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Margins trimmed at Skanska UK

18 Jul 13 Skanska UK has seen its operating margins squeezed to 3.2% for the first half of 2013, compared to 3.6% for 2012.

Skanska starts work at New Ludgate next month
Skanska starts work at New Ludgate next month

It made an operating profit of £17.5m on revenue of £545m for the six months to 30 June 2013.

CEO Mike Putnam was broadly satisfied, however. “This continues a pattern of good and consistent results over several years. Overall performance remains at the levels we would expect at this stage in the year,” he said.

For the full year 2012, Skanska UK made £42.1m profit on £1,166m revenue.

Mr Puttnam said that the £437m of new orders was “healthy but slightly behind target” although the order book remained on track for the full year, he said. “We’ve started some exciting opportunities and made some significant wins.”

Commercial and residential development were a strong focus in the first half of 2013. Homes by Skanska has begun selling houses and reports good interest in its planned future developments in Cambridge and the west of England. Work has begun at a commercial development at 66 Queen Square, Bristol, and planning permission has been gained at 11-19 Monument Street, London.

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Skanska UK won a number of projects in London in the first half of the year, including office projects at 1&2 New Ludgate, 1 Aldermanbury Square and 100 Cheapside. There were project wins for specialist mechanical and electrical services for Al Jazeera at The Shard and at Bush House. The company also entered the high-end residential sector with a win for mechanical and electrical services at One Tower Bridge.

In civils, work continues on the joint-venture contract with Costain to deliver the £110m station at Bond Street, a project won in 2013. Skanska also started work on the £321m later-upgraded sections of the M25.

In utilities, a major win was the Thames Water AMP6 asset management programme, worth approximately £80m a year to Skanska from 2015 for five years. Work started on an eight-year gas distribution strategic partnership with National Grid, worth about £100m a year to Skanska, from 2013.

Skanska reported its acquisition of Atkins Highways Services in February. This deal is expected to complete before the end of the year.

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