Lemminkäinen pulls out of Russian project
31 March 2015
Lemminkäinen is pulling out of its role as developer in a planned 2,000-apartment project with Lipsanen & Co Group in Vasily Island, St Petersburg, Russia.
The Finnish contractor is blaming the uncertainties in the operating environment and weakened economic situation in Russia, as well as the risk level of the project for Lemminkäinen.
It said it had made a framework agreement with Lipsanen for the Ilmatar project in February 2011. The companies are negotiating alternative ways to carry out the project.
Casimir Lindholm, president and CEO of Lemminkäinen, said, “Our building construction and paving businesses continue in Russia, and our ongoing projects in St Petersburg and Moscow proceed as planned.”
At the end of year 2014, Lemminkäinen had 755 employees in its Russian operations and the net sales were €196 million. In Lemminkäinen’s strategy review in July 2014, the company estimated that it did not expect its net sales in Russia to increase significantly in the next few years.
Lemminkäinen said it would keep its profit guidance for 2015 intact, estimating that its net sales in 2015 would not increase over 2014's €2,044.5 million. Operating profit in 2015 is expected to improve to €36.3 million.
Lindholm said in February that the company had experienced “a very challenging year”, as it released its latest annual results.