Lendlease (ASX:LLC) share price slides as market responds to AGM

Here’s the rundown from the company’s annual general meeting…

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The Lendlease Group (ASX: LLC) share price is falling this morning, down 1.73% to $10.48. The property and infrastructure giant’s shares are in focus as the market responds to the company’s AGM, although it is not a price-sensitive announcement.

Here are the key takeouts from the company’s annual summary and what has the market talking today.

What did Lendlease announce in its AGM?

The company advised that its operating income is likely to be tilted towards the second half of FY22. Return expectations outlined in its FY21 results remain unchanged. The Lendlease share price slumped on the back of these results, announced in August.

Lendlease acknowledges that FY22 will likely be another challenging year for the property and construction markets, as the effects of COVID-19 roll into the back end of 2021.

Despite this, activity across Lendlease’s Northern Hemisphere gateway sites is recovering strongly. This comes as Covid-19 restrictions have mostly peeled back there – especially in the residential sector.

Lendlease now expects a more “broad-based” recovery in those regions coming into the next calendar year.

Additionally, the company is consolidating its management structure and operating platforms and re-sizing its cost base for what it calls “near-term” challenges. Lendlease is confident it can achieve an annualised savings target of more than $160 million from these moves.

The group reflects its “end-to-end capability and real estate and a proven track record” in its $114 billion development pipeline. This is expected to support “the acceleration of production to more than $8 billion per annum by FY24”.

On a positive note, the company reckons it is well-positioned to capitalise on better operating conditions. It expects to reach its return on equity target range by FY24, alongside the $8 billion production target in the same year.

Beyond this, the company expects its production to surpass $8 billion consistently. It anticipates having more than $70 billion in funds under management by FY26.

However, this positive news has done little for the Lendlease share price today.

What’s next for Lendlease?

Aside from its production targets listed above, the company is optimistic about the prospects over the next periods.

It does expect the impacts of Covid-19 to remain in situ for a while. But it is positive on the strengths in its Northern Hemisphere operations and what this entails for Australia opening up post-pandemic.

As such it reckons “the underlying strength of [its] business will become apparent as global cities recover further”.

Lendlease also acknowledged the material impact that a restructuring charge of $130 million to $170 million and impairment expenses of $230million to $290 million will have on its statutory profit.

It also expects to upscale its investments platform via the launch of new funds and mandates, on the road to hitting its return on equity targets by FY23–24.

Lendlease share price snapshot

The last 12 months haven’t been kind to the Lendlease share price. It is in the red by 27% in that time and has lost 20% this year to date.

That’s well behind the benchmark S&P/ASX 200 index (ASX: XJO)’s climb of around 14% in the past year.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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