First half earnings at property and construction giant Lend Lease have fallen, but the company has moved to assure investors the decline was against an abnormally strong base and that its underlying businesses are performing well.
In a statement released to the Australian Stock Exchange on Wednesday, Lend Lease said its net profit after tax for the six months to December 2013 came in at $251.6 million.
Whilst this is down from the $300.9 million earned in the previous corresponding period to December 2012, Lend Lease says that half included earnings relating to the first two commercial towers at Barangaroo South as well as the recognition of the group’s interest in Greenwich Peninsula Regeneration Limited in the United Kingdom and was therefore abnormally strong.
Leading the profit decline was the company’s Australian and European operations, with earnings dropping from $304.3 million to $223.5 million in the former and $58.4 million to $8.2 million in the latter amid the abnormally strong results from these two regions in the previous comparative period notwithstanding increasing demand for residential construction in Australia.
On the flip side, development and fund management fees associated with the company’s JEMᶱ project to create the third largest shopping mall in Singapore saw the Group’s Asian earnings jump $184.4 percent to $69.1 million whilst a profit on sale of the Winston-Salem Veterans Affairs Healthcare Centre in North Carolina saw earnings from the Americas rise 85 percent to $48.1 million.
Notwithstanding the comparative profit fall, Group Chief Executive Officer and Managing Director Steve McCann welcomed the latest result, which he described as a solid performance from a well performing business.
“Over the last five years we have reshaped the business and are now delivering on our strategic objectives” McCann said. “The Group continues to realise value from its significant pipeline of urban regeneration projects. Nowhere is this more evident than on the Barangaroo South project in Sydney where construction has progressed well and we are continuing discussions with potential tenants for International Towers Sydney.”
McCann said Lend Lease had sold all of the 159 apartments on offer in the first release or residential apartments at Barangaroo South, whilst a further highlight during the past six months involved financial close the Darling Harbour Partnership.
Whilst not giving specific numbers, he said the outlook was positive, with a strong pipeline of forward sales in the residential development business set to underpin earnings in coming years.