Property, Infrastructure Drive Lend Lease Profit Higher

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Friday, August 23rd, 2013
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Despite the building slowdown in Australia, property and construction giant Lend Lease has unveiled a significant increase in profits as a more than doubling in the Group’s earnings in property development and an almost doubling in infrastructure development profits more than offset declining earnings in construction and investment management and a spike in corporate costs amid restructuring charges.

Despite the building slowdown in Australia, property and construction giant Lend Lease has unveiled a significant increase in profits as a more than doubling in the Group’s earnings in property development and an almost doubling in infrastructure development profits more than offset declining earnings in construction and investment management and a spike in corporate costs amid restructuring charges.

In its latest announcement, the company unveiled a ten percent rise in net profit after tax from $501.4 million in 2011/12 to $551.6 million in 2012/13, whilst earnings before interest, tax, depreciation and amortisation (EBITDA) rose 12 percent from $664.3 million to $744.2 million.

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Driving the result was a the group’s Development division, which saw a massive jump in profits (see chart) amid earnings relating to the first two commercial towers at Barangaroo South, the sale of the Group’s interest in the landmark JEM complex in Singapore and divestment of Greenwich Peninsula Regeneration Ltd.

Meanwhile, financial close of four major projects – Sunshine Coast University Hospital, Eastern Goldfields Regional Prison, New Bendigo Hospital in Australia and the Privatized Army Lodging (PAL) Group C project in the US – drove an almost doubling in Infrastructure Development profits.

On the negative side, however, weak building conditions in Australia, Asia and UK slashed Construction earnings whilst one-off costs relating to the restructure of the Australia business, the transformation program and the investigation relating to discrepancies in the accounts of the Group’s Abigroup business saw a significant increase in corporate costs.

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Chief Executive Steve McCann says the company was set to continue to grow over the next three years in spite of challenging conditions.

“While the market outlook presents challenges, the depth of our pipeline provides Lend Lease with significant earnings visibility and a platform for a strong growth trajectory over the next three years” McCann says.

Lend Lease’s positive result contrasts with massive losses having been incurred by building industry manufacturers such as Boral, BlueScope and Arrium but follows a return to profit delivered by counterpart Leighton earlier this month.

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