Review of 2010 – USD version - Skanska

Performance analysis
The Group
Revenue declined by 5 percent to USD 16.9 (17.7) billion, primarily due
to decreased revenue in Construction. In local currencies, the
revenue decline was 8 percent.
Operating income amounted to USD 741 M (676), with Residential
Development accounting for the largest improvement compared to the
preceding year. Earnings in Commercial Property Development and
Infrastructure Development also improved compared to the preceding
year. Earnings in Construction decreased somewhat less than the
pace of the downturn in revenue. Currency rate effects increased the
Group’s operating income by USD 19.7 M.
Central expenses, including businesses that are being closed down,
totaled USD –110 M (–89). Units that are being closed down affected
earnings in the amount of USD –18 M (–2). Of this, USD 14 M was
related to Skanska’s former residential operations in Denmark, mainly
impairment losses on land. Net financial items totaled USD –5 M (–30).
Income after financial items totaled USD 736 M (645). Taxes for the
year amounted to USD –189 M (–176), equivalent to a tax rate of about
26 (27) percent. Profit for the year totaled USD 547 M (470). Earnings
per share for the year according to segment reporting amounted to
USD 1.32 (1.13).
Construction
Revenue declined by 7.7 percent to USD 15.7 (17.0) billion. In local currencies,
the decline was 9 percent.
In the Construction business stream, operating income decreased
by 4 percent and amounted to USD 609 M (636). Currency rate effects
increased the operating income in Construction by USD 13.3 M.
Operating margin improved compared to the preceding year and
amounted to 3.9 (3.7) percent. The margin was positively affected
because there was a relatively larger share of projects at the end of the
project cycle than at the beginning. Net project revaluations occurred
primarily in Skanska Sweden, Skanska USA Civil, Skanska USA Building,
Skanska UK and Skanska Poland, while net project impairment losses
occurred primarily in Skanska Finland and Skanska Norway. During
the year, earnings in Construction were positively affected by recovered
bidding costs of USD 8 M in conjunction with the financial close of
New Karolinska Solna in Sweden and by a positive nonrecurring effect
of USD 14 M due to changes in the Norwegian pension system. In Finland,
a goodwill impairment loss of USD 15 M in civil construction operations
in Finland was also charged to earnings.
Residential Development
In Residential Development, operating income totaled USD 78 M
(–2). The operating margin amounted to 7.4 (neg) percent. The number
of project start-ups developed favorably while sales also developed
well, though at a somewhat slower pace than project start-ups. Operating
income included USD 7 M (–1) in income from joint ventures and
associated companies.
Commercial Property Development
Operating income in Commercial Property Development totaled
USD 128 M (102). During the year, the business stream carried out
divestments worth USD 547 M (465). Its operating income
included capital gains from property divestments amounting to
USD 110 M (99).
Infrastructure Development
Operating income in Infrastructure Development totaled
USD 41 M (24). Income was favorably affected in the amount of
USD 13 M by the business stream’s divestment of its stake in the
Orkdalsvegen E39 road in Norway. The financial close of New
Karolinska Solna had an impact on earnings, in the form of recovered
bidding costs totaling USD 2 M. Additional earnings from previous
years’ divestments totaled USD 12 M.
Construction
Residential Development
Commercial Property
Development
Infrastructure Development
Skanska Review of 2010 – USD version Segment reporting 11