Other European countriesPolandCzech Republic and SlovakiaUnited Kingdom<strong>Skanska</strong> is a leading construction company in the Czech Republic, Poland and the U.K. Despite weakmarket conditions, pr<strong>of</strong>itability was generally very good in these operations during <strong>2012</strong>, primarily dueto solid cost controls and risk management.Breakdown <strong>of</strong> order backlog, <strong>EUR</strong> 3.6 bnPolandCzech Republic 148%26% 52%54%46% 44%0% 0% Civil construction Building construction Service1 Including Slovakia.United Kingdom 30%<strong>Skanska</strong>’s home marketsUSDGDP/capitaConstruction/capitaConstruction as% <strong>of</strong> GDPPoland 13,448 1,715 12.8Czech Republic 20,502 2,427 11.8Slovakia 17,573 1,353 7.7United Kingdom 38,811 3,752 9.7Sources: Euroconstruct, IMF, national statistical agencies.CompetitorsBudimexHochtiefStrabagMetrostavBalfour BeattyCarillionLaing O’RourkeMajor events during the yearOrder bookings in the U.K. increased, while theydecreased in the Czech Republic and Poland comparedwith the preceding year.In addition to the <strong>of</strong>fice property constructionassignments generated by the Commercial PropertyDevelopment business stream, <strong>Skanska</strong> in Poland has,for example, won the assignment for approximately<strong>EUR</strong> 59 M to build a section <strong>of</strong> highway in Silesia,southwestern Poland.In the Czech Republic, a number <strong>of</strong> minor andmedium-sized projects were secured during the yearand the organization has continuously adapted tomarket conditions. At the end <strong>of</strong> <strong>2012</strong>, <strong>Skanska</strong> in theCzech Republic received the “TOP Responsible LargeCompany Award” from Business for Society, the CzechRepublic’s largest Corporate Social Responsibility(CSR) network for CSR initiatives.In the U.K., <strong>Skanska</strong> signed a maintenance contractwith the National Grid valued at about <strong>EUR</strong> 1.0 billion, toreplace gas pipes. The order bookings for <strong>2012</strong> include<strong>EUR</strong> 241 M <strong>of</strong> this contract. <strong>Skanska</strong> also won thecontract to modernize the M25 motorway for approximately<strong>EUR</strong> 195 M. Another major contractsecured in the U.K. was for the construction <strong>of</strong> theBermondsey Dive-Under for about <strong>EUR</strong> 74 M.MarketIn the U.K. and the Czech Republic, the market continuedto be weak due to the impact <strong>of</strong> public sector’s costcuttingprograms. There was more stability in the Polishmarket, despite a slight weakening <strong>of</strong> the buildingconstruction segment at the end <strong>of</strong> <strong>2012</strong>.EU infrastructure funds are important sources <strong>of</strong>financing for Polish and Czech investments in suchprojects, and their efficient usage enables new infrastructureinvestments.In recent years, there has been a shift from very largeprojects to increasingly small and medium-sized projectsin these two markets.In <strong>2012</strong>, the Polish and Czech construction marketswere both marked by turbulence, while <strong>Skanska</strong> with itsfinancial strength remained strong.EarningsOperations in Poland and the U.K. continued to delivergood earnings. Earnings in the U.K. were higher thanthe preceding year. In Poland, the earnings in comparisonwith the preceding year were negatively impactedby the completion <strong>of</strong> a very pr<strong>of</strong>itable project in 2011.In the Czech Republic, revenue fell due to the weakmarket, but pr<strong>of</strong>itability improved despite the situation.Outlook 2013PolandCzech RepublicUnited KingdomBuildingconstructionResidentialCivilconstructionThe European markets are expected to remain weak, particularlyfor large civil construction projects, and competition for theseprojects is intense. However, the outlook is somewhat brighterin the U.K.36 Construction Substantial growth Growth Stable Decline Significant decline<strong>Skanska</strong> <strong>Review</strong> <strong>of</strong> <strong>2012</strong> – <strong>EUR</strong> version
22%Other European countries accounted for22 percent <strong>of</strong> Construction revenue.”Despite a weak market, OtherEuropean countries delivered anoperating margin <strong>of</strong> 3.7 percent.Construction, Other European countriesRevenue Operating income Operating margin, % Order bookings Book-to-build, % Order backlog<strong>EUR</strong> M <strong>2012</strong> 2011 <strong>2012</strong> 2011 <strong>2012</strong> 2011 <strong>2012</strong> 2011 <strong>2012</strong> 2011 <strong>2012</strong> 2011Poland 1,023 1,146 48 104 4.7 9.1 870 1,012 85 88 692 775Czech Republic 1 639 738 14 6 2.2 0.8 433 663 68 90 658 841United Kingdom 1,438 1,408 52 47 3.7 3.3 1,327 1,012 92 72 2,206 2,259Totalt 3,099 3,293 115 156 3.7 4.7 2,630 2,687 85 82 3,557 3,8751 Including Slovakia.Broadened cooperation in Poland, the Czech Republic and Slovakia<strong>Skanska</strong>’s Central European construction units in Poland, the Czech Republic and Slovakia draw on each other’sstrengths to secure and execute various types <strong>of</strong> construction assignments. Cooperation also aims at effectingcost-savings through the exchange <strong>of</strong> resources and equipment. Here concrete is being poured for the runways atWarsaw’s and Poland’s largest airport, in Okecie. The machine comes from <strong>Skanska</strong> Czech Republic and is adjustableso it can pour concrete runways that vary from 6 to 12.5 meters in breadth. The project team comprises bothCzech and Polish employees. Outside the Polish city <strong>of</strong> Łódź, a similar clustered collaboration is taking place forthe expansion <strong>of</strong> Highway S8.<strong>Skanska</strong> <strong>Review</strong> <strong>of</strong> <strong>2012</strong> – <strong>EUR</strong> version Construction 37
- Page 1: Review of 2012EUR version
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Independent Auditors’ ReportTo th
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Annual Shareholders’ MeetingInves