The Lendlease Group (ASX: LLC) share price has been a strong performer within the S&P/ASX 200 (INDEXASX: XJO) index so far this year, climbing 35% higher in less than 8 months.
But why has the Lendlease share price surged 10% higher today, despite a soft full-year earnings result this morning?
What were Lendlease's full-year highlights?
Lendlease released its full-year results this morning and announced net profit had fallen 41% lower to $467.7 million during the year. Even revenue fell lower, with total sales coming in 0.1% lower on the prior corresponding period (pcp) at $16.54 billion, with return on equity (ROE) totalling 7.4%.
The property developer's Metro Tunnel and WestConnex projects took a hit to the company's profits, with delays and cost overruns weighing on profitability and growth. Lendlease also announced a 5 cents per share cut in its final dividend following the weaker result.
However, it wasn't all doom and gloom for Lendlease shareholders, with the Aussie property group noting a record pipeline of development projects and significant liquidity to capitalise on available opportunities.
So, why did the Lendlease share price surge this morning?
Despite the soft earnings result, the Lendlease share price is currently trading 10% higher – but why?
Amongst the full-year announcement, Lendlease did announce that it is selling its troubled engineering division, which may have boosted investors' hopes about the company's future profitability and growth prospects.
The Aussie property group took a $500 million hit from the troubled segment in its Brisbane and Sydney-based projects.
The move comes after the group's November 2018 decision to scrap a planned $500 million bond issuance after a slowdown on its NorthConnex project and further engineering segment troubles.
Foolish takeaway
Overall, the Lendlease full-year earnings result was far from the most impressive I've seen, but investors seem buoyed by the strong pipeline and plans to sell the engineering group.
The Lendlease share price has performed well in 2019, after having plummeted lower in the second half of 2018, and could well serve as a warning sign for other Australian real estate companies in August.
