Lendlease Group has announced plans to withdraw from the UK and sell its construction businesses, as part of a major restructure to focus instead on the Australian market.
Group CEO, Tony Lombardo, said by exiting international construction and early release of its development assets, the New South Wales-headquartered construction company could generate AD$4.5 billion (£2.3 billion) of capital, with AD$2.8 billion (£1.46 billion) anticipated by the end of FY2025.
The move, which follows several years of seeing its stock price tumble, means Lendlease could offload its UK construction business within 18 months, as plans to sell off its US operation are already well advanced, impacting around 1,400 jobs.
The group is targeting AD$125 million (£65.2 million) of pre-tax savings a year, a lower cost base and reduced debt, with results within the first 12 months.
Long term, Lendlease hopes to see a phased return of capital to its shareholders, as it targets an initial AD$500 million (£261 million) share buyback.
The group maintains its FY2024 guidance of a 7 per cent return on group equity, equating to approximately AD$450 million (£234.8 million) of operating profit after tax.
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.”
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