Lendlease Group (ASX: LLC) Posts $749 Million Loss, Guides to Higher Core Earnings

Lendlease Group reported a $749 million statutory loss for FY26 after impairments, provisions and costs overwhelmed stronger construction performance.

The result compared with a $225 million statutory profit in FY25. Operating loss after tax was $567 million, including an $800 million loss from the Capital Release Unit.

However, the continuing Investments, Development and Construction businesses delivered 33.7 cents per security. That outcome reached the top of Lendlease’s guidance range.

The group declared a 15.7-cent distribution per stapled security. It comprises a trust distribution only, with no company dividend declared.

Construction Drives the Core Result

Construction produced the clearest operational improvement. Revenue increased 29% to $3.9 billion, while EBITDA rose to $167 million from $33 million.

Its EBITDA margin reached 4.3%, exceeding the company’s 3% to 4% target range. Lendlease said challenged projects were now complete.

New work secured increased to $6.4 billion from $5 billion. Backlog revenue climbed 42% to $8.4 billion, supported by defence, social infrastructure and data-centre projects.

Development EBITDA fell to $78 million from $316 million because fewer major projects completed. Still, the Australian development pipeline expanded to $13.2 billion from $9.8 billion.

Meanwhile, Investments EBITDA eased to $297 million from $313 million. Funds under management declined to $43.9 billion following active portfolio recycling.

Capital Release Costs Dominate

The Capital Release Unit recorded a $500 million EBITDA loss. This included $340 million of non-cash impairments and $92 million of provisions.

The unit also incurred $196 million of underlying operating costs. Transaction profits dropped to $63 million from $349 million in FY25.

Lendlease contracted $1.2 billion of Capital Release Unit transactions during FY26. Total contracted or completed transactions have now reached $3.4 billion.

About $2.5 billion of invested capital remains to be recycled on a pro forma basis. The timing and proceeds of those disposals remain central to reducing debt and associated costs.

Debt Remains Above Target

Statutory net debt rose $400 million from the half year to $3.7 billion. Reported gearing was 30.3%, including a 7.4 percentage-point benefit from hybrid securities.

Underlying gearing stood at 37.7%. Contracted transactions would reduce it to 30.2% on a pro forma basis.

Lendlease retained $4 billion of available liquidity and maintained investment-grade ratings. Its longer-term underlying gearing target remains 15%.

Net overheads fell 22% to $363 million. The FY26 exit run-rate was about $350 million, with further savings targeted in FY27.

FY27 Guidance Points Higher

Lendlease expects Investments, Development and Construction earnings of 37 to 41 cents per security in FY27. That compares with 33.7 cents in FY26.

Pre-sold apartment revenue should support Development, while Construction revenue is expected to continue growing. Investments faces lower funds-management and co-investment income after portfolio recycling.

No FY27 earnings guidance was provided for the Capital Release Unit. Higher opening debt also means interest expenses will remain elevated.

Incoming chief executive Nick O’Neil is scheduled to begin on 24 August 2026. He takes charge as balance-sheet reduction and Capital Release Unit execution remain the group’s immediate financial priorities.