New South Wales based construction company Lendlease is selling its UK and US businesses and exiting international markets to focus on Australian operations
Lendlease is leaving the UK and US markets, after several years of losses, to refocus efforts on the Australian markets.
Lendlease expects to complete the sale of its UK operation- formerly Bovis Construction, which was acquired by Lendlease in 1999- by the end of 2025.
The European arm of the Group has seen losses of nearly £350m after tax in the last two years, and losses of AU$232m on revenue of AU$10.4bn in Australia.
Lendlease estimates to generate £3.76bn from the divestment
Group CEO Tony Lombardo said that through early release of assets and sale of the businesses, the company could generate AD$4.5bn (£2.3bn) of capital, with an overall AD$2.8bn (£1.46 bn) anticipated by the end of the 2025 financial year.
Ongoing projects, such as the £330m refurbishment of Manchester’s Town Hall will be offloaded to local businesses.
Other cost saving measures include:
- A phased return of capital to shareholders after an initial AU$500m (£261m) share buyback
- Maintaining a 7% return on group equity, roughly AD$450m (£234.8m) of operating profit after tax
- Targeting AD$125m (£65.2m) of pre-tax savings a year, with a lower cost base and reduced debt
“We need to take significant action”
Lendlease chairman, Michael Ullmer, said, “We recognise that our security price performance and securityholder returns have been poor as we have faced structural challenges and a prolonged market downturn.
“We need to take significant action at an accelerated pace to deliver value for our securityholders, capital partners and customers.”
Lombardo added: “Through the decisive actions announced today, a new Lendlease is emerging. One that is firmly anchored in the very best of our proud legacy, but less complex, more focused and fit for purpose.
“This new Lendlease will be more easily understood by our people and customers, and transparent and predictable for securityholders.
“By reshaping the portfolio, concentrating on our core competencies in markets where we have proven we have the right to play, and the competitive advantage to win, the financial and operational risk profile will be lower, and we believe the quality of our earnings ultimately higher and more sustainable.
“There is no question that the Australian business of Lendlease is market leading and unique in the breadth and strength of its integrated capability and services.
“Moreover, the opportunities to grow remain significant with a robust project pipeline that plays to our core competitive strengths, especially in urban regeneration.
“Our priority will be to pay down debt and efficiently return capital to securityholders.
“This is a profound change. And is based upon making some very tough but necessary decisions.”
Consigli has already bought the majority of Lendlease’s US operations
Sale of the Group’s US East Coast construction operations was confirmed today(29 May 2024) to US construction firm, Consigli Construction Co (Consigli).
Consigli will acquire Lendlease’s East Coast construction operations including approximately 45 current, under contract and pre construction projects. As part of the sale, the majority of Lendlease’s US construction workforce will transition to Consigli.
Lendlease CEO Tony Lombardo said “Today’s announcement represents another step to simplify Lendlease to create a more focussed company for securityholders. It’s the culmination of more than 12 months’ work refining our US construction activities to focus on the US East Coast where we have a clear competitive advantage.
“The sale represents a great outcome for both our people, the majority of whom will move across to Consigli, and for our customers.”
