New Australian infrastructure projects are likely to deliver growth to Lend Lease Group over the next financial year, despite global uncertainty.
The construction company and property developer says most sectors in Australia are presenting attractive opportunities, while Asia has strong market fundamentals. But it warns the economic outlook in the US and Europe remains “uncertain”.
Lend Lease chief executive Steve McCann said despite some short-term impact from weak consumer sentiment, the outlook across its Australian businesses was “positive”.
“Our expectation is that with the new projects that we’re bringing on stream in the next six months that we’ll have a pretty good year,” he told analysts on Friday.
Lend Lease increased full year profit by 42.6 per cent to $492.8 million for the 12 months to June 30, from $345.6 million a year earlier. The release of results was quickly followed by an announcement chief financial officer Brad Soller will exit the firm in January 2012 to pursue new opportunities.
As well, Jane Hemstritch will join the Lend Lease board of directors on September 1.
Analysts said the firm’s 50 per cent growth result on the prior year was distorted by the sale of its King of Prussia business, which recorded an after tax profit of $101 million. Lend Lease securities shed 30 cents, or 3.66 per cent, closing at $7.89 on Friday.
The group said recent negativity about the Australian economy had been “overstated” and it was confident about the mid to long-term outlook.
The group also revealed its controversial landmark Barangaroo project in central Sydney would begin to turn a profit in the second half of fiscal 2012, with up to $70 million of work to start in the coming months.
Lend Lease said it has received a “significant amount” of tenant inquiries about Barangaroo, while in Europe more than half of the London Olympics athletes village had been delivered.
But residential and commercial property sales were still slow, with people taking longer to make an investment decision.
Mr McCann said Australia’s high savings rate would be “good” for the economy over the longer term.
Conditions in the America’s remained patchy and in the United Kingdom, but the group was well-placed with major urban regeneration projects, he said.
Profit growth was achieved across all regions, even though challenging economic conditions continued in offshore markets.
Morningstar analyst Scott Courtney described it was a “good result” from a diversified firm.
The weaker share price could be attributed to market sentiment due to the company’s exposure to the US and Europe, he said.
It was the first time investors had a look inside the group since it entered an agreement with Bilfinger Berger SE to acquire 100 per cent of Valemus Australia.
Lend Lease says it’s in a strong liquidity position, with cash reserves of more than $1 billion and undrawn committed bank facilities of $815.7 million.
The group declared a final distribution of 15 cents per security, unfranked.
