Finnish contractor Lemminkäinen has posted a first quarter loss of €19.6 million, slightly better than the €19.9 million loss for the same period last year.

Casimir Lindholm said he “could not be satisfied” with the increased operating loss of €18.1 million, which followed what he described as a challenging year for the business in 2014.

First quarter net revenues were €289.6 million, compared to €279.2 million for the same period last year. However, Lindholm confirmed that the company’s negative results so far this year had been affected by its paving division – which suffered first quarter operating losses of €27 million.

Lindholm said, “In the paving segment, the profitability was weakened by write-downs related to inventories and declining margins in individual projects. Nevertheless, the year-to-date order book in paving has grown faster than last year in Finland, Sweden and Norway.”

He added, “In addition, the demand for infrastructure construction is still good in our main markets. In 2015, we will continue the measures to improve our operational efficiency and complete the Deliver 2014 cost savings programme.”

Lindholm said he was confident that the company’s targeted €30 million cost structure reduction would be reflected in the next annual results. He explained that the company had taken measures including improving the efficiency of its invoicing, divesting non-core assets and assessing the company’s residential housing production according to the market situation.

He said there were encouraging signs in Finland’s commercial and residential property market, particularly within the Helsinki metropolitan area.

Lindholm said there was good profitability within the Russian housing sector, despite operating uncertainties in the market. He confirmed that the company’s decision to withdraw from a housing project in St Petersburg had been because it was considered “too high-risk”. However, he said negotiations were still continuing for an alternative way to carry out the project.

In its outlook for the year, the company said the total volume of construction in Finland was likely to remain at the same level as 2014. Lemminkäinen said the building construction sector was supported by renovation projects, and that there were ongoing and future infrastructure schemes that would continue to support the market.

However, the company forecast that the weak public sector economy in Finland would result in reduced investment in road maintenance, which would increase its road repair backlog. Despite this, Lemminkäinen said there was a growing infrastructure market in Scandinavia. It said this was attracting major central European construction companies.

In Russia, Lemminkäinen said that the political and economic situation remains uncertain. It added that Russia’s currency fluctuations increased the instability of the business environment, with prices rising faster than salaries. In the Baltic countries, the company forecast that the market situation in infrastructure construction was likely to remain unchanged.

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