November 8, 2018 / 11:40 PM / in 9 days

UPDATE 1-Australia's LendLease puts unit under review as project issues mount

(Adds project background, CEO comment, share movement)

Nov 9 (Reuters) - LendLease Group said on Friday it has made a provision of A$350 million ($254 million) after tax to account for further underperformance of its engineering and services business, sending its shares tumbling over 15 percent.

The Australian developer said it made the provision for its 2019 half-year results, citing lower productivity in its post tunnelling phases of Sydney’s NorthConnex project among other reasons.

Chief Executive Officer Steve McCann said in a statement the situation was “extremely disappointing particularly given the underlying performance across LendLease’s other businesses”.

LendLease has been under pressure following delays in the tollroad project, which is expected to be completed in 2020.

The Sydney-based construction company said it would conduct a review of its business and seek the help of third parties to offset some of the anticipated losses.

It cautioned however that it was unclear whether the negotiations would be able to mitigate the underperformance.

LendLease, which has operations spanning from Australia to the Americas, secured the tollroad project in 2015.

Its shares were down 15.5 percent to A$14.75, its lowest since early 2017. ($1 = 1.3780 Australian dollars) (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Stephen Coates)

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