Lend Lease Profit Expected to Plummet by $265 million but Still Chasing FKP / AVEO

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Craig, N. ‘British Property Slump Puts Lend Lease Result into a Nosedive,’ Sydney Morning Herald, August 05, 2008.

Four weeks ago, Lend Lease announced it wanted to buy AVEO-parent FKP – despite FKP’s share price falling 47 percent in just six months. But this week it was revealed that Lend Lease’s share price has also dropped by 46 percent; the company stating its annual profit will halve this year due to a decline in UK house prices. Statutory net profit will probably be down $265.4 million or 47 percent, while net operating profit is predicted to fall 10 – 15 percent on the $447.1 million forecast in 2008.

Yet, chief executive Greg Clarke maintains the company’s local residential business was performing well. “Currently the trading position in the Australian communities business is OK,” he said. “We assume things might drift down a little… but we’re not assuming that we will have the sort of fundamental downturns that we’ve seen in the UK and USA over the past few years”. Retirement business FKP remains a potential takeover target. Asset sales would improve the flow of capital, but the company “was not under pressure to sell.”