Lemminkäinen boosts 2016 profits
By Ian Vallely13 February 2017
Scandinavian infrastructure and building construction specialist Lemminkäinen made a profit of €38 million in 2016, compared with €7.2 million for the same period a year earlier.
Operating profit amounted to €67.6 million, rather than €37.3 million in 2015, or 4% of net sales, up from 2% a year earlier. The operating profit includes €19.4 million of reimbursements and €8 million of lowered provisions related to the Helsinki Court of Appeal’s decisions regarding the asphalt cartel, as well as write-downs related to non-core businesses worth €4.9 million. Without these items, it said that the operating profit would have been €45.1 million and operating margin 2.7%.
Net sales totalled €1.68 billion, compared with €1.88 billion in 2015, and order inflow was €1.35 billion, down from €1.42 billion.
Order inflow between October and December 2016, meanwhile, was €212.5 million – €296 million for the same period a year earlier. The company’s order book at the end of the period amounted to €1,265.2 million, up from €1,180.3 million in the last quarter of 2015.
Net sales for the quarter, meanwhile, totalled €477.3 million compared with €528.5 million the year before, and the operating profit amounted to €35 million, up from €18.9 million. This was 7.3% (3.6) of net sales, compared with 3.6% in the last quarter the year before. Profit for the period was up to €22.9 million from €9.9 million.
President and CEO Casimir Lindholm, said, “Our 2016 operating profit improved year-on-year. In paving, our performance improved. In building construction, Finland, housing sales were strong especially during the second half of the year.”
He said that with infrastructure projects, operating profit was weakened by lower volumes as well as declining margins in individual projects in Sweden and Finland.
“In Russian operations, operating profit decreased due to lower volumes in building construction. During 2016, we have shifted our focus in Russia from residential development to negotiated contracting in building construction.”
Lindholm added that the company’s financial position had developed favourably throughout the year, “Year-on-year, our operating capital has decreased from €475 million to €388 million and our interest-bearing net debt has declined from €127 million to €81 million. In addition, we reduced the nominal amount of outstanding hybrid bonds by €78 million."
In Finland, the total volume of construction is expected to grow slightly in 2017. Residential construction is estimated to decline from 2016, but remain at a good level. In Norway and Sweden, infrastructure construction is boosted by multi-year, state-funded traffic infrastructure development programmes.
In Denmark, demand for paving is expected to decline as public investments in road infrastructure are decreasing.
In Russia, economic growth is expected to remain at a low level and, in the Baltic countries, the volume of infrastructure construction is expected to start growing moderately.