Olympic contractor sees European profits drop 55 per cent, despite construction profits rising by 57 per cent.
Lend Lease saw profits in its Europe business fall by more than half in the six months to December 2011 compared with the same period in 2010, it reported today.
The firm - a leading player in the private finance initiative market in the UK - said there had been a reduction in profits from the sale of PFI and commercial assets when compared with the prior period.
European construction saw increased profits despite a 29 per cent fall in turnover, from £508.6m to £361.6m. Earnings before interest, taxes, depreciation, and amortisation were up 16 per cent from £7.61m to £8.84m. Profit after tax was up 57 per cent, from £3m to £4.69m. That comes after the firm reported a 50 per cent fall in construction profits at the year end back in August 2011.
Posting half-year results to the Australian Securities Exchange today, the firm said total group revenue increased by a third, from £2.93bn to £3.92bn, with pre-tax profit creeping up from £189.5m to £190m. Construction accounted for £3.51bn of sales. Australia makes up 65 per cent of revenue and 70 per cent of profits.
European revenue – which represents 11 per cent of group share - dropped from £578m to £437.2m, with EBITDA down from £66m to £33.8m and profit after tax down 54 per cent from £64.3m to £29.2m.
EBITDA for infrastructure development - which includes management and development of public-private partnership projects - was down 73 per cent, from £36.8m to £9.72m.
The current results include profits from the sale of three healthcare and education PPP assets and Chelmsford Meadows shopping centre. In the last period, it sold 11 PFI assets to the Lend Lease PFI/PPP Infrastructure Fund and its stakes in the Pier Walk Office building in Greenwich, London and Overgate shopping centre, in Dundee, Scotland.
The firm said: “Uncertainty regarding the European debt crisis and tough economic conditions continue to make trading difficult across the group’s UK and Europe business.
“However, the UK remains well placed with its major UK urban regeneration projects expected to contribute earnings as the market recovers.”
Lend Lease said European construction profits were boosted by the Olympics Athletes Village, Birmingham Building Schools for the Future, Ministry of Defence projects and the BP Global Alliance projects across Europe.
The firm said major urban regeneration projects are progressing well, including in Elephant and Castle, while planning approval was secured for the masterplan of The International Quarter, Stratford City, London.
Australia saw a 51 per cent hike in profit to £140.6m as it integrates its infrastructure business and starts work on major projects such as Barangaroo South in Sydney’s business district. Profit in Asia almost doubled to £19.6m, while US profits fell 37 per cent to £12.3m.