Skanska positive about next 12 months

By Sandy Guthrie08 February 2016

Johan Karlström, president and CEO of Skanska

Johan Karlström, president and CEO of Skanska

A positive overall construction market outlook for the next 12 months is being reported by Nordic contractor Skanska, which said that non-residential, residential building and civil markets in Sweden were strong “although the landscape is competitive”.

It said that in Norway, the outlook for the infrastructure market remained positive but with significant competition for new bids. The non-residential market continues to weaken, it said, as a result of low oil prices, while the residential building market was felt to be relatively stable, with the exception of certain regions that were dependent on the energy sector.

Skanska added that the overall market situation in Finland remained weak.

It said the commercial building market and the civil market remained strong in the UK and Poland. The markets in the Czech Republic and Slovakia were improving on the back of an improved economic outlook, political stability and infrastructure investment plans fuelled by EU funding, it added.

In the US, said Skanska, the market for large and complex civil construction projects remained good, although it said that competition was intense. It pointed out that the US building construction market was experiencing a positive development in the aviation, education, commercial buildings, and life science and healthcare sectors.

Year-end report

In its year-end report for 2015, Skanska reported revenue of SEK154.9 billion (€16.39 billion), up from SEK145.0 billion (€15.35 billion) in 2014, although it said that adjusted for currency effects, its revenue decreased by 2%.

Operating income amounted to SEK6.5 billion (€688.23 million), up from SEK5.8 billion (€614.31 million) in 2014. It said that adjusted for currency effects, operating income increased by 6%.

Order bookings in construction amounted to SEK122.1 billion (€12.93 billion) compared to SEK146.9 (€15.57 billion) in 2014 – adjusted for currency effects, this was said to be a fall of 23%. The order backlog decreased by 5% when adjusted for currency effects at SEK158.2 billion (€16.77 billion).

Skanska president and CEO Johan Karlström said, “The performance in the construction business stream during 2015 was stable in all construction units except for the US operations which were burdened with charges earlier in the year.

“We are continuing our intense discussions with clients regarding design changes, and have yet to agree on the settlement of outstanding claims.”

He said a majority of the construction units improved their profitability during the year.

“The lower order bookings are due to the lumpiness of order bookings in general, as well as a significant amount of orders in US building getting postponed by the end of 2015.”

He added, “A majority of the construction units had higher order bookings than revenue in 2015, and the pipeline of projects to bid for is still strong.”

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