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Skanska warns Brexit uncertainty damaging UK market

Skanska has warned that Brexit uncertainty continues to have a “negative impact” on the non-residential UK market as the group reported a worsening outlook. 

In a trading update today, the Swedish firm said the market outlook in non-residential UK building, which covers mainly commercial and public sector projects, for the next 12 months had weakened since the previous quarter, while the prospects for its UK civils business was described as “stable”. 

In July Skanska UK issued a profit warning after revealing approximately £33m of writedowns.

However, the firm said today the performance of its UK construction arm has “stabilised” in the three months to September.

At group level Skanska revealed construction turnover between July and September increased 9 per cent to SEK38.2bn (£3.49bn). 

However, group operating profit for construction slid 3 per cent to SEK918m (£83.9m). 

CEO Johan Karlström (pictured) said the company was “clearly not satisfied with its construction performance”. 

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He added: “In Poland the turnaround continues and in the UK the performance stabilised during the third quarter.

“The US operations were burdened by two project writedowns in the third quarter impacting profitability negatively.

“All in all, we can clearly not be satisfied with the performance in Europe and the US and our efforts to strengthen risk management and training continues.”

In its last full-year, Skanska UK suffered a 44 per cent fall in pre-tax profit as its margin halved to 1.5 per cent.

Last month Skanska UK said its chief executive Gregor Craig, who took over from Mike Putnam in May, was “actively addressing the issues” relating to the writedowns.  

The group has secured a number of major contract wins in the UK year, including a £165m deal with Network Rail to upgrade Waterloo station, as well as a £245m seven-year road maintenance contract with Devon County Council.

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