Property sector heavyweight Lendlease has clawed back its first half loss to $141 million from the previous year’s $264 million despite taking a big hit due to the UK’s defective buildings provision.
The $200-million slap came after the defects liability period on residential buildings in the UK was extended to 30 years from six by the UK government.
As well, stronger earnings from its Australian masterplanned communities sector and investments were dragged down by revaluation losses of $39 million.
The group’s core operating profit after tax was $105 million, compared to $28 million for the same period in 2022.
The company’s funds under management lifted by 8 per cent to $48 billion.
Lendlease also warned that while earning were likely to continue to improve in the second half of the financial year, inflation, interest rates and other factors were likely to have a bearing on that.
However, the company said, the turnaround under chief executive Tony Lombardo was progressing and that it was on track for improved operating returns.
Lendlease said it was experiencing strong demand for its high-end Sydney projects—30 per cent of its planned One Circular Quay tower is presold, equating to $800 million, while the three towers of One Sydney Harbour is 88 per cent pre-sold to the tune of $1.38 billion.
Supply chain issues as well as inflationary pressures dragged down construction earnings in the first half.
Lendlease said that although lower lot sales of 766 in the Australian land business reflected the rise in interest rates, strong margins were being achieved.
The land business settled 1022 lots during the half, up on the same period last year, but expected to “be below the full year target of 3000 to 4000 lots due to weather and associated production delays”.
