Review of 2010 – USD version - Skanska

In August, a milestone
breakthrough was achieved
at the Hallandsås ( Hallandsås
Ridge) rail-tunneling project
in southern Sweden. The
tunnel-boring machine, named
Åsa, completed the first of the
two 5.5-kilometer pipes. The
final breakthrough is planned
for 2015.
The 285 m (935 ft.) long bridge
over Brandangersundet to
Sandøyna, Norway was fabricated
and installed by Skanska.
Sweden
Skanska Sweden improved both its order bookings and
its margins during 2010. Excellent execution and stronger
economic conditions resulted in substantially higher
bookings, while projects were well-executed. The high
point of the year was New Karolinska Solna, which is
Skanska’s largest-ever contract. The construction assignment
totals USD 2.0 billion and is being carried out in collaboration
with Skanska UK.
Assignments for public sector customers showed a
favorable trend, both for building and civil construction.
Demand in the private sector was good, although the
market for office buildings was relatively weak.
In addition to its construction expertise, Skanska
Sweden takes advantage of the Group’s financial strength
to develop and build major projects of a special nature
such as police headquarters, detention facilities and
courthouses. In this type of project, known as Bundled
Construction, during part of the project Skanska can also
help arrange financing. Examples of this are the combined
congress center, concert hall and hotel in Malmö and the
new Swedish Security Service headquarters in Solna.
Skanska began construction of the second phase of the
Bassängkajen office building in Malmö, as well as an office
building for Visma at Lindhagensterrassen in Stockholm,
where work also began on the replacement of the existing
Lustgården complex with new green office space.
Among an increasing number of residential projects
were Iskristallen and Linaberg in Stockholm, Fiskebäck
Brygga in Gothenburg and Lomma Hamn in Malmö.
New Karolinska Solna represented a major addition
to Swedish order backlog, which at year-end was equivalent
to about 17 months of construction.
Because of good order bookings during 2010, the
Skanska Sweden business unit will need to recruit new
employees.
Skanska’s main competitors in the Swedish market
are NCC, Peab, Svevia and various international market
players such as Bilfinger Berger.
Norway
During 2010 Skanska Norway had strong order bookings.
The Norwegian economy remained in good shape,
resulting in new projects for both the private and public
sector. Both the building and civil construction sectors
grew during the year. Residential construction also
showed a favorable trend. Skanska started a large number
of new residential projects, including Tiedemannsbyen
in Oslo.
The business unit was awarded several large office
building projects by private companies. In Oslo it
is constructing the new Statoil headquarters for
USD 222 M, and in Trondheim a shopping center
worth USD 79 M. A railroad project in Vestfold worth
USD 65 M is the largest new civil construction contract.
The business unit’s earnings were pulled down by
weak earnings in certain regions but were favorably
affected in the amount of USD 14 M by changes in the
Norwegian pension system.
The market is expected to remain stable during 2011.
The main competitors in the Norwegian market are
Veidekke, NCC and the AF Group.
Finland and Estonia
Skanska Finland significantly improved its order bookings.
During 2010 the Finnish economy bounced back;
of Skanska’s Nordic markets, it had weakened the most
during the financial crisis. Residential construction was
strong and is favorably affected by the fact that people
in Finland are continuing to move into cities. Earnings
were pulled down by goodwill impairment losses in civil
construction operations, totaling USD 15 M. The building
construction market remained relatively stable, but
with few major contracts. The largest projects were the
first two phases of Ruskeasuo, an office building project
in Helsinki being constructed for Skanska Commercial
Development Nordic.
Civil construction remained at a good level, and
Skanska’s contracts included new road construction assignments
between Porvoo and Sipoo in the Helsinki area.
The good economic trend is expected to continue
during 2011, both when it comes to building and civil
construction as well as the construction of multi-family
rental housing.
Estonia’s economic situation is highly influenced by
the sharp cyclical downturn during 2008 and 2009. This
meant continued weak demand for both new residential
and non-residential buildings as well as civil construction
projects. During 2010 no major new projects were started,
although the outlook for 2011 is significantly better than
it has been in recent years. Skanska’s main competitors
in the Finnish and Estonian markets are YIT, Lemminkäinen
and NCC.
Other European markets
Poland
Growth in the Polish economy is still good. In spite of
this, Skanska Poland’s order bookings were lower than in
2009. This is because the second phase of the A1 expressway,
a public-private partnership project, accounted for a
sizeable proportion of 2009 order bookings.
Building construction remained at a relatively good
level, and a number of new projects were started, especially
for the public sector. The market for private office
construction is still showing relatively slow growth.
Among the largest new projects were construction
assignments for Skanska Commercial Property Development
in Warsaw and Wrocław, as well as a courthouse
in Poznań and an air terminal in Rzeszów-Jasionka.
The Polish construction market is expected to
remain stable during 2011, but with continued tough
competition from a growing number of international
market players.
The construction market is being stimulated by
investments preparatory to the European football
(soccer) championships in 2012, which include roads
and railroads. The European Union’s infrastructure
funds remain important in financing the country’s
infrastructure investments.
Skanska Review of 2010 – USD version Construction 27