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Tue June 18 2024

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Lendlease retrenchment begins

29 May Australian construction group Lendlease is selling its international operations and pulling back to its domestic market.

Lendlease is walking away
Lendlease is walking away

The sale of Lendlease’s international operations has already begun, with a deal agreed for its US East Coast construction business.

Sale of its UK operation – the old Bovis Construction business, acquired by Lendlease in 1999 – is expected to be completed within the next 18 months.

Lendlease Europe made a loss of £124m after tax in the year to 30th June 2023 and a loss of £222m the year before that. 

Lendlease Group made a loss of AU$232m (£121m) after tax in fiscal 2023 on revenue of AU$10.4bn.

The group result was hit by a $295m (£154m) gross provision for what the board described as "retrospective, industry-wide action by the UK government" – in other words, the post-Grenfell dangerous cladding clean-up. 

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Lendlease chairman Michael Ullmer said: “We recognise that our security price performance and  securityholder returns have been poor as we have faced structural challenges and a prolonged  market downturn. We need to take significant action at an accelerated pace to deliver value for our  securityholders, capital partners and customers.”

Lendlease has agreed terms with US construction firm Consigli Construction Co for the sale of its US East Coast construction operations,  including 45 current, under contract and pre-construction projects. As part of the sale, the majority of Lendlease’s US construction workforce will transition to Consigli. The deal is expected to complete in the first half of 2025.

 Lendlease chief executive Tony Lombardo said: “Through the decisive actions announced today, a new Lendlease is emerging. One that is firmly anchored in the very best of our proud legacy, but less complex, more focused and fit for purpose. This new Lendlease will be more easily understood by our people and customers, and transparent and predictable for securityholders.

“By reshaping the portfolio, concentrating on our core competencies in markets where we have proven we have the right to play, and the competitive advantage to win, the financial and operational risk profile will be lower, and we believe the quality of our earnings ultimately higher and more sustainable.

“Importantly, we do not launch this strategy from a standing start. Significant work has already been undertaken and we anticipate making further positive announcements in the near-term on our progress. We are well advanced on several transactions, and we have clear plans of action to implement the necessary change to reorient the organisation. We are confident in the strategy and have conviction in how we will execute."

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