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Skanska UK predicts commercial recovery

FINANCE Contractor sees positive signs but turnover and profit down during 2004

SKANSKA UK is starting to experience the first signs of a recovery in workloads from commercial developers.

The UK arm of the Swedish giant is traditionally exposed to this area, where workloads have been down, but chief executive David Fison sees an upturn.

He said: 'The language has changed.

Clients are talking about dates and putting teams together and the water is heating up.

'We expect it to take a year to show up in our order book, as the first big schemes will go cheaply and someone else can have them.'

Operating margins at Skanska, which has a £1 billion order book, touched 2.8 per cent in 2004.

Mr Fison wants 3 per cent by next year but the management in Sweden is aiming to achieve 4 per cent across the group, which operates from the USA to Russia.

Underlying profits at Skanska UK totalled £22.1 million in 2004 but the firm took a £16.2 million hit on a contract being completed for Whessoe, the liquid natural gas business that was sold last year.

The over-run will cost £54.5 million and Skanska's UK operation will take 35 per cent of the hit, with the remainder booked as discontinued operations.

Whessoe was one of four businesses sold last year, along with a share in Hong Kong outfit Gammon and the Indian and mining divisions of Cementation.

Mr Fison said: 'Getting rid of our overseas companies was time-consuming and traumatic when you're letting go of good companies.Now we're focused on the UK.'

Skanska is growing its Scottish operations and looking for framework deals but has little exposure in Wales and only installs foundations in Ireland.