Annual Report 2008 - Skanska

Business streams
For several years, Skanska has
been expanding the rail network
in Prague, Czech Republic.
A new hub links several lines and
stations with Prague’s central
station. Meanwhile local transit
lines are now also tied into the
national network. The project,
completed in 2009, encompasses
27 km (17 mi.) of track construction,
including 12 bridges
totaling 1.29 km (0.8 mi.) and
2.4 km (1.5 mi.) of tunnels.
become a leader in terms of size and profitability. Skanska
also endeavors to be a leader in its industry in sustainable
development as well as ethics, health and safety. The Group’s
primarily goal is to increase its profitability. Growth in its
business units is prioritized only when financial targets are
achieved.
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.
Non-residential, civil and residential 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 longer
periods, have a higher risk profile and are more capital-intensive.
They consequently have a somewhat higher margin.
The Company’s risk management processes are aimed at
identifying and managing operational risks and thereby helping
to ensure higher profitability. Risk analysis is carried out
before deciding on a tender or commitment and then continuously
during the implementation phase. This is both a matter
of avoiding risks that may generate costs and of ensuring
that the Company is compensated for the risks that it chooses
to assume (see page 11). During 2008, Skanska’s Construction
units performed SEK 3.2 billion worth of work for projects
in the Residential Development business stream. The corresponding
figure for projects in Commercial Development
was SEK 3.2 billion. For projects in Infrastructure Development
in which Skanska is a co-owner, Construction units
performed assignments worth SEK 5.8 billion.
The top Nordic contractors, sales, June 30, 2008 1
Company Country SEK bn EUR bn
Skanska Sweden 143.4 15.3
NCC Sweden 58.5 6.3
YIT Finland 27.4 2.9
PEAB Sweden 33.9 3.6
Veidekke Norway 23.9 2.6
Lemminkäinen Finland 22.0 2.4
MT Højgaard Denmark 14.0 1.5
1 Rolling 12 months.
Source: Half-year reports of each respective company 2007/08.
The top global contractors 1 , sales. June 30, 2008. 2. 3
Company Country SEK bn EUR bn
VINCI France 303.8 32.5
Bouygues France 295.6 31.6
Grupo ACS Spain 211.4 22.6
Hochtief AG Germany 164.7 17.6
Skanska AB Sweden 143.4 15.3
Fluor Corporation USA 122.6 13.1
1 Excluding Asian construction companies.
2 Rolling 12 months.
3 Including non-construction-related operations.
Sources:Half-year report 2007–2008 of each respective company.
Skanska’s home markets
GDP per capita
USD thousand
Construction
per capita
Construction
as % of GDP
Sweden 49,011 3,554 7.7
Norway 62,052 9,794 11.9
Denmark 56,623 7,686 13.5
Finland 46,197 7,197 15.6
Poland 11,156 1,419 12.8
Czech Republic 16,618 2,659 15.9
United Kingdom 45,636 4,747 10.4
United States 45,160 4,895 7.8
Argentina 6,636 378 5.7
All figures refer to 2007. Sources: Euroconstruct, Datastream.
20 Construction Skanska Annual Report 2008