Dive Brief:
- In a major strategy shift, Australian-based contractor and developer Lendlease will pull out of international construction and development within the next 18 months, according to an announcement Monday.
- By exiting international projects and selling assets, the company will free up 4.5 billion Australian dollars ($3 billion U.S.), according to the announcement, allowing it to focus on its domestic operations, which it says are stronger.
- In the next 18 months, Lendlease said it will remove regional managerial structures and reduce the number of full-time employees outside of Australia by 1,400, some by divestments.
Dive Insight:
The company has struggled since the COVID-19 pandemic impacted its international business, and company leaders have tried to mitigate the challenges by moving the business model away from major construction projects to focus on investments.
In the announcement yesterday, the company said “overweight long-dated” projects internationally drove up costs with little return on investment. Over 80% of these projects currently underway are not expected to complete until at least 2030.
Although Lendlease said it will honor its commitments to capital partners to finish their joint venture projects, it will sell land and inventory in San Francisco, Chicago and London, including Hayes Point in San Francisco, Lakeshore East in Chicago and Deptford Landings in London.
Lendlease said that it is making these changes in part to address market headwinds.
“We recognise that our security price performance and securityholder returns have been poor as we have faced structural challenges and a prolonged market downturn,” Chairman Michael Ullmer said in the release. “Today we have announced the blueprint to position Lendlease for success — focusing on our core strengths and competitive advantages.”
