Lend Lease profits jump on casino deal

Construction giant Lend Lease has reported a 39 per cent profit jump after securing financial backing for a six-star casino on Sydney Harbour.

Lend Lease made a net profit $302.3 million in the six months to December 31, up from $217.8 million in the second half of 2011.

Its Australian business delivered the bulk of the profit growth, as the first commercial agreements were brokered for Lend Lease's Barangaroo South project on Sydney harbour.

Lend Lease's local business posted a profit of $304 million, up from $207 million in the previous corresponding period.

Chief executive Steve McCann said the company was in a strong position, with a project pipeline worth about $21.4 billion.

He said the company had "good visibility of earnings in the 2013 financial year", but did not provide more specific financial guidance.

Major projects in Sydney, Brisbane and London were expected to underpin construction earnings from 2015.

At a shareholder briefing in Melbourne, Mr McCann said Lend Lease expected engineering and construction activity to peak during the coming two years "as major project investment continues to slow".

"The commercial construction sector remains challenging with activity levels expected to remain subdued," he said.

"However, our project management and construction business is well placed, with a strong pipeline of internal development and social infrastructure work."

Mr McCann said the company had been reshaped to generate the majority of its earnings in Australia.

"The Australian economy is facing its challenges but it remains an economy that's strong on a relative basis," he said.

Residential market conditions, however, were still soft because of weak consumer confidence and concerns about job security.

But Mr McCann expected lower interest rates to increase activity in 2013.

"Our view is that it will be some time before we see any momentum," he said.

The NSW and West Australian markets were regarded as the strongest, with Queensland starting to show small signs of recovery.

Australia's retail environment was expected to remain a challenge.

Several office tenant agreements at Barangaroo have been signed with major financial companies, and Lend Lease has also agreed to develop a hotel on the site for James Packer's company Crown.

Lend Lease expects financial closure by late 2013.

The company declared an unfranked interim distribution of 22 cents.

Lend Lease also said it had altered its remuneration structure for Mr McCann to limit the cash component of any short-term incentives to $800,000.

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