Full Year 2026 LendLease Group Earnings Call Transcript
Key Points
- IDC earnings per security of $0.337 for FY26 were at the top end of guidance, with FY27 guidance of $0.37-$0.41 indicating ~16% EPS growth at the midpoint.
- Construction segment delivered a strong performance with EBITDA margin of 4.3%, above the target range, supported by a 29% revenue increase and a record $6.4 billion in new work secured.
- Development pipeline grew to $13.2 billion, including high-quality projects like Sydney's Metro Hunter Street West and 175 Liverpool Street, with a strong completion profile of over $8 billion from FY27 to FY29.
- Capital recycling progress was made with $1.2 billion in CRU transactions contracted, including the sale of TRX retail and office interests and the divestment of Keyton Retirement Living, reducing CRU invested capital to $2.5 billion.
- Net overheads were reduced by 22% to $363 million, with an exit run rate of ~$350 million, reflecting continued cost-saving initiatives.
- New partnerships were established, including a mandate with Malaysia's largest public pension fund and a $1.1 billion modernization opportunity in Japan, with Lendlease co-investing at 5% or less.
- Strong liquidity of approximately $4 billion was maintained, with investment-grade credit ratings confirmed by Moody's and Fitch.
- The Impact Partnership Joint Venture with The Crown Estate became operational, with three of six projects transferred, expected to contribute additional profits in FY27.
- Group recorded a statutory loss after tax of $749 million, including $182 million in non-cash negative investment property revaluations and impairments.
- CRU segment reported an EBITDA loss of $500 million, driven by $340 million in asset impairments and $92 million in provisions for retained international construction risks.
- Reported gearing was elevated at 30.3%, with underlying gearing at 37.7%, well above the 15% target, and no security repurchases were undertaken due to high gearing.
- Investment management EBITDA margin declined to 35.9% from 40.6% in FY25, due to a $5 billion reduction in FUM and lower fee revenues.
- Development EBITDA was subdued at $78 million, reflecting limited completions in FY26 and a development ROIC of only 3%.
- Corporate costs included $114 million in additional charges, including restructuring costs related to international operations and finance/ICT transformation initiatives.
- Net debt increased due to delays in capital recycling and high capital expenditure, with gearing expected to remain elevated at the half-year of FY27.
- The company incurred a material tax expense despite an operating loss, due to impairment of deferred tax assets and non-recognition of tax benefits in the US and UK.
Thank you. Good morning, and thank you for joining the LendLease 2026 full-year results presentation. I'm Andrew Nieland, Joint Interim CEO and Group CFO of Lendlease. With me today is Penny Ransom, Joint Interim CEO and CEO of Investment Management. Sitting here today in Sydney, I acknowledge the traditional custodians of the land on which we are meeting and pay my respects to elders, past and present. As an investor, developer, builder, and manager of assets across Australia, we also acknowledge the traditional owners of the many lands on which LendLease operates, and value their continuing custodianship of country.
Today, I will provide an overview of our FY26 result, and Penny will present the operational performance of the business, covering investments, development, and construction, or IDC. I will then take you through the group's financial performance and FY27 outlook before we open up for questions.
Starting on slide 4, FY26 was another year of disciplined execution against our
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