ANNUAL REPORT 2004 - Skanska

International energy companies are major Skanska customers in Latin America. During 2004, the company completed an
expansion of the Loma de la Lata gas production plant in Neuquen, Argentina.
Latin America
SEK M 2004 2003
Net sales 2,785 2,142
Operating income 118 119
Operating margin, % 4.2 5.6
Capital employed 350 375
Return on capital employed, % 23.7 27.8
Order bookings 3,924 2,401
Order backlog 2,885 2,087
Operations focus on energy supply and distribution
as well as assignments for the oil
and gas industry, mainly in Argentina, Brazil,
Chile, Peru and Mexico.
The region saw continued recovery during
2004. Together with Skanska’s mutually
beneficial collaboration with key regional
customers in its prioritized product segments,
this resulted in another successful
year. Order backlog and order bookings
were at historically high levels, providing a
very good foundation for continued positive
growth in operations during 2005.
New contracts in the energy sector in Brazil
will strengthen the company’s position in
this attractive market.
Aside from local market players, Skanska
competes with such major companies as
Brazilian-based Odebrecht and Argentinebased
Techint.
International 1
SEK M 2003 2002
Net sales 1,867 2,233
Operating income –42 –250
Operating margin, % –2.2 –11.2
Capital employed 656 493
Return on capital employed, % –10.2 –69.2
Order bookings 1,756 1,425
Order backlog 1,844 2,131
As one element of Skanska’s strategic concentration
on its home markets, project
export operations have been discontinued.
Operations are now focusing on completing
the seven ongoing projects according to the
established program.
By forming Skanska Project Support,
Skanska will take advantage of the unique
expertise and experience that exists among
the unit’s employees to promote Skanska’s
operations in its home markets.
1 International includes operations in Russia as well as
International Projects
Discontinuing operations
In 2004, Skanska continued to sell or close
down operations that fall outside its core
business or home markets. Divested operations
were equivalent to about 4 percent of
the Group’s 2004 net sales.
During the year, Skanska sold its 50
percent stake in Gammon Skanska (Hong
Kong) and its 80 percent stake in Skanska
Cementation India. Also divested were Skanska
Cementation Mining in South Africa and
Canada as well as engineering consultancy
Skanska Whessoe in the U.K. Of the writedown
carried out in the United Kingdom
during the fourth quarter, 65 percent was
included in Whessoe’s earnings.
Skanska Services and Myresjöhus were
also divested during the year.
Total operating income from discontinuing
operations, including gains from divestments,
was SEK 768 M.
Additional units in Skanska Sweden have
been identified for divestment: Flexator,
Temporent, Skanska Prefab Mark, Skanska
Glasbyggarna and IV Produkt. Skanska plans
to sell them in 2005.
Skanska Annual Report 2004 – Construction business stream
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