Lendlease share price sinks on $232 million full-year loss

Lendlease faced a number of headwinds over the past year but forecasts improving conditions for FY24.

The Lendlease Group (ASX: LLC) share price is taking a tumble on Monday.

Shares in the S&P/ASX 200 Index (ASX: XJO) property and infrastructure group were up as much as 2.5% in early trade today. But momentum quickly reversed.

At the time of writing, the Lendlease share price is down 4% at $8.14.

This comes as ASX 200 investors digest the company's full-year results for the financial year ending 30 June (FY23).

Read on for the highlights.

falling infrastructure asx share price represented by disheartened looking builder on work site

Image source: Getty Images

Lendlease share price pressured by rising losses

  • Core operating profit after tax of $257 million, down 7% from FY22's $276 million
  • Statutory loss after tax of $232 million, compared to a $99 million loss in FY22
  • 9% year on year growth in funds under management (FUM) to $48.3 billion
  • Full-year dividend payout of 16.0 cents per share, in line with FY22

What else happened during the year?

It's broadly been a year of struggles for the Lendlease share price.

The company reported that it has faced headwinds from retrospective legislation in the United Kingdom relating to residential building safety regulations, difficult trading conditions, provisions against prior projects and receivables, and lower property valuations.

Still, Lendlease said its core strategy remains on track. The company pointed to the growth in FUM and its development work in progress (WIP) of $22.9 billion. Lendlease also saw an increase in development commencements to $7.7 billion, noting that the execution of its pipeline is picking up pace.

Other key business activities included $1.3 billion of portfolio divestments over the year, with more to come.

FY23 also saw Lendlease launch its first Australian build to rent products, with $28 billion in the global pipeline.

What did management say?

Commenting on the results that are pressuring the Lendlease share price today, CEO Tony Lombardo said:

We made significant progress during the year towards being investments-led and further simplifying the group. However, our financial performance was impacted by a number of issues related to prior projects and activities.

Despite these challenges, we grew our funds under management to $48.3 billion, increased development commencements, further streamlined our operations, and are now on track to achieve our ROE [return on equity] target range in FY24.

Now what?

Looking at what could impact the Lendlease share price in the year ahead, the company said that despite ongoing headwinds it expects to achieve the lower end of its ROE target of 8% to 10% in FY24.

FUM growth is forecast to continue "in line with recent performance".

Development earnings are expected to further recover. And Lendlease said the cuts to its global workforce should deliver a pre-tax benefit of some $60 million to FY24's core operating profit.

Lendlease share price snapshot

The Lendlease share price is down 22% over the past 12 months.

Despite today's slide, shares remain up 3% in 2023.

Motley Fool contributor Bernd Struben has no position 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 Scott Phillips.

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