The Lendlease Group (ASX: LLC) share price is under pressure today amid reports of job cuts.
Shares in the listed property company are swapping hands at $8.15, down 4.7% from yesterday's closing price. Comparatively, the benchmark S&P/ASX 200 Index (ASX: XJO) is ticking 0.42% lower, supported by utilities and financials.
Let's take a closer look at why Lendlease shares are drastically underperforming the market on Tuesday.
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Leaning out cuts into Lendlease shares
It appears an internal memo has been leaked today, revealing Lendlease's decision to strip out 10% of its global workforce.
The changes will see 740 jobs within the company cut, comprised of a 15% offshore reduction and a 5% local reduction. Following the staff cuts, the company expects to obtain $80 million to $100 million in annual savings.
According to the Sydney Morning Herald, the memo — issued by global CEO Tony Lombardo — outlined America, Europe, and Asia Pacific as the regions to experience the most significant reduction. A 'permanent shift to being an investment-led company with a leaner operating structure' was supplied to warrant the decision.
Furthermore, the call to make cuts follows the company's decision to freeze hiring on 1 July amid the inhospitable commercial property environment.
Although a lightened expenses load might seem beneficial for a company striving to return to acceptable profit margins, today's Lendlease share price would leave you thinking otherwise.
Perhaps the market is viewing it as 'blood in the water'. After all, the global property developer has featured in the top 10 most shorted ASX shares for several weeks, including the most recent instalment.
Uncanny timing
Coincidentally, it was only last week that Motley Fool senior journalist Tony Yoo covered one fund manager's stance on Lendlease shares.
Investment firm Allan Gray is the third-largest shareholder in the troubled property developer. Yet, the unfortunate share price performance has not shattered the team's confidence in the potential for returns.
Instead, analyst Tim Morrison believes 'there is cause for optimism'. At the time, Morrison highlighted cost reductions as a positive factor. It appears we are now seeing some of these reductions come to fruition.
Still, the Lendlease share price remains 14.8% underwater compared to a year ago.
