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Skanska's US arm drags construction into the red for Q3

Project writedowns in Skanska’s US business continued to “overshadow” performance in the third quarter of 2018, the Swedish group has said.

The global construction business made an operating loss of SEK 310m (£26.3m) for the quarter on revenue of SEK 40.26 bn (£3.41bn).

This was largely attributed to the group’s US business, which suffered project writedowns and goodwill impairment charges of SEK 1.3 bn (£110.4m).

Overall the group reported a SEK 493m (£41.9m) pre-tax profit for the third quarter.

Skanska president and chief executive Anders Danielsson branded the US performance “not acceptable”, adding that it “overshadows the strong performance of several other business units”.

The Scandinavian company said writedowns of SEK 900m (£76.4m) were caused by cost overruns due to lower production rates and delays on two ongoing PPP projects in US.

The chief executive revealed the firm was taking extra measures to boost its construction operations performance.

Skanska will exit the US power sector and no longer bid for large-scale design-and-build PPP or EPC (engineering procurement and construction) projects.

Mr Danielsson said the risk profile of the major design-and-build projects was no longer attractive.

In the UK the group said it had continued with a strategy of focusing on projects within its core business.

The combination of these initiatives designed to reduce risks in the construction business unit had resulted in reduced new orders, the group added.

In January, Skanska revealed it was embarking on a “comprehensive restructure” of its European operations and planned to cut 3,000 jobs.

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