Lendlease Faces FY26 Transition Challenges Despite Strong FY25 Results

A Year of Progress and Simplification

Lendlease Corporation Limited marked its 2025 Annual General Meeting by highlighting a year of tangible progress in repositioning the company for sustainable growth. The group reported a statutory profit after tax of $225 million and an operating profit of $386 million for FY25, signaling a return to financial health after a period of strategic recalibration. Central to this turnaround was the completion or announcement of over $2.5 billion in capital recycling initiatives, alongside the divestment of its international construction operations, which materially reduced complexity and risk.

Cost efficiencies were also a key theme, with the company achieving annualised cost savings of $141 million, surpassing its targets. This simplification has sharpened Lendlease’s focus on its core markets, where it sees the greatest potential for long-term value creation.

Governance and Board Renewal

In governance, Lendlease is actively renewing its board to better align with its strategic ambitions. The board will reduce in size to seven non-executive directors, with a majority based in Australia and two internationally. Notably, David Craig, who has served the maximum nine-year tenure, retired at the AGM, with Lianne Buck joining as a new director and appointed Chair of the Audit Committee. Buck brings extensive experience in Australian and global investment markets, reinforcing the board’s financial oversight capabilities.

FY26 – A Transition Year with Clear Priorities

Looking ahead, FY26 is framed as a transition year focused on strengthening the balance sheet and advancing growth initiatives across Investments, Development, and Construction segments. The company plans an on-market securities buyback of up to $500 million, expected to commence in the second half of FY26 once sufficient capital is released from ongoing divestments.

Lendlease is progressing three significant divestment transactions, including investments in TRX Malaysia and Retirement Living Australia, alongside the anticipated completion of a landmark joint venture with The Crown Estate in the UK. This joint venture unlocks access to $49 billion in development assets across London and Birmingham, positioning Lendlease to expand its international investment platform and development fee streams.

Growth Pipeline and Earnings Outlook

The company’s development pipeline remains robust, with approximately $10 billion secured and a bid pipeline of $25 billion. Key projects include One Circular Quay in Sydney, Victoria Harbour in Melbourne, and the RNA Showgrounds in Brisbane, among others. Construction momentum is strong, underpinned by $5 billion in new work secured in FY25 and a total of $15 billion in secured and preferred contracts, largely government-backed.

Lendlease reiterated its FY26 earnings per security guidance for its Investments, Development, and Construction segments at 28 to 34 cents, with earnings skewed to the second half of the year. No guidance was provided for the Capital Release Unit due to transaction timing uncertainties. The group targets a gearing ratio of 15% by the end of FY26, reflecting its commitment to deleveraging.

Positioning for Sustainable Growth

With foundational work on capital recycling, cost reduction, and operational simplification largely complete, Lendlease is confident in its medium-term growth trajectory. The company anticipates improved margins, increased funds under management, and stronger earnings visibility from FY27 onwards. The board and management emphasize their focus on delivering returns above the cost of equity and enhancing securityholder value as they navigate this pivotal phase.