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Skanska UK construction restores margins to 3%



Skanska has restored its margins to target levels after a year of focus on core activity and offloading its infrastructure services businesses. Including continuing and offloaded business during the pandemic year, revenue fell 18% to £1.46bn, although operating profit nearly doubled to £23m from £12m previously. This saw an uplift in operating margin to 1.6% from 0.7% in 2019.

But adjusting for non-recurring exceptional provision of £22m, group underlying operating profit topped £44m with operating margin getting back to a targetted 3%.

In April this year, Skanska offloaded its £323m revenue infrastructure services business to M Group for £50m, with the highways arm now rebranded as Milestone.

The group recorded a £31.5m gain from the sale, which will be taken in the 2021 accounts. During 2020, these discontinued businesses doubled pre-tax profit to £9.4m.

Kelly Gangotra, Skanska UK finance director, said: “The sale of infrastructure services and the decision to exit key contracts within the utilities sector were made after a strategic review, which led the business to concentrate on the infrastructure and building markets.

“The aim is to bring more focus to our customer relationships and service delivery as well as create greater alignment between Skanska UK activities and our approach in other parts of the world.”

In response to the pandemic, Skanska avoided implementing staff job and pay cuts, taking £4m in Government furlough support for its workforce, which remained stable at around 5,300 staff.

Skanska said the outlook remained very strong after the business last year booked projects worth over £2.8bn in revenue that are individually worth over £30m each. The UK operation will release a new business plan later this year to set out its future direction.


(Credit: Aaron Morby. https://www.constructionenquirer.com/2021/07/12/skanska-uk-construction-restores-margins-to-3/).

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