Sydney, Feb 12: Property, construction and financial services group Lend Lease Corp Ltd said on Thursday its investment profits helped boost first half earnings, and played down the effects of Asia's economic turmoil.Managing director David Higgins said the group was on track for a further rise in profit for the year to June 30 and had already booked a A$60 million profit in the second half from the sale of 10 million Westpac Banking Corp in January.
Higgins comments came after Lend Lease reported a 13.4 per cent rise in net profit to A$181.5 million for the six months to December 31, 1997, towards to the top end of market expectations which ranged from A$170 million to A$185 million.
First half sales rose 32.7 per cent to A$1.37 billion and dividends for the period rose to 53 cents a share from 48 cents per share a year earlier.
About one-third of profits came from dividends from Westpac, Hoyts Cinemas Ltd, Mirvac Ltd and information technology joint venture IBM Global Services Australia, along withshare sales in Hoyts and Mirvac.
``The board of directors is budgeting for an increase in profit after tax, earnings per share and dividends for the full 1997/98 financial year,'' the company said in a statement accompanying its half year results.
Higgins said the company expected to achieve planned profit growth even without the profit from last month's sale of Westpac shares.
Lend Lease, which has operations in Singapore, Indonesia,Thailand and China, made a provision of A$25 million against some Asian assets in the December half, due to falling assets prices in the region following plunging Asian currency values.
``We don't expect to make any further provisions in Asia, given the provisions we have made there to date and the knowledge we have about the outlook in the region,'' Higgins told reporters after the results announcement.
Asia's economic slowdown was likely to result in the deferral of some of Lend Lease's construction projects in region, Lend Lease said.
``The financial difficultiesin Asia are likely to cause a deferral of most new projects, causing short- term focus to be on successful completion of current projects and a reduction in overhead structure.''
The Asian currency turmoil had also hit Lend Lease's fund management joint venture in Indonesia, which saw a massive flight of money -- falling by A$450 million to A$150 million during the six months to December 31, 1997.
Analysts said they were comfortable with Lend Lease's provisioning for Asia, as its exposure only made up three per cent of its A$5.15 billion in assets, and may fall to 1.5 per cent with a planned sale of a project in Singapore.
Results from Lend Lease's financial services, which is mainly through its MLC unit, rose to A$92.6 million in the half or 51 per cent of total profit, from A$75.7 million a year ago.
Lend Lease, seen as one of Australia's more conservative firms with an enviable record of 22 years of profit growth, also got a boost to earnings from the acquisition last year of US real estateinvestor Equitable Real Estate Investment (ERE).
The group's real estate investment services unit contributed A$37.5 million to first half net profit, from A$9.0 million a year earlier, with most of the division's earnings coming the merged US-based ERE-Yarmouth operations.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
