Skanska’s construction sector struggles

Skanska has recorded half-year revenues of SEK72.5 billion (€7.62 billion) for the first six months of 2016 – a 3% decrease from the same period a year ago.

The Swedish-based company’s construction sector recorded revenues of SEK64.2 billion (€6.75 billion) during the six-month period, which represents a 4% decrease from the corresponding period in 2015.

The group’s operating income rose 46% to SEK3.6 billion (€380 million), thanks to a rise of 220% in its commercial property development sector. However, its construction sector saw a decrease of 21% to SEK1.34 billion (€140 million).

Johan Karlström, president and CEO of Skanska, said, “In our construction business stream we continue to see a strong performance in Sweden, Finland and Norway, as well as in US building.

“The profitability in the business stream was negatively impacted by weak performance in certain projects in Poland, where we also see a shift in the market from small- and medium-sized projects to large projects.”

He added that this was partly driven by delays in the allocation of designated EU funds, which the company would adjust accordingly.

He said that profitability in US civil works was still affected by previous design changes, as Skanska has yet to agree a deal with its clients. He said the company’s intense discussions continued and progress was being made in some projects, without a major impact on its profits.

However, Skanska said its outlook for the next 12 months continued to be positive.

It said the non-residential, residential building and civil markets in Sweden were strong, despite strong competition, while the Norwegian market also looked strong.

The company added that the UK, US, Czech Republic and Slovakian markets were strong, while the Finnish market was weak.

Meanwhile, Skanska has agreed a SEK225 million (€23.66 million) divestment deal with Assemblin for Skanska Installation.

Assemblin, which is owned by Triton, is a complete installation and service partner with operations in Sweden, Norway and Finland.

The sale, which the company said took place after its strategic review, includes its entire Skanska Installation operations, all its employees, as well as its assets. In 2015, Skanska Installation employed around 830 people. It also recorded revenues of around SEK1.5 billion (€160 million).

The sale is subject to approval from the Swedish Competition Authority.