Review of 2010 – USD version - Skanska

Profitable growth 2011–2015
Skanska’s business plan for the five-year period 2011–2015 is aimed at achieving
profitable growth. All four business streams shall grow while maintaining a
strong focus on profitability, good margins and capital efficiency.
The goal is both to expand the volume of Construction
operations and to increase the activities of investment
operations by taking advantage of financial synergies
in the Group. The strategy is to step up the pace of reinvesting
cash flow from Construction in order to achieve
growth in project development.
After a consolidation process lasting several years,
Skanska is well equipped for a new phase aimed at volume
growth while maintaining profitability. The Group has
continuously improved its profitability, while its financial
position is strong and its operations are run in a capitalefficient
way. In addition, Skanska has improved both its
risk management and project execution. Today it thus
has a stable platform for profitable growth.
The business plan for the Group’s 2011–2015 operations
is based on a thorough analysis of external trends
and market developments. This analysis used data and
forecasts from internal research studies as well as on
macro- and microeconomic trends and population changes.
The task of putting together the business plan was a
collaborative effort by the Senior Executive Team and the
management teams of Skanska’s local business units.
Increasing market shares
The conclusion of this research is that Skanska has the
capacity to grow more than its markets in general, thereby
increasing its market share. This applies to a number of
Skanska’s home markets and to such core areas as hospitals,
schools and water treatment and transportation
facilities. The demand for green construction will also
increase, due to demands from customers and public
agencies concerning the environmental performance
of both new and older buildings. Skanska’s ambition is
to drive the development of green construction forward
and to be the leading green project developer and construction
company.
The new business plan’s emphasis on profitable
growth means that profitability is a higher priority than
growth and that only units that have a documented
ability to execute projects with good earnings will be
allowed to grow. The volume of Construction operations
should increase gradually during the period through
2015. Meanwhile the target is for operating margins in
Construction to average 3.5–4 percent over a business
cycle and thus be among the best in the industry.
Growing in project development
Skanska will also take advantage of the potential for
growth in its three project development business
streams and aims at achieving a better balance between
construction and project development operations.
Investments in land and residential construction,
commercial property projects and infrastructure development
projects will thus increase, while maintaining
a high turnover rate in the project portfolio. The target
is for return on capital employed in Skanska’s three
project development business streams to total
10–15 percent annually.
Skanska will take advantage of its financial strength
in order to expand its project development operations.
The business model is the same that the Group has
applied for many years: capital that is generated in
Construction is used for investments in Skanska’s
project development streams.
Increasing investments in project development will
represent a more efficient utilization of the Group’s
balance sheet and a reduction in its net cash position.
Skanska’s target is a positive net cash position, excluding
net pension liabilities and construction loans for cooperative
housing associations and housing corporations.
Strengthening Skanska’s risk management
In recent years, the strengthening of Skanska’s risk
management and improvements in project execution have
provided a stable platform and are essential to profitable
expansion and improved margins. To increase productivity,
the Group is continuing to invest in the use of
digital tools such as Building Information Modeling
(BIM) in planning, monitoring and execution as well as
in further industrializing construction, coordinating
procurement and taking advantage of internal expertise
in a structured way.
Even with continued efficiency improvements,
Skanska will need to recruit a large number of new
employees, since there will be large-scale retirements
during the period. The Group will also have to intensify
development of existing employees.
Leader in safety
Skanska’s ambition is to be the leading company in
its industry when it comes to health and safety. Over
the past five years, the Group’s efforts to improve
safety have led to a halving of its lost time accident rate
(LTAR). Steps are now being taken to make further
improvements in this area.
Skanska’s qualitative targets, as expressed in the five
zeros vision − zero loss-making projects, zero work site
accidents, zero environmental incidents, zero ethical
breaches and zero defects − will continue to guide
all its operations.
Skanska Review of 2010 – USD version Nya Businessplan Strategi 2011-2015 9