Contractor posts dip in profit but continues to capture market share

Skanska UK’s construction profit margin dipped below 3% last year, in otherwise steady financial results for the calendar year.

In group results posted by Skanska’s Swedish parent company yesterday, the firm’s UK construction division posted a reduced operating margin of 2.4%, down from 3%, while operating profit dipped 2% to £36.3m, down from £37.2m.

However, Skanska UK’s construction division continued to capture market share, with revenue up 21% to £1.5bn, up from £1.2bn. The division also booked marginally more orders in 2015 than the previous year, £1.57bn compared to £1.56bn.

Mike Putnam (pictured), Skanska UK’s president and chief executive, said: “In a tough and extremely competitive environment, I am pleased to report a year of steady performance across the business.”

Skanska Group said it expected trading across both its key UK construction markets of non-residential buildings and civils to improve this year. By the end of the year Skanska UK was using level two BIM on all its projects, the firm said.

Overall the group posted an increase in revenue and operating profit, with revenue up 7% to 153bn SEK (£12.5bn), up from 143.3bn SEK (£11.7bn), while operating profit increased 17% to 6.3bn SEK (£514.5m), up from 5.4bn SEK (£442.4m).

Skanska UK began work on a number of major projects in 2015, including £140m New Papworth Hospital in Cambridge and three AMP6 projects for Thames Water worth a combined £454m.

The firm completed major jobs including £118m London office development One and Two New Ludgate for Land Securities, a £34m extension to Thameside prison, and seven new schools in Bristol.

Putnam said: “2015 wasn’t just about winning work, it was also about continuing to deliver our current projects to the highest standards.

“A tremendous example is the M1 Junction 19 project for Highways England, where the M1 meets the M6 and the A14. Several milestones have been reached early and, in one case, three months ahead of schedule. It means that drivers who have had to negotiate one of the most complex junctions in the country are starting to see a significant change for the better.”

He added: “Sustainable growth is our goal and we will deliver that in line with our purpose to build for a better society.”