UPDATE 1-Australia's Lendlease Group to sell engineering unit for $122 mln

(Adds details on deal, background, Acciona’s statement)

Dec 19 (Reuters) - Australia’s Lendlease Group said on Thursday it would sell its engineering business to Acciona Infrastructure Asia Pacific for A$180 million ($122 million), a year after announcing plans to offload the struggling unit.

Earlier this year, the construction firm had pinned its 41% drop in annual profit to underperformance of its engineering and services business.

A sale process for the services business, however, continues, the company said in a statement, adding that it remains on track to meet its financial targets for fiscal 2020.

Under the deal, the Madrid-based infrastructure firm’s Asia Pacific arm will acquire the engineering unit excluding the NorthConnex, Kingsford Smith Drive and Melbourne Metro projects, which remain with Lendlease.

The Sydney-based firm reiterated that it would incur a restructuring cost of A$450 million to A$550 million in fiscal 2020 to exit the engineering and services business.

Acciona said in a statement that the integration of the new projects will help the firm in generating annual construction revenues in Australia in excess of A$2 billion in the near term.

$1 = 1.4736 Australian dollars Reporting by Shriya Ramakrishnan in Bengaluru; Editing by Himani Sarkar and Rashmi Aich