The multinational behind East Perth’s Waterbank development has linked decreased construction and development earnings and a restructure for the loss.
Multinational developer Lendlease, behind the delayed Waterbank East Perth development, has posted a $264 million loss following a decrease in construction and development earnings in the latter half of 2021.
Lendlease Group announced its half-year earnings today, reporting a net loss after tax of $264 million, compared with a $196 million profit in the prior corresponding period.
It also posted an impairment expense of $299 million before tax, which included the write-down of Waterbank.
In addition, Lendlease incurred $124 million in restructuring costs, describing the first half of this financial year as a “reset” period.
The company’s chief executive, Tony Lombardo, told investors the company would simplify its operating model, which included selling some its less-profitable projects.
"As previously flagged, successfully resetting Lendlease's operating model forms a key part of our future success,” Mr Lombardo said.
“Despite the ongoing impacts of COVID-19, we've made significant progress in reducing the cost base of the organisation as well as improving operational execution and capital allocation decisions.
"We also made significant headway progressing projects and initiatives we expect will drive future profits.”
Lendlease sold a 28 per cent stake in its US military housing income stream and an expected $2 billion in developments to be complete as COVID-19 restrictions eased.
Mr Lombardo said the group would introduce major new investors to its platform, grow its funds under management, and achieve key planning milestones across projects in San Francisco, London and Sydney.
"We're confident Lendlease has passed the low in profitability,” he said.
“While COVID risks remain, improved visibility of factors within our control provides more certainty on the outlook for the group.”
Lendlease’s Waterbank project in East Perth has remained undeveloped for a decade after the group was appointed as a developer for the site in 2011.
The Barnett government in 2010 described Waterbank as the cornerstone project for the 40-hectare development area.
The site, earmarked for apartments and offices, has attracted close to $100 million in state government investment via the Metropolitan Redevelopment Authority.
Scaled-back construction work in the US has dented the company’s profits, as the pandemic impacted work in that region.
The company’s chief financial officer, Simon Dixon, said the group had the financial capacity to deliver on its $112 billion development pipeline, while continuing to pursue investment opportunities.
"Financial strength is a priority as we transition through a reset year for the group,” he said.
“Simplification is enabling a lowering of our operating cost structure that will enhance returns as growth re-emerges."
The company told Business News it remained committed to WA, with more than a billion dollars of defence projects under way, masterplanned communities at Alkimos, Ellenbrook and Joondalup.
Lendlease’s impairment costs were more than the expected amount of between $230 million and $290 million.
Lendlease Group’s shares were up 0.097 per cent to $10.32 at the time of writing.