Profit up in most segments at Lemminkäinen

By Sandy Guthrie27 October 2016

Third quarter operating profit at Finnish contractor Lemminkäinen has improved year-on-year in all business segments except for infrastructure projects.

It reported operating profit for the period from July to September 2016 of €42.8 million – up from €20.9 million for the same period last year. It said this was 8.0% of net sales, compared to 3.7% a year ago.

The contractor operates throughout Northern Europe and Russia.

Order inflow at Lemminkäinen in the third quarter was €351.4 million, which was a rise from €312.2 million last year. Its order book at the end of the period amounted to €1.41 billion. It stood at €1.27 billion a year ago.

For the January to September 2016 period, order inflow was €1.13 billion, up from €1.12 billion in the same period in 2015.

President and CEO Casimir Lindholm said, “Our third quarter operating profit improved year-on-year in all business segments except in infra projects. Overall, the paving segment has improved its performance – especially, the measures we have taken to improve the operations in Norway are proceeding as planned.

“We have identified operational challenges in Sweden, which we need to address.”

He said that in the Finnish building construction division, housing sales – especially in the Helsinki metropolitan area – supported the segment’s result.

“In Russian operations, our operating profit last year was weakened by a write-down related to our decision to withdraw from the planned Ilmatar project.”

He said that with infrastructure projects, falling margins on individual projects in Sweden and Finland weakened the operating profit.

He added, however, that the company’s financial position had strengthened year-on-year.

“Our operating capital decreased from €486 million to €395 million. The number of unsold completed housing units at the end of September dropped from 304 to 191 units in building construction, Finland.”

He said the order book had developed positively.

“In paving, the order book grew year-on-year even though the fallen price of bitumen has decreased unit prices. In building construction, Finland, the segment’s strong order book was supported by the start-ups of six new residential development projects.

“In Russia, we won two new negotiated building construction contracts. In infra projects, the market outlook is positive especially in Scandinavia but our order inflow is still too weak.”

Cartel decision

The Helsinki Court of Appeal recently published its decision on the damages related to an asphalt cartel case.

Lindholm said, “The Court of Appeal ordered us to pay less damages than the District Court did and we are entitled to receive refunds in total approximately €19 million consisting of capital as well as interest and legal expenses.

“We are satisfied with the decisions of the Court of Appeal to the extent our appeals were accepted. The reimbursements will be recorded as income in our fourth-quarter result.”

He added, “With the support from our solid order book and strong financial position, we continue to improve our operational result and competitiveness in all operations.

“In addition, we seek profitable growth from infra projects especially in Sweden and Norway, where states continue to invest in long-term urban infrastructure development.”

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