Skanska Annual Report 2003

Comments by the President and CEOToday we have a stronger financial position, better focus and control.Our ambition is to improve the implementation of our projects.2003 IN REVIEWThe year 2003 was one of progress in implementing the strategyestablished in late 2002. We had some bumps in the road,but we also had some noteworthy success.The most important accomplishment was thestrengthening of our balance sheet. A strong financialposition is a critical success factor in the construction andproject development industry. We are in a much betterposition now, having eliminated the net debt of SEK 9,376 Mwe had at the beginning of 2003. At year-end, we insteadhad a net cash position of SEK 150 M. Net debt to equity nowstands at 0.0, well within the target for year-end 2004. Wealso took steps that will help us meet the financial targetsset forth for each of the business streams. We exited certainbusinesses and divested assets in others that were no longerin line with our strategic direction, thus sharpening ourfocus. This process will continue in 2004. During the year wereduced overhead in the business units and the corporatecenter in response to market conditions.Margins in construction and services were impacted bylower earnings in the U.S. and disappointing results in the2003U.K. and in Russia. But construction operations in the Nordicregion, led by the Sweden business unit, improved. In CentralEurope, Skanska CZ (Czech Republic) continued to earn highmargins. Skanska Poland showed a profit, indicating the turnaroundthere is succeeding. Once again, operations in LatinAmerica showed good results in a very challenging environment.POSITIVE TRENDIn 2003 we created a business stream for residential development.The separation from construction enables this businessto focus on land acquisition; product development,marketing and customer care while the construction units areresponsible for the building process only. Sales and resultswere strong in the Czech Republic and Finland. In Swedenthe slowdown in the high-end market hampered results andin Poland the market is still depressed. During the year wetook steps to reduce exposure to the high-end markets, whichshould enhance return on capital employed going forward.Results in the commercial development business streamwere very strong as we sold SEK 7.6 billion worth of devel-2Comments by the President and CEO – Skanska Annual Report 2003