09/11/2018 - 14:33

Lendlease flags $350m impairment

09/11/2018 - 14:33

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Lendlease's chief executive says he is embarrassed by the problems that have forced the construction company to take a $350 million post-tax impairment in its first-half results.

Lendlease flags $350m impairment
The company is reviewing its engineering and services unit.

Lendlease's chief executive says he is embarrassed by the problems that have forced the construction company to take a $350 million post-tax impairment in its first-half results.

The ASX-listed firm said Friday it is launching a review of its engineering and services unit after problems on projects including Sydney's NorthConnex motorway tunnel forced the provision.

Lendlease's shares plummeted 17 per cent after it announced a move it said is mostly related to lower productivity in post-tunnelling phases of NorthConnex; as well as wet weather, access issues and the need to fix defective design on other projects.

"It is more than embarrassing," chief executive Steve McCann told investors on Friday.

"We've got to take accountability and I've got to take personal accountability as the CEO of this business that we haven't got this business yet into the shape that it needs to be in."

Mr McCann gave no further details.

The NorthConnex problems are understood to be unrelated to a site accident last month in which a worker's leg was crushed by a giant saw.

Lendlease is negotiating with third parties to mitigate anticipated losses but said it cannot give guidance on what impact that would have.

Lendlease’s engineering division has no projects in Western Australia, while its building arm is currently completing a $216.9 million contract as part of the Campbell Barracks redevelopment project in Swanbourne.

Some of the other major engineering contracts include a $1.7 billion contract for the Melbourne Metro Tunnel, and an $885 million road project in South Australia.

Shares in the company were $2.96, or 17 per cent, lower at $14.49 at 1131 AEDT.

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