ANNUAL REPORT 2002 - Skanska

Business units
The graphs show the composition
of the order backlog at year-end
Skanska Sweden
Selmer Skanska
Skanska Denmark
Skanska Oy
Building
construction
Civil construction
Services
39%
17%
22%
20%
61%
83%
78%
80%
The construction units in Skanska’s national
home markets are the core of its operations.
In 2002, these companies completed
many projects that help create good living,
traveling and working environments.
Skanska Sweden
Change 2002 2001
Order bookings, SEK bn –11% 24.4 27.3
Net sales, SEK bn –10% 25.5 28.4
Operating income, SEK M –39% 456 745
Operations specialize in residential and
commercial building construction, as well
as civil construction projects. The economic
slowdown that began during the autumn
of 2001 continued throughout 2002. Large
loss provisions in a few civil construction
projects in Stockholm and delayed projects
in the Stockholm residential construction
unit pulled down earnings.
During the year, Skanska Sweden signed
a conditional agreement with the Swedish
Rail Administration to resume rail tunnel
construction under the Halland Ridge
(Hallandsås). The project will take place
in a consortium and, if implemented, will
represent a contract value of about SEK 2.2
billion. The project is not included in order
bookings for 2002.
The Swedish construction market is
expected to shrink during 2003.
Selmer Skanska
Change 2002 2001
Order bookings, SEK bn –9% 8.8 9.7
Net sales, SEK bn –6% 8.6 9.1
Operating income, SEK M 95 –128
Operations specialize in residential and
commercial building construction, as well
as civil construction work. The Norwegian
construction market has shown weak
growth in the past two years.
After a sizable loss during 2001,
operations were restructured toward fewer
but more profitable profits.
The Norwegian construction market is
expected to grow slightly during 2003.
Skanska Denmark
Change 2002 2001
Order bookings, SEK bn +6% 4.3 4.1
Net sales, SEK bn –20% 4.6 5.8
Operating income, SEK M –198 –1,030
Operations specialize in residential and
commercial building construction, as well
as civil construction projects. After having
remained stable since 1999, the market
shrank during 2002.
Skanska Denmark has undergone a
restructuring during the past two years.
Operations have been concentrated in
fewer units, with a focus on fewer but more
profitable contracts. During the fourth
quarter, restructuring expenses of SEK 162
M were charged to earnings after Skanska’s
strategic review.
The downturn in the Danish
construction market is expected to continue
during 2003.
Skanska Oy
Change 2002 2001
Order bookings, SEK bn +10% 9.2 8.3
Net sales, SEK bn +10% 9.7 8.8
Operating income, SEK M –85% 18 122
Operations specialize in residential and
commercial building construction, as well
as civil construction projects, in Finland,
Russia and Estonia.
The Finnish residential construction
market continued to show strength. In
commercial construction, the market
trend remained weak. Operations in Russia
reflected a continued strong construction
market. Operating income declined due
to property writedowns as well as certain
accounts payable. During the fourth
quarter, restructuring expenses amounting
to SEK 44 M related to the divestment
of operations in Latvia, Lithuania and
Hungary were also charged to operating
income.
During 2003, the construction market is
expected to shrink in Finland but grow in
Russia.
Skanska UK
Change 2002 2001
Order bookings, SEK bn –26% 19.5 26.2
Net sales, SEK bn –4% 21.0 21.8
Operating income, SEK M 350 –23
Skanska’s operations in the United
Kingdom focus on building and civil
construction, but have various special areas
of expertise in construction-related services
as well. Skanska UK is also responsible for
two partly owned companies in Asia, the
stock exchange-listed company Skanska
Cementation India (80 percent) and
Gammon Skanska in Hong Kong (50
percent). In addition, Skanska UK includes
four remaining joint venture projects
with the British construction company
Costain. Skanska UK is also responsible for
Cementation Africa, which works with shaft
sinking for the mining industry. Market
growth has been driven by private finance
initiative (PFI) projects.
Operating income climbed substantially
compared to 2001. This improvement can
largely be explained by better outcomes in
the joint venture projects with Costain as
well as in Skanska UK’s own PFI projects.
The British construction market is
expected to be stable during 2003.
Skanska Poland
Change 2002 2001
Order bookings, SEK bn –11% 5.0 5.6
Net sales, SEK bn –25% 4.8 6.5
Operating income, SEK M –121 –700
16 Skanska Annual Report 2002 – Business units