Skanska UK has said it will rely on the utilities and civils markets to help it through the downturn
In its latest accounts, which were sent to Companies House last week, the UK arm of the €12bn turnover Swedish construction giant painted a positive outlook, based on its haul of projects that included the £1bn M25 widening joint venture with Balfour Beatty that it won in May 2008.
It said: “Our civils business entered 2010 with well over 90% of the anticipated activity for the coming year already in hand.” Meanwhile it said that the utilities such as water would benefit from “major capital expenditure programmes for many years to come”.
But the firm recognised there was uncertainty in the commercial arena and warned of challenging times ahead for its construction businesses, saying the general election and public spending cuts would affect the extent of new public projects. It said the PFI market would “weaken in the immediate future”.
The UK company turned over £1.5bn in 2009 and made a pre-tax profit of £40m compared with a loss of £48m in the previous year, which followed writedowns on two PFI hospital projects in the east Midlands.
The company has had mixed success in the PFI market despite winning a £1bn Building Schools for the Future (BSF) contract in Essex in February.
Before then it had struggled to pick up work and missed out on deals including the £250m Camden BSF project last year. In January Building reported that Mike Putnam, UK chief executive, had sent a memo to staff warning of redundancies if the firm failed to pick up the Essex contract.
The accounts also showed that its switch from a final salary pension scheme to an average salary scheme provided the company with a one-off boost of £14m. The number of employees was reduced by 649, from 5,555 to 4,906, which helped cut administrative costs by £9m.
Skanska in numbers
£559m Turnover from civil engineering
£994m Turnover from construction
£444,000 Pay of the highest paid director (2008: £238,000)
4,906 Average number of staff (5,555)
£9m Size of the cut in administrative costs
£336.7m Cash position at year end (up by £77.3m)