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Property project developer Lendlease (ASX: LLC) has capped off a tough FY19 with a 40 per cent dive in profits, down to $467 million from $793 million.
The financial year was a rough one for the developer, with class actions being thrown at it by Phi Finney McDonald and Maurice Blackburn, and an ailing engineering and services business dragging its figures down.
Group CEO Steve McCann (pictured) acknowledges that he is disappointed with the FY19 results but is optimistic about the group's future.
"It was a difficult year for the group with the provision taken in the first half for underperforming engineering projects impacting the overall result," says McCann.
The group is currently engaged in the sale process of its engineering and services business, which continued to an after-tax loss of $337 million for Lendlease.
That underperforming business is also the section of Lendlease privy to a class action brought by law firm Phi Finney McDonald currently.
Excluding its engineering business Lendlease says that its core business recorded a profit of $804 million.
"As the separation process progresses, we remain committed to delivering the best possible outcome for our clients, employees and securityholders," says McCann.
Things are looking particularly good for the group's core business however, with $100 billion in its development pipeline including a major project for Google and the redevelopment of the Gold Coast Airport.
"Broadening our urbanisation expertise into targeted international gateway cities has driven strong growth in the group's long dated development pipeline, with some tremendous wins from both government and private sector clients," says McCann.
During the financial year there were 1,623 residential for sale apartment settlements, with Darling Harbour in Sydney, Victoria Harbour in Melbourne, and Elephant Park in London accounting for the majority of the settlements.
In addition, the group completed its first ever residential for rent apartment building in FY19 at Southbank in Chicago.
Despite the profit dive, Lendlease says it remains in a strong financial position.
"Our portfolio of 21 major urbanisation projects across 10 cities delivers on our objective of diversifying to targeted gateway cities," says McCann.
"These long-dated projects provide strong visibility of future earnings."
Shares in Lendlease are up 10.78 per cent to $15 per share at 10.08am AEST.
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