Firm attributes poor returns to 鈥榗hallenging trading conditions across the UK and continental Europe鈥�

Revenue at Lend Lease鈥檚 European arm fell by 40.4% during the year from June 2010 to June 2011, dropping by AUD$1bn (拢655m) to AUD$1.5bn (拢982m).

Newly published results reveal lower returns at the Australian developer and contractor鈥檚 European arm, which is dominated by the UK business.

Revenue at the European construction division also fell by 40.5% to AUD$1.3bn (拢853m), and profit after tax dropped 55.8%, from AUD$25.8m (拢16.9m) to AUD$11.4m (拢7.5m).

It follows results last month from fellow contractor Laing O鈥橰ourke, which announced a halving of its profit and a 30% cut in its European workforce.

The news also comes in the year Lend Lease took the decision to drop the Bovis brand, one of the best known in UK construction, from its UK operation.

Lend Lease鈥檚 report concludes that the fall in profit after tax reflected 鈥渃hallenging trading conditions across both the UK and continental Europe鈥�.

Nevertheless, Lend Lease chief executive and managing director, Steve McCann, said: 鈥淚n the UK Lend Lease is well placed with our major urban regeneration projects that will be developed as the market recovers.鈥�

Despite the overall fall in European revenue, Lend Lease said it had experienced a 26% increase in new construction work secured, of AUD$1.4bn (拢918m).

It also said profit after tax in Europe increased by AUD$18.8m to AUD$137.4m (拢89.9m), reflecting the AUD$125m sale of the group鈥檚 infrastructure arm to the Lend Lease PFI/PPP Infrastructure Fund LP (UKIF).

The UKIF was launched with 拢220m to invest in social infrastructure assets over the next five years. Among the group鈥檚 future projects is a 拢1.5bn regeneration of London鈥檚 Elephant and Castle.

Following Laing O鈥橰ourke鈥檚 results, chief executive Ray O鈥橰ourke attributed the development to the 鈥渆conomic storm鈥� facing engineering and construction.

A spokesperson for Lend Lease鈥檚 European arm declined to comment on the European results in detail.