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Skanska UK targets growth despite continuing profits squeeze

23 Jul 15 Skanska UK has seen its first-half operating margins reduced for a third successive year.

President and CEO Mike Putnam
President and CEO Mike Putnam

The revenue from Skanska UK’s construction business in the first six months of 2015 was up 4% to £675m. Operating income was down 19% to £16.1 million, which equates to an operating margin of 2.4%.

In 2014 it made a first-half operating profit of £19.9m on revenue of £651.4m – a margin of 3.1%, down from 3.2% and 3.6% in 2013 and 2012.

However, president and CEO Mike Putnam was upbeat about prospects. He said: “Our order booking and pipeline of future work remains strong. We are also preferred bidder for a large number of projects. Following the recruitment of 750 people in 2014, we are taking on a further 1,000 people to deliver new projects. The outlook for 2015 as a whole is positive.”

Highways England has appointed a joint venture of Skanska and Costain to improve part of the A14 between Huntingdon and Cambridge in a contract worth around £600m.

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A number of contracts were won or extended in the second quarter of 2015. These include a new research facility, ESS Lund, near Malmö in Sweden which is being built by Skanska UK in joint venture with Skanska Sweden. This contract is worth £25.4m to Skanska UK.

Projects completed in the first half of 2015 include the £34m extension of HMP Thameside in London and the One and Two New Ludgate commercial development in the City of London.

Skanska said that its development business also continues to perform strongly, with the sale of 66 Queen Square in Bristol to Aviva Investors for about £33m. Skanska has also acquired the long-leasehold interest of 51 Moorgate in the City of London from Corpus Sireo, while The Monument Building in London – currently is under construction – is “attracting encouraging interest from agents and investors”, the company said.

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MPU
MPU

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