ANNUAL REPORT 2004 - Skanska

Net sales and percentage outside
Sweden, continuing operations
SEK bn %
170,000
90
150,000
130,000
110,000
90,000
70,000
50,000
30,000
10,000
-10,000
2001 2002 2003 2004
Net sales
Outside Sweden, %
decrease, equivalent to 4 percent. Of net
sales, 22 percent were related to operations
in Sweden. For comparable units, including
currency rate effects, net sales fell by 8 percent.
For continuing operations, net sales
fell by 8 percent to SEK 116,257 M
(125,850).
170000
5000
150000 The decline in net sales for continuing
4000
operations was explained, among other
130000
things, by lower business volume in U.S.
110000
3000
units as well as lower divestment volume
90000
of commercial properties than in 2003.
2000
70000 In the Construction business stream,
sales 50000declined by 2 percent after currency 1000
rate adjustments.
30000
10000
-10000
-1000
Performance analysis Jan–Dec Jan–Dec
SEK M 2004 2003
Net sales
90
5000
Construction 107,977 114,417
80
Residential Property Development 5,814 4000 5,839
Commercial 70 Project Development 5,584 8,861
BOT 33 3000 87
60
Central and eliminations –3,151 –3,354
Continuing
50
operations 116,257 125,850
2000
Discontinuing
40
operations 5,006 7,029
Skanska Group
1000
121,263 132,879
30
0
Operating 20 income
Construction 1,211 1,551
10
-1000
Residential Project Development 524 259
Commercial Project Development 1,637 3,061
BOT 31 27
Central –364 –470
Eliminations 46 –65
Continuing operations 3,085 4,363
Discontinuing operations 768 169
Operating income 3,853 4,532
Net interest items –48 –393
Other financial items 14 –67
Net financial items –34 –460
Income after financial items 3,819 4,072
Taxes –1,158 –1,303
Minority interests –13 –8
Net profit for the year 2,648 2,761
Earnings per share, SEK 6.33 6.60
80
70
60
50
40
30
20
10
0
Income
Gross income
Gross income reached SEK 9,596 M (12,892).
90
This included income from operating activities
as well as capital gains from 80divestments
of residential and commercial project
70
development
properties. It also included writedowns
in project development operations
60
and loss provisions in ongoing 50 projects.
Selling and administrative expenses 40 fell to
SEK 7,289 M (8,453). The action programs
30
that were initiated earlier to reduce overhead,
as well as divestments of businesses, 20 were factors
contributing to the decrease. 10
The gain from divested Group companies,
SEK 1,413 M (14), refers to the gain on
divestments of businesses in which the
Group’s share of ownership exceeded 50
percent.
Skanska’s share of the income from joint
ventures and associated companies was
SEK 133 M (79), with most of the income
attributable to BOT operations. The capital
loss of SEK 35 M on the divestment of the
Group’s 50 percent holding in the Hong
Kong-based Gammon Skanska is also
included in this item.
Operating income
Operating income amounted to SEK 3,853
M (4,532), of which continuing operations
represented SEK 3,085 M (4,362). The
decrease for the Group was affected by
SEK 1 M in negative currency rate effects.
Construction reported operating income
of SEK 1,211 M (1,551). Operating income
improved in Skanska’s Swedish, Norwegian
and Danish operations, while other operations
showed a stable earnings level.
Provisions in U.S. and U.K operations,
however, adversely impacted operating
income by about SEK 1.1 billion in the
fourth quarter.
Residential Project Development more
than doubled its operating income to SEK
524 M (259). Operations in Sweden, Norway,
Finland and the Czech Republic
showed improved operating income. The
increase in earnings was largely related to
residential units in the medium and lower
price segments, for which there is heavy
demand in all markets. Swedish operations
accounted for the largest improvement in
operating income.
Commercial Project Development reported
a lower operating income of SEK 1,637 M
(3,061) as a consequence of lower divestments
of commercial projects as well as
lower rental revenues due to the reduced
property portfolio compared to the previous
year.
Of operating income, SEK 1,515 M
(2,399) was attributable to property divestments,
with a total sale price of about
SEK 4.6 billion (7.6).
A number of major property divestments
were made. For example, Skanska sold
properties in Gothenburg and Sundbyberg,
Sweden to a Swedish pension fund for a sale
price totaling about SEK 1 billion, with a
capital gain of more than SEK 250 M. In
addition, Skanska sold two properties in
Budapest, Hungary to an Irish and a German
real estate fund, respectively, for a total sale
price of about SEK 1 billion, with capital
gains of SEK 400 M. In Sweden, other commercial
property divestments included
Rosengårds Centrum, a Malmö shopping
center, at a price of more than SEK 300 M
and a gain of about SEK 55 M.
Skanska carried out a writedown of SEK
142 M (20) on commercial properties, while
reversals of earlier writedowns amounted to
SEK 44 (20). The writedown was related to
properties in Denmark, while the reversal
was related to properties in Sweden. Operating
income also included a writedown of
SEK 61 M in Skanska’s 30 percent ownership
stake in the Westin Hotel in Warsaw, Poland.
BOT operations increased their operating
income from SEK 27 M to SEK 31 M.
Skanska BOT develops and invests in privately
financed infrastructure projects in
cooperation with Skanska’s construction
units. BOT is part owner in twelve projects,
of which seven are in operation.
At year-end 2004, the book value of
shares, participations and subordinated
receivables totaled about SEK 1 billion.
Skanska BOT’s remaining investment commitments
related to ongoing projects total
about SEK 0.7 billion.
Due to lower corporate administrative
expenses and improved earnings in a number
of companies reported at the corporate
level, corporate overhead shrank to SEK
–364 M (–470).
Quarter
2,500
2,000
1,500
1,000
500
0
-500
-1,000
Operating income, SEK M,
continuing operations
Rolling 12 months
5,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
-03 -03 -03 -03 -04 -04 -04 -04
4,000
3,000
2,000
1,000
-1,000
Gain from divestments of commercial properties
Operations excluding gain on sale of
commercial properties
Operating income, rolling 12 months
0
Skanska Annual Report 2004 – Report of the Directors
33