Skanska UK has seen pre-tax profit decline by more than 40 per cent for the second year in a row.
The contractor recorded pre-tax profit of £13.5m for the year to 31 December 2017, down 42.8 per cent from £23.6m in 2016 results – which was itself down 44 per cent on 2015’s £42.1m.
Skanska UK’s pre-tax margin also halved for the second successive year, falling from 3 per cent 2015 to 1.6 per cent in 2016 and now 0.7 per cent in 2017, according to documents filed with Companies House.
Revenue for the business increased by 9 per cent to £1.8bn in 2017, up from £1.65bn in 2016.
The firm’s results included £33m-worth of writedowns reported as part of a profit warning in July 2017.
Skanska UK said that a number of the problem projects behind the profit warning were close to completion, but that some jobs would run into 2018.
The company reiterated that the writedowns were due to “lower-than-anticipated production rates, projects being delayed with estimated penalties and multiple customer-driven changes, which have caused cost overruns”.
Skanska UK also confirmed details of the restructure that was first announced in March.
A shake-up of business units as part of the company’s Laser Focus Plan will see the number of operating units reduced from nine to seven.
These changes will see the group’s two building operations units combined into one organisation, having previously been separated on a geographical basis.
The other change will be the blending the mechanical and electrical engineering businesses into a single division.
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Skanska UK’s restructure comes as its Swedish parent group continues a wider re-organisation of its global business, which is expected to see more than 3,000 redundancies.
The group restructure followed declines in profit due to weak performance across several construction units in Europe, as well as a slowdown in European infrastructure development.
In May, Skanska Group reported a year-on-year fall in group operating profit of 66 per cent to SEK 639m (£53.6m) for the first three months of 2018.
News of the restructure came at the same time that Skanska pulled out of the race to build the £1bn Silvertown Tunnel project in March.
Responding to the results a Skanska spokesman said: “Skanska UK delivered a positive operating income of £14.6m in 2017, despite the write-downs announced in July.
“Skanska’s strong cash position, healthy balance sheet and robust pipeline of future work continue to provide a solid foundation for its business.
“Additionally, since the write downs, Skanska UK has been fine tuning its operations, building on its track record of delivering industry-leading performance and taking action to ensure it remains a best-in-class, values-led, fit and sustainable business for the future.
”This has involved restructuring our business to improve efficiency, keep costs at a sustainable level, and make it easier for customers to work with us.”