The Lendlease Group (ASX: LLC) share price has risen over 8% in response to the FY19 report release.

Lendlease is a listed property group specialising in project management and construction, real estate investment and development. The business has been operating for over 60 years and now has around 13,000 employees across Australia, Asia, Europe and the Americas.

Lendlease’s FY19 Result

Lendlease reported that its core operating EBITDA (click here to learn what EBITDA means) fell by 9% in a mixed result. ‘Development’ EBITDA rose by 18% to $793 million, ‘Construction’ EBITDA declined by 29% to $211 million and ‘Investment’ EBITDA fell by 27% to $489 million.

Core EBIT also dropped by 11% to $1.23 billion. However, the business’ total net profit after tax (NPAT) fell by 41% to $467 which included a $500 pre tax provision on underperforming projects which were accounted for in the first half of the financial year.

The market was expecting a net profit of $425 million according to CommSec and Bloomberg, so it appears to beaten the expectations.

Lendlease is in the process of selling its non core business (engineering and services) which generated an after tax loss of $337 million. Several interested parties are currently undertaking detailed due diligence.

But, there were plenty of positives in the report. Its development pipeline is approaching $100 million and it achieved 17% growth of its funds under management (FUM) to $35.2 billion.

It also won a number of new projects, including three major urbanisation projects in Milan, Chicago and Sydney. It also won a $20 billion project in the San Francisco Bay Area after the end of the financial year. It’s also preferred on on two projects in London and Birmingham valued at approximately $17 billion.

It also told investors about its US residential investment partnership with a US$1 billion equity commitment.

Lendlease Management Comments

Lendlease CEO and Managing Director Steve McCann said: “It was a difficult year for the Group with the provision taken in the first half for underperforming Engineering projects impacting the overall result. 

As the separation process progresses, we remain committed to delivering the best possible outcome for our clients, employees and securityholders.”

Is Lendlease A Buy?

Lendlease certainly looks like an interesting option with its very large development pipeline and growing funds under management. But, I’m not sure about what a good price to pay is for Lendlease, and there are certainly risks involved with these huge projects. It might be easier to stick to reliable businesses like the ones in the free report below.


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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.