Lendlease reports a significant financial loss, attributing it to restructuring costs.
- The company’s remediation provision for UK building safety surged by nearly £26m.
- Lendlease recorded a pre-tax operating loss of £719.2m for the financial year.
- A new business strategy incurs substantial impairment and restructuring charges.
- Lendlease is preparing to withdraw from construction markets in the UK, US, and Asia.
Lendlease has announced a substantial financial setback, with losses exceeding £700m, largely due to significant restructuring costs across its global operations. The Australian contractor’s financial distress is echoed by a marked increase in its remediation provision for building safety work in the UK, which has soared to A$365m (£188.9m), marking an upward shift of approximately A$50m (£25.9m) over the previous year.
For the year ending 30 June 2024, Lendlease posted a pre-tax operating loss of A$1.4bn (£719.2m), a considerable rise from the A$238m (£123.2m) registered the previous year. According to company chair Michael Ullmer, the loss stems from expenses linked to a new business strategy, primarily involving impairment and restructuring charges, deemed essential for setting the firm on a path to future success. However, this strategic overhaul coincides with a reduction in turnover, falling from A$10.2bn (£5.3bn) to A$9.2bn (£4.8bn).
The remediation provision is set to address safety measures across 60 buildings in the UK, primarily constructed by Crosby prior to its 2005 acquisition by Lendlease. Despite the developments occurring before Lendlease’s ownership, the firm has pledged to cover these costs, estimating an expenditure of A$138m (£71.5m) within the next year, with the balance extending over five and a half years. Notably, Lendlease has settled with a third-party contractor to recover costs related to some buildings included in the provision, receiving the settlement payment in June 2024.
Amid financial challenges, Lendlease is in the preliminary stages of divesting from construction markets in key regions such as the UK, US, and Asia, a strategic move initially disclosed in May. In Asia, significant advancements have been accomplished, notably through the establishment of a life sciences joint venture with Warburg Pincus, effectively transitioning a portion of its construction workforce. Concurrently, Lendlease is finalising terms to offload its east coast operations in the US, marking a pivotal shift in its business strategy.
Lendlease is undergoing a strategic transition amidst financial losses, poised towards future realignment.
