Global developer and construction giant Lendlease has put its troubled engineering business behind it and bounced back with $112 billion worth of developments as it looks to generate more earnings overseas.
The ASX-listed construction company joined a growing number of companies warning about possible impacts from the coronavirus and has issued "notice of potential delays". Chief executive Steve McCann said the notices were precautionary and the coronavirus had not had any "material impact at this time".
"The supply chain is monitored on an ongoing basis but we haven't seen any material impact and the work at the Crown Resorts tower at Barangaroo in Sydney's Darling Harbour is continuing," Mr McCann said.
The three residential towers of Lendlease’s One Sydney Harbour development at Barangaroo.Credit:
"We are taking every precaution we can with our staff and in the short term we have stopped overseas trips, including any marketing visits to Hong Kong for the One Sydney Harbour apartments in the short term, but if the virus issues continue, it may reduce the flow of inquiries down the track."
With the $112 billion in projects on the books, boosted by a deal with the Google in the United States and development approval for the next stage of the Melbourne Quarter office complex, the business "is robust", Mr McCann told investors.
"We have 21 major urbanisation projects across nine gateway cities," Mr McCann said. In addition, the construction division backlog is now worth $14 billion."
For the half the group reported a 13 per cent fall in net profit after tax to $308 million, but the non-core business swung from a loss of $339 million to a profit of $5 million, following the sale of its engineering business to Spanish group Acciona.
Analysts said the result was in line with expectations and have forecast improved earnings after the sale of the services business and an uptick in residential settlement in the 2021 financial year.
"We believe the result was a relatively high-quality one for Lendlease, with underlying development margins appearing to have exceeded our expectations," Goldman Sachs' analyst Ian Randell said.
The group is in discussions with parties on the sale of its services business and said it expected an outcome in the coming months.
The interim dividend was 30¢ per security.
Lendlease will also follow its strategy of de-risking the balance sheet with the sell-down of a 25 per cent stake in the Victoria Cross metro station project in Sydney and the creation of the listed Singapore real estate investment trust.
Mr McCann said the group would look to sell down its investment in the $4 billion One Sydney Harbour apartment project in Barangaroo. Presales have reached $1.4 billion.
In the UK Lendlease has signed a new £80 million ($155 million) deal with the Canada Pension Plan Investment Board for the Build-to-Rent homes, which will be at Lendlease’s Elephant Park development in south London.
Lendlease shares rose 7.4 per cent to $18.72.
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