Firm attributes poor returns to ‘challenging trading conditions across the UK and continental Europe’
Revenue at Lend Lease’s European arm fell by 40.4% during the year from June 2010 to June 2011, dropping by AUD$1bn (£655m) to AUD$1.5bn (£982m).
Newly published results reveal lower returns at the Australian developer and contractor’s European arm, which is dominated by the UK business.
Revenue at the European construction division also fell by 40.5% to AUD$1.3bn (£853m), and profit after tax dropped 55.8%, from AUD$25.8m (£16.9m) to AUD$11.4m (£7.5m).
It follows results last month from fellow contractor Laing O’Rourke, which announced a halving of its profit and a 30% cut in its European workforce.
The news also comes in the year Lend Lease took the decision to drop the Bovis brand, one of the best known in UK construction, from its UK operation.
Lend Lease’s report concludes that the fall in profit after tax reflected “challenging trading conditions across both the UK and continental Europe”.
Nevertheless, Lend Lease chief executive and managing director, Steve McCann, said: “In the UK Lend Lease is well placed with our major urban regeneration projects that will be developed as the market recovers.”
Despite the overall fall in European revenue, Lend Lease said it had experienced a 26% increase in new construction work secured, of AUD$1.4bn (£918m).
It also said profit after tax in Europe increased by AUD$18.8m to AUD$137.4m (£89.9m), reflecting the AUD$125m sale of the group’s infrastructure arm to the Lend Lease PFI/PPP Infrastructure Fund LP (UKIF).
The UKIF was launched with £220m to invest in social infrastructure assets over the next five years. Among the group’s future projects is a £1.5bn regeneration of London’s Elephant and Castle.
Following Laing O’Rourke’s results, chief executive Ray O’Rourke attributed the development to the “economic storm” facing engineering and construction.
A spokesperson for Lend Lease’s European arm declined to comment on the European results in detail.