Net income fell to A$251.6 million ($227 million) in the six months to Dec. 31 from A$300.9 million a year earlier, the Sydney-based company said in a statement to the Australian stock exchange.

Profit from Lend Lease’s construction divisions in Australia fell and Europe recorded a loss even as the company’s Australian and U.K. residential businesses received a boost from improving housing markets. Its planned projects include the A$6 billion Barangaroo South development in downtown Sydney, which had generated initial earnings for the group in the year-earlier period, and the 1.5 billion pound ($2.5 billion) Elephant and Castle regeneration in central London.

The weakness in Europe “should be temporary with the U.K. construction purchasing managers index the strongest it’s been since 2007,” Ben Rundle, an analyst at Moelis & Co. in Sydney, wrote in an e-mailed note.

Shares Fall

Lend Lease shares slid as much as 6.1 percent, the biggest drop since June, and were 3.0 percent lower at A$11.22 as of 10:28 a.m. in Sydney trading, paring this year’s gain to 0.5 percent. That compares with a 1.6 percent gain this year in the benchmark S&P/ASX 200 index.

Profit fell 27 percent to A$223.5 million in Lend Lease’s Australian business and slumped 86 percent to A$8.2 million in Europe. It more than doubled in Asia to A$69.1 million and increased 85 percent to A$48.1 million in the Americas.

“The group finished the half year with a robust pipeline of global construction backlog revenue of A$15.5 billion and a global development pipeline with an estimated end value of A$38.4 billion,” Steve McCann, chief executive officer of the company, said in today’s statement.

To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

http://www.bloomberg.com/news/2014-02-25/lend-lease-profit-drops-on-tough-u-k-australia-construction.html

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