(SYDNEY) Lend Lease Group, Australia’s biggest property developer, posted a 3.8 per cent drop in first-half profit after sales in Europe and the US declined and said it is in due diligence with potential partners on the funding of its Barangaroo project in Sydney.
Net income in the six months ended Dec 31 fell to A$217.8 million (S$294.1 million), or 38.6 Australian cents a share, compared with A$226.5 million, or 38.9 cents a share, a year ago, the Sydney-based company said yesterday in a statement to the Australian stock exchange. The company’s dividend for the half fell to 16 cents from 20 cents a year ago.
‘As a sign that Lend Lease may need to reinvest more equity into Barangaroo, distribution per security was down, despite flat earnings per share,’ Winston Sammut, managing director of Sydney-based Maxim Asset Management, said. ‘Comments on Barangaroo are non-specific, and needed more detail.’
Lend Lease shares rose 0.3 per cent to A$7.31 at the close of trading in Sydney. They’ve gained 2.1 per cent so far this year, compared with a 4.9 per cent increase in the benchmark S&P/ASX 200 index.
Lend Lease yesterday said it has been in exclusive due diligence since November with potential investors to help fund Barangaroo. It is also ‘progressing well’ on leasing discussions with prospective tenants, it said.
Media and analysts had speculated an agreement with potential tenants and investors for Barangaroo may be delayed after Lend Lease failed to make an announcement by the end of December after flagging it would do so.
‘The group has clear priorities and is focused on the delivery of its major projects,’ Steve McCann, managing director of Lend Lease, said in the statement. ‘The group made significant progress implementing its strategy including the commencement of construction at Barangaroo South in Sydney.’
The company remains ‘cautious’ about its outlook in the medium term due to the uncertainty in global markets and its impact on availability of funding, Mr McCann said.
Lend Lease’s results were ‘ahead of expectations, with stronger construction results’, Anthony Passe-de Silva, an analyst at JP Morgan Chase & Co, who has an ‘overweight’ rating on the stock, wrote in a report yesterday. ‘The diverse development pipeline should help the group grow earnings over the medium term.’
Operating profit rose 51 per cent at the company’s Australian business, and jumped 82.3 per cent in its Asian unit. It dropped 54.6 per cent in its European business and was down 37.4 per cent in the US, it said yesterday.
The company reduced its exposure to the US and Europe, with Americas unit accounting for 6 per cent of its total business, from 10 per cent a year ago, Lend Lease said. European business made up 14 per cent, compared with 34 per cent a year ago, while Australia accounted for 70 per cent, up from 50 per cent a year ago, it said.
Lend Lease also appointed Colin Carter, one of the founding partners of the Boston Consulting Group in Australia, to its board of directors, it said in a separate statement. Mr Carter, non-executive director of Wesfarmers Ltd and Seek Ltd, will join the board on April 2, it said. — Bloomberg
Source: Business Times 21 Feb 2012