Lendlease Warns On Looming Writedowns

By Glenn Dyer | More Articles by Glenn Dyer

Global developer and investor Lendlease has warned its loss for the 2020 year could blow out to as much as $340 million due to more write-downs on the engineering services business and asset values.

In its unaudited results to June 30, 2020, released yesterday, the group says core profit after tax expected to be in the range of $50 million to $150 million reflecting COVID-19 impacts across the group.

This includes the impact of reductions in investment valuations in the second half in the range of $130 million to $160 million after-tax.

Lend Lease shares were down 1.3% to $12.21 yesterday.

The company said the anticipated costs associated with the exit from its engineering business of $550 million pre-tax, “with approximately $525 million pre-tax ($370 million after-tax) expected to be accounted for in FY20.

Lend Lease said it enters 2020-21 in a strong financial position with gearing at 30 June 2020 expected to be below 10% “and total liquidity above $5 billion”.

Lendlease withdrew its 2019-20 earnings guidance back in late April. Yesterday it said it was in a position to give “greater clarity” on some of the issues facing the company.

“Performance in the Investments segment will be impacted by reductions in valuations across the Group’s c.$4 billion investment portfolio, including the Group’s co-investments within the funds’ platform, Retirement Living business, and other asset positions,” the company said.

“The reduction in valuations in H2 FY20 is expected to have an impact on FY20 Core profit after tax in the range of $130 – $160 million.

“The retail asset management business within Investments has been working with retail partners as they navigate through a difficult period. This will have a negative impact on the operating earnings of the Investments segment in both FY20 and FY21,” Lendlease said yesterday.

“Further progress has been made on the exit of Engineering. The sale to Acciona is expected to complete in early FY21, subject to outstanding conditions, including third party consents, being satisfied. The Melbourne Metro Tunnel Project, NorthConnex and Kingsford Smith Drive projects are being retained by Lendlease. “

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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