Lendlease back in black but warns of construction | Australian Markets

Property giant Lendlease has limped back to the black because it tries to deal with its Australian development and investment operations after a collection of pricey international forays.

Posting a $48 million revenue for the December half, the Sydney-based group claimed to have made “strong progress” on its deal with higher-performing companies unveiled in Might final yr.

The modest revenue compares with a loss of $136m for the December half of 2023 and a huge enchancment on the $1.5 billion backside line losses after Lendlease acted on an investor revolt over failed UK, US and European forays.

And Lendlease is making ready to tackle the Australian Tax Workplace over $120m of assessments for allegedly unpaid capital features tax on the partial gross sales of its retirement residing operation.

In notes to the revenue end result, Lendlease mentioned it had obtained “independent legal advice” on its place and it believed its tax remedy on its retirement village dealing was according to the law and a ruling by the tax workplace in 2022.

Lendlease would “contest the matter through litigation” if its objections to the tax workplace had been unsuccessful.

“The group intends to vigorously defend its position,” it advised the stock exchange.

Former Bunnings boss John Gillam took over from Michael Ullmer as Lendlease chair in November final yr as traders compelled motion over plunging income and the share price falling by two-thirds this decade.

The latest end result exhibits the construction division remains to be battling, struggling a a $26m loss as income slipped by $331m to $1.55b.

Chief government Tony Lombardo mentioned materials prices inflation and subcontractor points hit income, pointing to 2 tasks having “negatively impacted financial performance”.

Whereas not figuring out these two tasks, Mr Lombardo mentioned his workforce was within the “process of recovering some of those losses” associated to fixed price Australian contracts secured in 2020/21. “Some of those discussions are commercially in confidence,” he mentioned.

“There’s been supply chain, insolvencies and productivity issues. They’ve been impacted by hyper inflation in construction.”

Mr Gillam mentioned the issues with the tasks had been recognized “well after” Lendlease launched its full -year ends in August and he anticipated the Australian construction division to be profitable within the second half.

“We believe that, based on the thorough review of all projects, that the problems isolated these two projects,” he mentioned.

The Lendlease bosses mentioned within the outcomes announcement to the stock exchange that recognized loss-making tasks would accomplished within the June half and project losses had been absolutely recognised within the December half end result.

The Lendlease development phase loved a $95m half-year internet revenue, up from a $29m loss, thanks largely of settlements on two huge house tasks beside Sydney Harbour.

Mr Gillam and Mr Lombardo painted an optimistic image for the developments division, saying it was well-placed for new mixed-use and residential tasks.

Lendlease shares had been trading about 1.2 per cent down on Monday morning.