Skanska operating income falls
By Helen Wright19 July 2012
Swedish contractor Skanska reported a 76% year-on-year fall in first half operating income to SEK1.4 billion (€170 million).
It pointed out that last year's operating income had been boosted by capital gains of SEK4.5 billion (€529 million) from the sale of its Chilean Autopista Central Highway Concession, skewing the year-on-year comparison.
Restructuring costs of SEK380 million (€45 million) in the residential division also impacted this year's first half operating result, according to Skanska.
Nevertheless, revenues were up 12% year-on-year to SEK60.6 billion (€7.1 billion), boosted by growth of 11% in the construction division to SEK57 billion (€6.7 billion). The commercial property development division also saw revenues rise to €3.5 billion (€407 million), compared to SEK897 million (€105 million) in the first half of last year.
However, a larger overall increase in revenues was constrained by falls in the company's residential and infrastructure divisions and its central and eliminations segment. Residential development revenues fell 10% year-on-year to SEK4 billion (€471 million) in the first half, while infrastructure development revenues were down 32% to SEK158 million (€19 million).
The central and eliminations division - which reports investments made in inter-company contracts - registered a loss of SEK4.2 billion (€497 million), compared to last year's first half loss of SEK3.1 billion (€365 million).
Meanwhile, Skanska's order backlog increased 16% year-on-year for the period to SEK161.1 billion (€18.9 billion).
Looking ahead to the next 12 months, Skanska said it expected the Nordic building construction market to remain good, except for weak conditions in Finland and a temporary slowdown in Sweden. It said other European markets were expected to remain weak, particularly for large new civil construction projects, however the outlook for Poland was brighter.
Skanska added that the market for large and complex civil construction projects was developing favourably in the US, where it said the potential for new public-private partnership projects continued to improve. In Latin America, too, Skanska highlighted good potential for new infrastructure projects.