Review of 2010 – USD version - Skanska

increase due to stricter energy and emission requirements
and because both investors and tenants increasingly
demand green commercial space.
Non-residential, civil and residential construction
and renovation
The mission of Skanska’s Construction operations is to
offer building, civil and residential construction services,
also including refurbishment as well as operation and
maintenance of industrial and transport facilities. These
operations are targeted to both corporate customers and
public agencies. By virtue of its size and leading position,
Skanska can accept the largest, most complex assignments
from the most demanding customers.
The Construction business stream also performs
contracting assignments for Skanska’s other business
streams in the development of commercial and residential
properties as well as infrastructure. This collaboration
generates both large construction assignments and
synergies for the Group.
Order backlog
Order backlog, totaling USD 21.6 billion at year-end
2010, is divided among several thousand projects. Nonresidential
building construction accounts for 53 percent,
civil construction 38 percent and residential construction
5 percent of the Construction business stream’s order
backlog. The remaining 4 percent consists of service
assignments. At year-end, the part of this backlog that
Skanska plans to carry out in 2011 was equivalent to
69 (59) percent of 2010 revenue.
A leading builder in selected markets
The Construction business stream operates in a number
of selected home markets − Sweden, Norway, Finland,
Estonia, Poland, the Czech Republic, Slovakia, the U.K.,
the U.S. and Latin America. In addition, there is a pan-
Nordic unit for construction-related industrial production.
In its selected markets, the Skanska Group is regarded
as one of the leaders or have the potential to become a
leader in terms of size and profitability. Skanska also
endeavors to be the industry leader in sustainable development
as well as in ethics, health and safety. In the
Construction business stream, the Group’s primary goal
is good profitability, followed by growth.
Skanska built the Bromma
Blocks retail complex in western
Stockholm for KF Fastigheter.
This ultramodern three-story
shopping mall has more than
80 stores and a garage with
330 parking spaces. The project
incorporates a 1947 aviation
hangar, whose exterior is a
protected historical structure.
Local conditions
Conditions vary between home markets, and the operations
of Skanska’s local business units thus differ. Some
specialize in selected market segments, while others
operate in a broader spectrum.
The earnings of Skanska’s construction units must
be evaluated in light of local market conditions, the
segments in which these units operate and varying
contractual mechanisms.
Higher margins in civil construction
Non-residential and residential building construction
is generally characterized by high capital turnover,
limited capital employed and low margins.
Civil construction projects are usually underway for
long periods, have a higher risk profile and are more capital-intensive.
They consequently also have higher margins.
In 2010, Skanska’s construction operations executed
project work for internal business streams as noted in the
table. Project opportunities are also created by taking
advantage of the Group’s financial expertise. Skanska
Financial Services often helps arrange financing
solutions for certain types of projects.
Intra-Group revenue, USD M
Business streams 2010 2009
Residential Development 289 257
Commercial Property Development 122 253
Infrastructure Development 992 780
Total 1,403 1,290
Skanska’s home markets
GDP per
capita, USD
Construction
per capita, USD
Construction as
% of GDP
Sweden 43,668 3,919 9.0
Norway 78,178 9,796 12.5
Finland 44,581 6,737 15.1
Poland 11,302 1,340 11.9
Czech Republic 18,256 2,659 14.6
United Kingdom 35,257 3,334 9.5
United States 45,934 2,911 6.3
Argentina 7,725 406 5.3
All figures refer to 2009. Sources: Euroconstruct, IMF.
The top global contractors 1 , sales, June 30, 2010 2, 3
Company Country USD bn SEK bn
Vinci France 45,4 329.7
Bouygues France 43,1 313.2
Hochtief AG Germany 25,6 185.8
Grupo ACS Spain 21,6 156.6
Fluor Corporation U.S. 21,2 153.6
Skanska Sweden 17,7 128.1
1 Excluding Asian construction companies.
2 Rolling 12 months.
3 Including non-construction-related operations.
Sources: Half-year report for 2009–2010 for each respective company.
The top Nordic contractors, sales, June 30, 2010 1
Company Country USD bn SEK bn
Skanska Sweden 17.7 128.1
NCC Sweden 7.1 51.6
PEAB Sweden 4.8 35.1
YIT Finland 4.6 33.4
Veidekke Norway 2.6 18.8
Lemminkäinen Finland 2.6 18.6
MT Højgaard Denmark 1.6 11.6
1 Rolling 12 months.
Sources: Half-year report for 2009–2010 for each respective company
Skanska Review of 2010 – USD version Construction 25