Lendlease (ASX:LLC) share price tumbles on ‘reset year’ results

COVID-19 restrictions have hit construction projects across the world.

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Key points

  • Lendlease share price opens sharply lower
  • The company reported a big statutory loss
  • An interim dividend was declared

The Lendlease Group (ASX:LLC) share price is taking a tumble in early trade, down 2.4%.

Lendlease shares closed Friday at $10.31 and are currently trading for $10.07.

Below we look at the highlights from the ASX 200 international property group’s financial results for the half year ending 31 December (1H FY22).

Lendlease share price slides on losses

  • Statutory loss after tax came in at $264 million
  • Earnings per share (EPS) of 4.1 cents
  • Launched $6 billion of investment partnerships to grow funds under management
  • Interim dividend of 5 cents per share, unfranked, payable on 16 March

What else happened during the half year?

Lendlease reiterated that FY22 is a reset year for the company. It is working to simplify its operating model with an eye to future growth. And the company has been impacted by the ongoing pandemic.

Despite the sizeable statutory loss, Lendlease reported a core operating profit after tax of $28 million. This figure, the company said, “Reflects Statutory earnings adjusted for non-operating items and the non-core segment.”

The $264 million statutory loss was driven by the loss of $262 million from non-operating items. These included restructuring charges, development impairments and revaluation gains. There was also a loss of $30 million recorded from the company’s non-core segment.

The property group said its gearing of 12% is at the lower end of its 10–20% target range. It has $3 billion in liquidity, comprised of $800 million cash and $2.2 billion in available undrawn debt.

What did management say?

Commenting on the results, Lendlease CEO Tony Lombardo said:

Despite the ongoing impacts of COVID-19, we’ve made significant progress in reducing the cost base of the organisation as well as improving operational execution and capital allocation decisions.

We also made significant headway progressing projects and initiatives we expect will drive future profits. This includes introducing major new investors to our platform, growing our funds under management, and achieving important planning milestones across projects in San Francisco, London and Sydney.

Lendlease CFO, Simon Dixon added:

Financial strength is a priority as we transition through a reset year for the Group. Simplification is enabling a lowering of our operating cost structure that will enhance returns as growth re-emerges.

What’s next?

Lendlease said it expects that the second half of FY22 will see “significant improvement” in its core business activity and profitability, with the first half forecast to “mark the trough”.

The company said costs savings will start to be realised in the upcoming months, with improved productivity from its construction segment amid reduced COVID restrictions. Lendlease has numerous multi-billion projects under development.

Looking ahead, Lombardo said, “We’re confident Lendlease has passed the low in profitability. While COVID risks remain, improved visibility of factors within our control provides more certainty on the outlook for the Group.”

The company releases it full year results on 22 August.

Lendlease share price snapshot

Over the past 12 months the Lendlease share price is down 14%. That compares to a gain of 6% posted by the S&P/ASX 200 Index (ASX: XJO).

Year-to-date, Lendlease shares are down 7%.

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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