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Skanska’s US writedowns hit global profit

Project writedowns in the US have hampered Skanska’s global construction profit in the second quarter of 2018.

A SEK 520m (£44m) writedown in the US, combined with restructuring costs of SEK 430m (£37m) and project writedowns of SEK 600m (£51m) in its Polish operations, contributed to Skanska’s global construction business posting operating profit of SEK500,000 (£43,000) for Q2 2018.

However, this was up from a construction loss of SEK 41m (£3.5m) in the first quarter.

Group construction revenue stood at SEK 40.42bn (£3.48bn) in the second quarter, up 4.5 per cent year on year.

Its global order book fell 2.3 per cent compared with 12 months earlier to stand at SEK 197.6bn (£17.01bn) as of 30 June.

Describing the UK civil market as “stable”, Skanska repeated its view that Brexit uncertainty was limiting investment in the non-residential sector.

The group said its Nordic construction arm had delivered a strong performance and that European operations remained stable aside from its Polish business.

Skanska was also boosted by a UK “pension curtailment” of about SEK 500m (£43m).

The Stockholm-based contractor revealed in January it was embarking on a “comprehensive restructure” of its European operations and planned to cut 3,000 jobs.

Skanska president and CEO Anders Danielsson said: “The strategic initiatives to restore profitability levels in our construction stream have begun stabilising our operations in Poland, but we experienced additional setbacks in the US operations, where second quarter results were far from satisfactory.

“We remain highly focused on improving profitability in our construction stream. We are continuing the implementation of the strategic initiatives decided upon earlier in the year.”

Skanska UK saw its pre-tax profit decline by more than 40 per cent for the second year in a row in its 2017 results, released last week.

Updated: Skanka’s UK project writedowns occurred in Q2 2017, rather than in Q2 2018 as stated in the original article

 

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