After years of financial losses, Australia-based builder and developer Lendlease has seen a turnaround, thanks to a strategic pivot.

On Monday, the company reported a statutory profit of AU$48 million ($30.46 million) for the first half of fiscal year 2025, ending December 31, 2024. This marks a significant recovery from the same period the previous year, when the firm posted a statutory loss of AU$136 million.

The change in direction began in May 2024, when Lendlease announced it would exit international construction markets and refocus on its Australian operations. CEO Tony Lombardo shared in a Monday earnings call that the shift is progressing as planned. “In less than nine months, we’ve made strong progress simplifying the group, reducing its risk profile and recycling capital to be a more focused organization,” he said.

During the first half of the fiscal year, Lendlease completed much of the divestment of its international construction operations, including selling off its U.S. business. In September 2024, Consigli Building Group, based in Milford, Massachusetts, finalized the purchase of a significant portion of Lendlease’s U.S. portfolio. The deal, the terms of which were not disclosed, included 45 ongoing, under-construction, and pre-construction projects valued at over $1.8 billion. In addition, around 400 Lendlease employees, most of the firm’s U.S. workforce, transitioned to Consigli as part of the sale.

Then, in January, marking the beginning of the second half of fiscal year 2025, Lendlease announced it had reached a binding agreement to sell its U.K. construction business to Atlas Holdings, a private equity firm based in Greenwich, Connecticut.

Performance Snapshot

‍In the latest earnings report, Lendlease noted a drop in construction revenue, down 18% compared to the same period last year. Lombardo attributed this decline to the completion of large projects in 2024 and delays in other projects that took longer to come to fruition.

“Over the last five years, our construction earnings have been negatively impacted by supply chain issues, the COVID-19 pandemic, and subcontractor insolvency,” Lombardo said.

Despite these setbacks, he expressed disappointment over losses primarily stemming from two projects, which were awarded between 2020 and 2021 with fixed prices. “It is disappointing in the period to experience losses predominantly on two projects,” Lombardo added. These projects saw costs surge due to rising material prices, which caused them to become unprofitable.

Looking ahead, Lombardo was more optimistic. “While these headwinds continue into FY25, we anticipate construction will return to profitability in the second half of FY25,” he said, emphasizing that the company’s strategy shift away from pursuing similar projects would help safeguard future profitability.

Looking to the Future

‍As Lendlease sheds its international ventures, the company is increasingly honing in on the Australian market. Lombardo’s comments reflect this strategic shift, with the company aiming to minimize risk while optimizing its capital.

With international operations now largely behind it, Lendlease is focused on reinforcing its position in Australia, where it hopes to tap into the growing infrastructure demand. The divestments and restructuring efforts position the company to move forward with a leaner, more focused approach.

While the company faces lingering challenges, including supply chain constraints and the impact of the pandemic, the potential for recovery remains strong. As Lendlease shifts its focus to local projects, it’s hopeful that these adjustments will provide a clearer path to profitability in the coming months.

Originally reported by Zachary Phillips in Construction Dive.