Lend Lease builds a $553 million profit

Global property and infrastructure solutions provider Lend Lease (ASX: LLC) has reported a 9% increase in operating profits after tax to $553 million — equal to 96.3 cents per security (cps) — and declared an unfranked final distribution of 20 cps.

Tallied up, full year distributions totalled 42 cps, an 11% increase on the prior year. The company also managed to maintain its return on equity at 13.4% and grew its funds under management by 50% to $15 billion and its assets under management by 40% to $12.5 billion.

Australia, Asia and the Americas all increased their contribution to group earnings with Australia up nearly 18%, Asia 6% and the Americas (off a much lower base) up 49%. The only region to experience a decline in earnings was Europe which fell 2.4%. Regional highlights included the Barangaroo South project in Sydney, the sale of the Jem retail project in Singapore and increased profits from the Military Housing Privatisation Initiative in the USA.


Source: Google Finance

Foolish takeaway

Despite a compound annual growth rate (CAGR) in revenue of 5.2%, a 19.6% CAGR in operating profit after tax, a 13.9% CAGR in earnings per share and a 9.5% CAGR in distributions over the past four years, as the chart above shows, Lend Lease’s share price has actually underperformed the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) over the past four financial years.

With global construction backlog revenue of $17.2 billion and an estimated end value for the company’s global development pipeline of $37.4 billion there is certainly future earnings visibility and a platform for future growth. With Lend Lease trading on a price-to-earnings ratio of 9.6 times and taking into account the positive outlook statement from management, Lend Lease could well be worth a closer look by investors.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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