Lendlease Group

For FY26, IDC segment EBITDA was $542 million and IDC earnings per security were $0.337, at the top end of guidance. Construction revenue was $3.9 billion, up 29% on FY25, new work secured was $6.4 billion, up 28%, and Construction EBITDA margin was 4.3%. The group recorded a statutory loss after tax of $749 million and operating profit after tax loss of $567 million; this included $182 million of noncash negative investment property revaluations and impairments. Reported gearing was 30.3% at year-end, underlying gearing was 37.7%, and the group cited approximately $4 billion of committed and available liquidity. FY27 IDC EPS is guided to $0.37 to $0.41. Management said Development should see a strong earnings recovery from presold apartment settlements at One Circular Quay and Victoria Harbour, with circa $1.2 billion of Lendlease presales achieved to date embedded in development profits. Construction is expected to keep growing, with margin targeted at 3% to 4% through the cycle. No specific FY27 earnings guidance was provided for CRU.

Andrew Nieland framed FY26 as another year of disciplined execution against strategy, emphasizing simplification, capital recycling, lower overheads, and growth in IDC. His tone was candid about the weak group bottom line, calling the outcome disappointing, but he repeatedly pointed to a clearer path in FY27 as peak development capex passes and capital recycling proceeds come through. He also highlighted the incoming CEO transition, saying Nick O'Neil will take over next week to drive strategy forward.

As Group CFO, Andrew Nieland stressed the balance sheet and cash flow backdrop: net overheads fell 22% to $363 million, from $466 million in FY25, and he said the exit run rate for net overheads entering FY27 is circa $350 million. He also noted lower net finance costs of $194 million, helped by hybrid issuance, about $30 million of higher interest income, and a lower average cost of debt. On liquidity and funding, he said the group has approximately $4 billion of available and committed liquidity, redeemed $600 million of U.S. dollar bonds in May, and expects FY27 maturities to be funded with existing facilities and capital recycling proceeds. He flagged that FY27 gearing should improve as development cash inflows and contracted transactions flow through, but it will remain elevated at the half.

Analysts focused heavily on FY27 gearing, the timing of capital recycling, and how much of the move from pro forma 30.2% gearing to the old 15% target is realistic. Management said the gap is mainly about transaction timing, with multiple CRU processes underway and about $1 billion to $1.5 billion of capital also available from investments and development, but they declined to give a specific gearing target or timing. Questions on One Circular Quay centered on the remaining high-end sales; management said demand remains strong but buyers are taking longer, and that most FY27 settlement margin is already secured rather than dependent on unsold stock. Analysts also asked about delays at Comcentre and One Darling Point, which management said were due to in-ground delays and slower presales, and confirmed no margin impact from the timing shifts.