Australian construction company Lendlease has announced its decision to withdraw from international construction markets in order to focus on growth within Australia.
The company has established a new Capital Release Unit (CRU) aimed at unlocking 4.5 billion A$ (2.9 billion $) by completing ongoing transactions.
This strategic move aims to address shareholders’ demands for greater focus on local operations following criticisms of the company’s international performance.
Lendlease plans to achieve annual savings of 125 million A$ within the next 12 months and return 500 million A$ to shareholders through on-market buybacks.
This decision represents the most significant change in the company’s strategy since the sale of its Asset Management division to National Australia Bank (OTC:NABZY).
In response to the strategy update, Lendlease shares surged approximately 10%, marking its best day since April 2020. The company’s shift in strategy came after pressure from shareholders to prioritize Australian projects over less profitable offshore ventures.
Despite the planned exit from overseas constructions, Lendlease will continue to maintain its international investment platform. CEO Tony Lombardo stated that the company will focus on expanding its globally managed funds.
Lendlease also anticipates impairments of up to 1.48 billion A$ due to write-downs on investments in international projects. However, the group maintains its equity return outlook for the 2024 financial year.
Chairman Michael Ullmer acknowledged dissatisfaction with the company’s securities price performance and returns, attributing structural challenges and prolonged market downturns as contributing factors. The strategic realignment aims to enhance shareholder value and stabilize the company’s financial performance.
Source: investing.com
