford Asset Management.
“I think they need to deliver more consistently. This could mean that they have to restructure the way the company sees development. “
Net income after tax of $ 377 million was in line with the company’s expectations. But even though it announced an improvement in its profits for the 12 months to June 2021 – largely due to the divestiture of its loss-making engineering and services business which affected profits a year earlier – Lendlease has suffered from the pandemic, Mr Lombardo said.
Residential projects such as Elephant Park in London and One Sydney Harbor in Barangaroo Central suffered from weaker sales and lower prices – together representing a success of $ 100 million. Construction revenues were down 16 percent from a year ago and rental costs totaling around $ 40 million hurt its investment property portfolio.
“The forced closures and isolation from the COVID pandemic have important ramifications for the way society lives, works and plays,” Lombardo said.
“This has been reflected in workplace occupancy, retail vacancy and, in some cases, population shifts related to immigration and population decline.
“As an organization, we have experienced significant negative effects due to the deterioration of these conditions. “
The company said pre-sales at its Barangaroo Central apartment towers amounted to 85% in value of One Sydney Harbor and “just over half” on Tower Two.
“Delivery is progressing well, and completion is scheduled for fiscal year 24,” said Frank Krile, interim CFO.
Lendlease settled the sale of 621 apartments during the year, primarily in East Tower in Melbourne Quarter, Clippership Wharf in Boston and three buildings in Elephant Park in London.
The planned community enterprise had worse results than the company had hoped for.
“While colonies in the Australian Communities portfolio grew by 17% to 2,228 lots, they were well below target levels and broader market performance,” Mr. Krile said.
The current year’s settlements would be below the company’s 3,000-4,000 target, he said.
Analysts were lukewarm about the results.
“It was a weak result and a very weak outlook for fiscal 22,” said Richard Jones of JP Morgan.
“Lendlease’s asset classes and geographic distribution are not conducive to a significant increase in activity in the short term with the recovery targeted in FY24. “
The divested units continue to cast a shadow over Lendlease, which said it would take an additional $ 168 million after-tax provision to cover historic claims on projects related to the now divested engineering division.
Mr Lombardo also said the company has taken legal action against Spanish group Acciona, buyer of the engineering business, for failing to honor a final payment of $ 47 million due at the end of June.
The restructuring – which the company will give details of at the end of this month – follows an announcement in June regarding the consolidation of Lendlease’s operations in its Australian home market into a single business unit and the appointment of heads for each of its businesses. development, construction and investment. .
While the company was aiming for savings of over $ 160 million per year from the simpler structure, it would also incur a restructuring charge of $ 130-170 million in its results for the six months leading up to December.
Mr Lombardo declined to give estimates on the staff cuts, saying more details would come in the August 30 market update.