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Lendlease’s profit slumps on tough year

This morning Lendlease Group (ASX: LLC) released its results for the financial year ending June 30, 2019. Below is a summary of the results with comparisons to the prior year. 

  • Net profit $467.7 million, down 41%
  • Sales of $16,538, down 0.1%
  • Earnings per share 82.4c
  • Unfranked final dividend 30cps, full year dividends 42cps
  • Return on equity 7.4%
  • Core businesses produced a profit after tax of $804m, (ROE 12.8%)
  • Engineering & services business (non core) loss of $337m, sale process underway
  • Gearing at 9.9%

FY 2019 was a tough year for Lendlease as its core businesses of construction, development and investments saw profit fall around 16% to $804 million, but still produced a respectable return on equity of 12.8%.

The group also reports its core business is positioned to grow with a record pipeline of development projects and $3 billion in available liquidity to finance opportunities. 

The worst part of the year was the underperformance of its ‘engineering and services’ business that swung to a $337 million loss and is now up for sale with Lendlease reporting strong buyer interest.

It has also flagged $450 million to $550 million in pre-tax restructuring costs as a result of the problems, although this amount excludes any proceeds from the sale.

The shares are down around 35% over the past year and at $13.54 sell for 16.4x FY 2019’s earnings with a 3.1% dividend yield.

The group declined to provide any specific financial guidance for FY 2020.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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