Skanska's global turnover and profit levels fell in 2002, as the worldwide economic slowdown hit the order books of the world's largest construction firm, writes Matthew Richards.
Net turnover totalled £10.7bn, down 12% on 2001, and pre-tax profit was £71.8m, a year-on-year fall of 57%. New orders totalled £10.1bn, a fall of 10% on the previous 12 months.

In the UK, problems with some large-scale developments took the shine off the firm's expansion in the PFI market. Stuart Graham, who took over as chief executive of Skanska last year, said: "Some large development projects in the UK have gone sour, but our joint ventures have gone well, so the outlook for the UK is positive, as is the outlook for Europe as a whole."

He added: "The British PFI market is very strong. There are lots of opportunities there, and we expect our investment volume to increase."

The figures were broadly in line with analysts' expectations, but Skanska surprised the market by cutting its dividend one-third to 15p. Graham conceded: "Reducing the dividend is not something we want to do; it is not a positive measure and we don't want to do it again. We're asking shareholders to pitch in and strengthen our balance sheet."

He added: "We're living in uncertain times, and businesses don't want to invest in the future if they're not confident in the future. The outlook going forward is quite uncertain, and our construction business is expected to shrink in the coming year."

Graham said: "Construction job site margins have improved a lot this year, and that's where you make the money in this business. You certainly can't correlate a reduction in sales with a reduction in [net] income." Skanska's results include restructuring expenses and goodwill write-downs of £150m.

Marcos Hermandez, an analyst at investment bank Merrill Lynch, assessed Skanska's prospects as "negative across the board".

We’re asking shareholders to pitch in and strengthen our balance sheet

Stuart Graham, chief executive, Skanska