Good order book for Lemminkäinen

Sales in the first half of this year were +18% higher than for the same period last year for Finnish construction group Lemminkäinen, and it claimed that its order book at the end of June was at an all-time high.

Operating profit was up +6% to € 20,6 million for the period from April to June this year, although a six-month operating profit loss of € 7,4 million was reported, down -1% on the first six months of 2010.

Lemminkäinen said that the acquisition of the Norwegian infrastructure company Mesta Industri was concluded at the end of May, and that it had recognised negative goodwill of € 8,1 million from the acquisition in the second quarter operating profit.

President & CEO Timo Kohtamäki said, "Housing construction in Finland, special infrastructure contracting and operations outside Finland were the primary drivers of growth in our order book.

"Now that the Mesta Industri acquisition has gone through, we are one of the largest paving contractors in Norway and a major builder of infrastructure in the Nordic countries, in line with our strategy."

Second quarter net sales were reported to be up 19% and amounted to € 550 million. Net sales in the January to June period were up 18% at € 866,3 million.

Operating profit and pre-tax profit for January to June do not account for the sale of the Lemminkäinen roofing business to Nordic private equity fund Axcel. The deal was concluded on 31 January, 2011.

Mr Kohtamäki said, "The trend in our infrastructure construction business was favourable in the first part of the year, and its earnings measured up to our expectations."

Lemminkäinen said, however, that the European credit crisis had increased uncertainty in the markets. It felt that if this continued, it might impact on the availability of financing and weaken the economic business environment.

It said that Confederation of Finnish Construction Industries RT forecasts suggested that construction would increase by about 5% in Finland this year.

It is estimated that the construction of 31000 new residential units would be started up in 2011, which would be slightly less than in the 2010. Lemminkäinen estimates that in 2011 it will begin construction of a total of about 1200 units of its own housing production in Finland, 20% more than in 2010.

Construction of business premises will see moderate growth in 2011, according to Lemminkäinen. It will build three new office buildings in the centre of Helsinki, valued at a total of about € 150 million. Construction work on the first site has already begun, while the next two will start in spring 2012. In addition, several individual projects for the construction of business premises are ongoing around Finland.

There is still a great need for new housing in Russia, according to Lemminkäinen, which estimates that it will start building about 500 units in its own housing development in St Petersburg in 2011.

Lemminkäinen said it had a good workload in infrastructure construction. In the case of paving works, 2011 is turning out to be on a par with 2010, it said.

The volume of infrastructure construction in the other Nordic countries is expected to grow by 3 to 6% in both 2011 and 2012. Government allocations for infrastructure development are substantially greater in Norway and Sweden than in Finland, and are spread over several years. Lemminkäinen claimed to have a solid workload in paving works in Norway and Denmark, though infrastructure construction in the Baltic countries remained at a low level.