Skanska boosts margins despite dip in turnover

Grant Prior 12 years ago
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Construction giant Skanska enjoyed a 10% rise in profit margins last year despite a drop in turnover and orders.

Results released today for the UK arm show operating margins hit 3.3% for the year to December 31 2011 compared to 3% last time.

Turnover dipped 4% to £1,222m while orders fell even sharper to £878m from £1,343m.

Skanska said the results reflected the drive for profit rather than winning work at unsustainable levels.

Mike Putnam, President and CEO, Skanska UK told the Enquirer that the pipeline of work this year was encouraging and the new residential arm would continue to expand.

He said: “It is encouraging looking at our bidding pipeline but I am sure that all those projects will be hard fought in the current climate.

“The old cliche that turnover is vanity and profit is sanity has never been truer and we will continue to make sure that our work is bid at a sensible margin.”

Skanska is on site in Cambridge with its first residential development and Putnam said up to another five sites are currently under consideration.

The contractor currently employs around 4,000 staff in the UK.

Staff numbers have reduced during the last year but workers have been relocated in other parts of the business wherever possible.

Putnam said: “Revenue for the year is in line with our targets and expectations and I am very pleased that we have seen a slight increase in Operating Income, equating to an Operating Margin of 3.3%.

“Order bookings for the year are down and this is a reflection of the current recession in the market and the reduction in public projects resulting from government spending cuts.

“During the last financial year, we launched our Profitable Growth business plan and good progress has been made during the year across a number of our focus areas including Green Business, where we are developing a number of opportunities for green retrofitting in the commercial buildings sector.

“We have expanded our Regional Presence and opened a new office for the midlands in Birmingham and, as Skanska Residential, recently launched our “Homes by Skanska” offering for the UK market, which focuses on delivering contemporary, sustainable homes with built-in functionality designed for everyday life.

“We have been developing our first residential site in Cambridge, with completed homes being available for sale later this year.”

Putnam said the regional drive would not mean chasing after lower value work.

He said: “The key word is presence. We are not trying to be a regional player and won’t be going after smaller projects.”

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