But the Australian firm did post improved profit in its most recent results
Lendlease has warned of a challenging year to come as covid-19 and a restructuring plan cast a shadow over the firm鈥檚 improved financial position.
In its results for the year to 30 June 2020, which were announced this morning Australian time, the firm posted a pre-tax profit of A$222m (拢118m) 鈥� a significant improvement on the $310m loss (拢168m) it posted last year, which was largely due to the hit it took selling its engineering business.
Despite the improved position chief executive Tony Lombardo, who was giving his first results update since taking the top job in June, said the firm had definitely felt the pressure of the pandemic in the past 12 months.
He said a $60m (拢32m) pre-tax provision was taken following weaker rental demand and lower rents for the recently completed apartments at London鈥檚 Elephant Park, while a similar $40m (拢21m) hit was taken on the scheme鈥檚 One Sydney Harbour scheme.
The property giant, which posted turnover of $9.9bn (拢5.24bn) down from $11.8bn (拢6.25bn) said construction activity was constrained by delays to the start of new projects, site shutdowns and lower productivity and that the impact of social distancing protocols across its sites was reflected in a 16% decline in revenue compared with a 9% decline in hours worked.
The firm added that it was still concerned about a tough 12 months to come, announcing plans to strip out $160m (拢85m) in costs each year that will put it in a better position to respond to an upturn in the construction and development markets it is expecting in the year to 30 June 2023.
Lombardo said: 鈥淎s an international real estate group we expect FY22 to be the cyclical low point for both development production and profitability.
鈥淲e are targeting to deliver solid returns across the construction and investments segments, although activity levels are likely to continue to be affected by the pandemic.鈥�
Shares in the ASX-listed firm lost 7.5% on Monday, to close at $11.64 (拢6.16), after it said profit for the first half of its next financial year would take a couple of hits associated with the business changing direction.
It said it was planning for a restructuring charge associated with the revised organisational structure of between $130m (拢69m) to $170m (拢90m) and an impairment of between $230m (拢122m) and $290m (拢154m) because of extra cash it will spend on 鈥渁 small number鈥� of development projects on which it has decided to change strategy.
The review that will determine how exactly the business will be restructured is still being carried out by Lombardo.
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