Restructuring cost pulls Skanska into the red
17:00 17 Feb 2004
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Skanska's UK construction business made an operating profit of £21m last year, said chief executive David Fison.
But a major restructuring led to one-off costs of £22m - with the overall result being that the division ended up £1m in the red. Turnover ran to £1.1bn, a slight dip on the figure of £1.2bn in 2002.
Skanska Group has decided three elements of the UK business should be moved out: Skanska Whessoe and Cementation Skanska (both up for sale) and Cementation India (management is being transferred to the Swedish head office). The changes, which will cut turnover by £200m this year, have prompted one-off costs of £16m.
The UK construction business itself has been transformed into three rather than eight business streams, resulting in a £6m restructuring cost. There will be no further charges in the future.
Keith Clark, the previous head of Skanska UK construction, claimed Skanska achieved 3% margins.
Fison has backtracked on that figure. "We're running at just under 2%. I'm not ecstatic with that." Previously the division was enhanced by the performance of its Hong Kong subsidiary, now accounted for separately.