Wednesday, May 6, 2009

Skanska UK construction back in profit with 1.7% margin

Skanska’s UK construction activity was in profit in the first quarter of 2009, generating a profit margin of 1.7%.

The figure represents a big improvement on the first three months of 2008 when Skanska UK construction struggled with the burden with a negative profit margin of -6.4%.

Much of that woe was a result of taking ВЈ27m of project write-downs onto its books.

Globally, Skanska’s construction operations delivered a much better contribution in Q1 with an operating profit of £61m (comparable figure in 2008: £40m).

But much of this bonus was wiped away by the group’s infrastructure development operation which ran up a loss of £5m (comparable figure in 2008: profit of £48m).

Skanska group’s turnover in Q1 was little changed at £2.6bn and its forward orderbook stands at £12bn. Skanska’s overall profit in the three months slid from a previous figure of £73m to a lower level of £36m.


Skanska UK construction back in profit with 1.7% margin


The groupвЂs verdict on its global construction activities in the first quarter of 2009 says: “In all our markets, demand for building construction is continuing to weaken, both in residential and other private construction.

“Requests for new projects from private customers remain low.

“Civil construction markets, where the public sector represents a higher proportion of total volume, have also been adversely affected because these customers foresee declining tax revenue.

“The large government stimulus packages that have been announced are expected to eventually have a positive impact on civil construction markets, especially in the US.

“In the short-term, however, their effect on order booking has been the opposite, because already approved projects are being held back while waiting the possibility of obtaining government stimulus funds.”