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Skanska 2015 results cite 'tough market' as profit margins dip for UK business

Skanska blamed project delays and a difficult market after revealing that its UK profit margin had dipped below 3 per cent.

The contractor posted an operating margin of 2.7 per cent for its construction and development business for the full year to December 2015.

In its group results, the company said the lower margin in the UK operation was due to delays in certain schemes as well as the “execution of projects” won under tougher market conditions.

UK operating profit for the period stood at £38.4m on revenues of £1.4bn. The contractor secured orders totalling £1.49bn during 2015.

Skanska UK chief executive Mike Putnam said: “In a tough and extremely competitive environment, I am pleased to report a year of steady performance across the business.”

In 2015 Skanska began work on the £140m New Papworth Hospital in Cambridge as well as three AMP6 projects for Thames Water, Welsh Water and Anglian Water, worth £454m over five years.

Project completions included the £118m One and Two New Ludgate development in London for Land Securities, and the £34m extension to HMP Thameside, working with Serco.

“2015 wasn’t just about winning work, it was also about continuing to deliver our current projects to the highest standards,” Mr Putnam said. “A tremendous example is the M1 junction 19 project for Highways England, where the M1 meets the M6 and the A14.

“Several milestones have been reached early and, in one case, three months ahead of schedule. It means that drivers who have had to negotiate one of the most complex junctions in the country are starting to see a significant change for the better.”

Group operating profit increased by 6 per cent to SEK 6.5bn (£533m) from SEK 5.8bn (£475m) in 2014, while revenue dipped by 2 per cent to SEK 154.9bn (£12.6bn) from SEK 145bn (£11.9bn).

Group CEO Johan Karlström said all construction units recorded a “stable” performance with the exception of the US, which he said was “burdened” with charges earlier in the year.

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