Annual Report 2011 - Skanska

Other European countriesAndel av orderstockenPolandCzech Republic and SlovakiaUnited KingdomPolenTjeckienStorbritannienSkanska is among the largest construction companies in the Czech Republic and Poland. It is also oneof the leading 55% construction companies in the United Kingdom. In all three markets, its operationsinclude building 45%and civil construction. 60%In the 24%• U.K., Skanska’s operations also include construction0% • 40%54%0% • 22%and maintenance of distribution networks for electricity, gas and water as well as other types ofconstruction • Anläggningsbyggande services. • Husbyggande • ServiceBreakdown of order backlogPolandCzech Republic55%24%• 45%60%40% • 54%0% • 0%• Civil construction • Building construction • ServiceUnited Kingdom• 22%Skanska’s home marketsUSDGDP/capitaConstruction/capitaConstruction as% of GDPPoland 12,323 1,492 12.1Czech Republic 18,277 2,497 13.7Slovakia 16,104 1,315 8.2United Kingdom 36,164 3,515 9.7All figures refer to 2010. Sources: Euroconstruct, IMF.CompetitorsBudimexHochtiefStrabagMetrostavBalfour BeattyCarillion9.1%operating margin wasSkanska Poland’sMajor events during 2011Order bookings in Poland increased, while they decreasedin the Czech Republic and in the U.K. One sizeable orderduring the year was a contract to expand the subway systemin Prague, Czech Republic, which will add four newstations. Skanska’s contract is for the technical part of theextension project and is worth about SEK 1.3 billion.In Poland, Skanska received the construction contractfor the second phase of the Sucharski Route outsideGdańsk. The contract is worth about SEK 410 M and isone of the city’s road projects in conjunction with the 2012European Football Championship. The European Unionis co-financing the project. Skanska’s big Polish highwayproject, the A1 – which has public-private partnershipfinancing – was opened during the year. In December,Skanska signed an agreement to acquire a Polish constructioncompany, the PUDiZ Group, which specializesin road construction and has 450 employees and annualsales of about SEK 350 M. The acquisition will enableSkanska to continue its geographic expansion in Poland.Skanska UK received an assignment to be responsiblefor construction of the Crossrail Paddington Station, thefirst station to be built as part of the Crossrail project,which will connect east and west London. The project isa joint venture with the British construction companyCostain, and Skanska’s share of the order amount is aboutSEK 770 M. Other major U.K. contracts were a streetlighting project in Croyden and Lewisham worth aboutSEK 760 M, construction of a prison in Scotland for aboutSEK 590 M and a green commercial construction projectin London worth about SEK 520 M. Skanska was alsoawarded contracts for construction of a school in Londonand an office building refurbishment project in Liverpool.In the two latter cases, the contract amount is aboutSEK 310 M each.Market overviewIn the U.K. and the Czech Republic, the market remainedweak and order bookings declined. Public sector costcuttingprograms continued to affect these markets,although in the U.K. they were partly offset by increasedprivate construction investments. In Poland, order bookingsincreased somewhat. EU infrastructure funds areimportant sources of financing for Polish and Czechinvestments in such projects.EarningsPoland and the U.K. continued to deliver good earnings,with a near-doubling of earnings in Poland, mainly dueto a successful highway project. In the U.K., the outcomewas similar to the previous year despite a very difficultmarket in 2011. In the Czech Republic, revenue fell andprofitability worsened due to the weak market.OutlookThe Czech and U.K. markets are expected to be weakin 2012 as well. In the U.K., public sector cost-cuttingprograms will continue to affect the market, while thegrowth rate in Poland is expected to be stable, though at asomewhat lower level than in 2011.36 Construction Skanska Annual Report 2011