Vivant Consultants

    Skanska issues profit warning after £33m UK writedowns

    The Stockholm-based construction giant said the UK writedowns were due to “lower-than-anticipated production rates, projects being delayed with estimated penalties and multiple customer-driven changes, which have caused cost overruns”. It added: “In these areas, we continue to have constructive dialogue with our customers to reach commercial agreement.”  Skanska’s UK chief executive Gregor Craig, who took over from Mike Putnam in May, is ”actively addressing the issues” relating to the writedowns, the firm said.  “Skanska UK continues to maintain its strong balance sheet and cash position,” the company added.  These came alongside writedowns of 420m SEK in the US, leaving the group’s overall operating income in the period at SEK 1.5bn (£140m). No operating income is anticipated from infrastructure development in the second quarter of this year, according to today’s statement. Construction is expected to produce operating income of just 100m SEK (£9m).  Commercial property development operating income is expected to double from the same period last year, representing two-thirds of the group’s Q2 2017 operating income. The firm did not disclose a forecast for full-year profit.  Skanska earlier this year reported a 27 per cent rise in group operating income to 8.2bn SEK (£750m) in calendar year 2016. Group revenue was 151.3bn SEK (£13.8bn) in the same period.   However, its UK operating profit margin dropped from 2.4 per cent in 2015 to 2.1 per cent last year. Rival Carillion also issued a profit warning earlier this week after revealing it had booked a provision of £845m over problem construction contracts. 

    source: https://www.constructionnews.co.uk/companies/contractors/skanska/skanska-issues-profit-warning-after-33m-uk-writedowns/10021637.article