Skanska Group posts surprising drop in fourth-quarter profits

Swedish construction firm Skanska - the parent of Skanska UK - has posted a bigger drop in fourth-quarter (Q4) pre-tax earnings than expected today, saying that it no longer expects to meet the timing of its financial targets set for 2010.

The latest Q4 pre-tax profit figure of £6m is a fraction of the year-earlier figure of £140m.

The dip is a result of Skanska making write-downs and provisions of £105m in Q4.

This sum is made up of:

• £54m relating to project development operations
• ££43m to the cost of personnel cutbacks
• ££8m to additional warranty provisions in operations that are being discontinued

Back in November Skanska said it would have to cut 3,400 jobs in the Nordic region as a result of shrinking order books and as a result of this it would take a fourth-quarter restructuring charge of £50m.