Lendlease Group (ASX: LLC) shares are slipping in morning trade after the international property and infrastructure company reported its half-year results. At the time of writing, the Lendlease share price is trading down 0.76% to $11.80.
What’s moving the Lendlease share price?
Challenging operating conditions
The Lendlease share price is on the slide in morning trade despite the company reporting it has recovered from the worst of last year’s COVID-19 slowdown. However, activity still remains below pre-pandemic levels for the property management and development group.
Given the company is reflecting on results compared to the period before the world ground to a halt, there was a common theme throughout its report. In most cases, FY21 half-year results were down compared to the prior corresponding period.
However, Lendlease is reporting that momentum continues to build from the second half of FY20. As CEO and managing director Steve McCann noted, “Core operating EBITDA was $405 million, a significant improvement from the second half of FY20, although lower than the $525 million in HY20.”
Furthermore, the challenging operating conditions impacted each of the company’s business segments. Yet, it wasn’t all bad news, as the weaker environment allowed the company to seize urbanisation projects on attractive terms. These include city blocks in New York and the La Cienega Boulevard in Los Angeles, with a combined estimated end value of $1.8 billion.
The challenging period resulted in a 37% hit to Lendlease’s statutory profit after tax, at $196 million, down from $313 million. Investments were the heaviest impacted during the period, with the segment down 46% compared to last year. This was due to significantly fewer fees derived from asset management.
Outlook for Lendlease
Lendlease continues to shift towards a focus on core urbanisation and investment platforms. Currently, the development pipeline is $110 billion and is growing with additional projects in US and European cities. However, as international COVID-19 impacts linger, management remained cautious of near-term conversions.
The big standout is the urbanisation pipeline for Lendlease. As mentioned in the update by Mr McCann:
Our urbanisation pipeline is expected to create more than $50 billion of institutional grade assets for our investment partners and the Group’s investments platform. We expect to more than double our current $38 billion in funds under management as this pipeline is delivered.
Due to the impacted result, Lendlease expects to pay an interim dividend of 15 cents per share. This represents a decrease of 50% from the 30 cents per share interim dividend paid last year.
The Lendlease share price has fallen by more than 38% over the past twelve months.
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More reading
- Here’s why the Lendlease (ASX:LLC) share price is wobbling today
- Real reporting season surprise isn’t about profits but dividends
Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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