Skanska’s European construction business, which includes mainly UK operations by revenue, saw profits tumble to £1.9m in the first six months from £12.6m previously.
Skanska UK to close utility contracting operation next year
Revenues were down by over a fifth to £985m in the first half due to the impact of the pandemic in the UK, Poland and the Czech business.
This saw operating margin across the UK and central European territories slide to 0.2%. Order levels in the UK were supported by the signing of the £3.3bn HS2 Euston tunnels and approaches contract in partnership with Costain and Strabag.
Meanwhile, Skanska UK has also just posted results for its annual performance in 2019 at Companies House. This reveals that pre-tax profit slumped by two-thirds to £12m from revenue down by around 7% to £1.8bn.
The UK business is also planning to exit utility contracting after announcing its was pulling out of highways and rail maintenance at the start of this year. Goodwill write-offs related to these closures impacted heavily on the results, with underlying margin reported at 2.3%. Kelly Gangotra, Skanska UK finance director, said: “In early 2020, the group announced that it would withdraw from the highways maintenance, rail maintenance, and street lighting maintenance sectors.
“In addition, the decision was made to exit key contracts within the utility operating unit, running these down with an expected closure in 2021.”
Across the entire Skanska property and construction group total revenue in the first six months of 2020 dipped 5% to £6.3bn with profit up 16% to £307m.
Skanska’s President and CEO Anders Danielsson said: “In construction, revenue is to some extent negatively impacted by disruptions due to the pandemic, especially in the UK, USA and Central Europe.
“Despite this, the underlying profitability remains solid in the stream, thanks to strong execution and cost control.
“Order bookings have also been impacted negatively, in many cases due to postponed decisions by clients.
“However, Sweden and Norway are keeping up the pace, and one significant order booking in the UK in the second quarter is contributing positively.
“Going forward, our strategy of being selective in our bidding, focusing on cost efficiency and improving our commercial management will be even more important in this uncertain market environment.”
Originally published on:https://www.constructionenquirer.com/2020/07/23/skanska-europe-profits-tumble/
Written by Aaron Morby