Lend Lease Corp., Australia’s biggest property developer, slumped the most in more than four years in Sydney trading after the company said that earnings from its Australian and European construction businesses fell.
Lend Lease declined 7.5 percent to A$8.65 at the close of trading in Sydney, the biggest drop since Feb. 5, 2009. Underlying construction markets in Australia and Europe had softened in the six months through June, Lend Lease said today in statements to the Australian stock exchange. The firm’s Asian development, Australian infrastructure development and Australian property businesses were stronger than a year earlier, the company said.
“When the infrastructure projects they are working on are completed over the next two years there is then a question of will there be replacement projects,” Scott Marshall, infrastructure analyst at Shaw Stockbroking Ltd., said. “We only have got one-and-a-half percent profit growth in 2014” forecast for Lend Lease, he said, adding that he won’t alter his forecasts based on today’s announcement.
Lend Lease said it will restructure its Australian construction and infrastructure businesses to create more competitive operations, according to one of the statements. The costs of the restructure will be included in the company’s fiscal year results, Sydney-based Lend Lease said.
The developer also said that it had established the Lend Lease Jem Partners Fund, which will buy Lend Lease’s 25 percent stake in Jem, a suburban retail and office development in Singapore. The sale would result in a lower effective tax rate for Lend Lease in fiscal 2013, the company said.
“It is pleasing to be on track to deliver a solid result in line with market expectations in a tough market environment,” Lend Lease Chief Executive Steve McCann said in the statement.
The lower taxes and steady profit forecast “means the quality of the profit has declined,” Marshall said.
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