Skanska remains upbeat despite continuing profits squeeze

Mike Putnam
Mike Putnam

Skanska UK said the outlook for 2015 is “positive” despite having seen its first-half operating margins reduced for a third successive year.

The revenue from the firm’s UK construction business in the first six months of 2015 was up 4 per cent to £675 million. Operating income was down 19 per cent to £16.1m, which equates to an operating margin of 2.4 per cent.

In 2014 it made a first-half operating profit of £19.9m on revenue of £651.4m – a margin of 3.1 per cent, down from 3.2 per cent and 3.6 per cent in 2013 and 2012.

Skanska’s development business performed strongly, with the sale of 66 Queen Square in Bristol to Aviva Investors for about £33m. Skanska has also acquired the long-leasehold interest of 51 Moorgate in the City of London from Corpus Sireo, while The Monument Building in London – which is under construction – is attracting encouraging interest from agents and investors.

Highways England has appointed Skanska, in a joint venture with Costain, to improve part of the A14 between Huntingdon and Cambridge in a contract worth around £600m. The agreement is expected to be signed in 2016.

A number of contracts were won or extended in the second quarter of 2015. These include a new research facility, ESS Lund, near Malmö in Sweden which is being built as part of a joint venture with Skanska Sweden. This contract is worth £25.4m to Skanska UK.

Several projects were successfully completed in the first half of 2015. These include the £34m extension of HMP Thameside in London and the One and Two New Ludgate commercial development in the City of London.

Skanska UK’s President and CEO Mike Putnam said: “Our order booking and pipeline of future work remains strong. We are also preferred bidder for a large number of projects. Following the recruitment of 750 people in 2014, we are taking on a further 1,000 people to deliver new projects. The outlook for 2015 as a whole is positive.”

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