Skanska sees solid 2011

By Helen Wright09 February 2012

Johan Karlström, president and CEO at Skanska

Johan Karlström, president and CEO at Skanska

Despite losses in its Finnish and Norwegian construction units, expansive Swedish contractor Skanska reported an overall rise in operating income in 2011 to SEK9.1 billion (€1 billion), compared to SEK5.3 billion (€605 million) in 2010.

Project writedowns and provisions in the company's Finnish and Norwegian construction businesses cost the company a total of SEK1 billion (€116 million) for the 12-month period, much of which was sustained in the fourth quarter. The company has started a review into the divisions with a view to improving profitability.

Nevertheless, full-year 2011 revenues rose to SEK122.5 billion (€14 billion), compared to SEK121.7 billion (€13.8 billion) in 2010, fuelled by increases in Sweden Poland, the US and the UK.

The expansive company also made three acquisitions in the fourth quarter - US-based Industrial Contractors, Finnish contractor Soraset Yhtiöt and Polish road builder Pudiz - which together represent a total of over SEK5 billion (€567 million) in annual revenue.

Adjusted for currency rate effects, order backlog increased by 7% year-on-year at the end of 2011 to SEK155.7 billion (€17.7 billion).

Mixed forecast

But Skanska president and CEO Johan Karlström presented a mixed forecast for 2012. He said prospects in the building construction market looked stable, with good demand in the US and generally stable development in the Nordic market, but weak prospects in the Czech Republic and UK markets.

He said government austerity programmes were affecting the civil construction market in the US, Czech Republic and UK.

"Due to the tightening of British public expenditures, there has been a general reduction in the supply of new public-private partnership (PPP) projects in the UK, but the potential for this type of project appears likely to improve somewhat during 2012.

"In other European markets, the supply of projects is more limited, although interest in PPP solutions has increased in some markets. There is also good potential for new projects in the US and Latin America, but the lead times for these are difficult to predict," Mr Karlström said.

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