The Lendlease Group (ASX: LLC) share price has slipped into the red on Monday after the company reported its FY24 results.
At the time of publication, shares in the international property group are swapping hands at $6.25 apiece, more than 1.5% in the red.
Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is slightly in the red as well at the time of writing.
Let's see what the company reported.
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Lendlease share price drops as FY24 numbers underwhelm
The key takeouts from the year include the following:
- Core earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 23% year over year to $669 million
- Core operating profit after tax (OPAT) rose 2% to $263 million
- Statutory loss after tax ballooned to $1.5 billion, driven by $1.35 billion in impairments to implement its "revised strategy"
- Investment property valuations also dropped by $260 million, a 10% reduction
- Full-year distribution was maintained at 16 cents per share, with a payout ratio of 42%
What else happened in FY24?
Lendlease undertook several strategic initiatives aimed at streamlining operations and stabilising its share price.
The company announced $1.9 billion in asset sales as part of a broader $2.8 billion sales target for FY25.
It also commenced the restocking of its Australian development pipeline. Projects include Gurrowa Place at Queen Victoria Market, and luxury apartments at Darling Point.
These are valued at $1.3 billion and $0.5 billion, respectively.
Despite this, the pipeline was overshadowed by heavy impairments linked to the company's internal overhaul and declining property values.
This resulted in a 2% reduction in funds under management, tallying $47.3 billion at the end of FY24. Lendlease's share price is sensitive to these figures, so a reduction could be impactful.
The company also reported cost savings of $64 million, with further savings anticipated as management continues to simplify operations.
What did management say?
Lendlease CEO Tony Lombardo acknowledged the difficult year amid a "refreshed strategy":
Our results for FY24 reflected challenging business conditions and the early actions from our refreshed strategy. We have made significant progress towards our target of recycling $2.8 billion of capital in FY25, with further cost savings realised as a result of our simplified management structure.
Our priorities remain strengthening our balance sheet, returning capital to securityholders,
nvesting in our high return Australian operations and growing our international Investments platform.
What's next?
Looking ahead, the Lendlease share price faces hurdles. Management aims to strengthen the balance sheet while "growing and improving the performance of the Investments, Development and Construction (IDC) segments".
Management aims to "accelerate the release of capital", likely focused on increasing distributions to shareholders.
The company is targeting earnings per security of 54 to 62 cents in FY25. This includes a range of 48 cents per security that is "secured or highly probable".
Lendlease share price snapshot
The Lendlease share price has faced pressure in recent months. It has remained in a downtrend for most of 2024.
Zooming out, the stock is down nearly 22% in the past year.
