Review of 2012 â EUR - Skanska

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The AmericasUSA BuildingUSA CivilLatin AmericaSkanska is one of the leading construction companies in the U.S. for building and civil construction.Latin American operations, which are dominated by energy-sector assignments, were charged withwrite-downs during the year. The order situation remains highly favorable in the U.S., which indicatescontinued growth.Breakdown of order backlog, EUR 8.4 bnSkanska’s home marketsCompetitorsUSA BuildingUSA Civil0% 100%100%0%0% 0%Latin America 63% 0% 37%USDGDP/capitaConstruction/capitaConstruction as% of GDPUnited States 48,328 2,493 5.2Argentina 10,944 1,434 13.1Brazil 11,929 952 8.0Chile 14,500 2,009 13.9Sources: Euroconstruct, IMF, national statistical agencies.TurnerBovisFluor Corp.KiewitGraniteFlatironTechintOdebrecht Civil construction Building construction ServiceMajor events during the yearOrder bookings in the Americas, particularly for SkanskaUSA Building and Skanska USA Civil, have been quitefavorable and resulted in increased geographical spread.As in previous years, Skanska USA Building won mostof its big contracts in the healthcare and education sectors.Also, several assignments were secured for the constructionof office buildings during the year. The largestassignment was a construction management contract forthe expansion of a pharmaceutical research campus inthe Northeast, valued at about EUR 345 M.In 2012, Skanska USA Civil’s order bookings weredominated by road and bridge contracts. Skanska’s strongposition in the construction for the New York subwaysystem also generated several assignments. The largestassignment secured in 2012 was for the construction ofthe Midtown Tunnel/Elizabeth River Tunnels in Virginia,valued at about EUR 505 M. This is the result of closecooperation with Skanska Infrastructure Development,which also reached Financial Close for the financing,design, construction, operation and maintenance ofthe project. The integration of Industrial ContractorsSkanska, acquired at year-end 2011, was a top priorityin 2012 and is proceeding well.In Latin America, the assignments secured were primarilyin the energy sector, the largest being an assignmentto expand a natural gas power plant in Rio deJaneiro, Brazil, worth about EUR 195 M. In 2012, operationsin Latin America were charged with write-downsof EUR 99 M, primarily attributable to a write-down onone ongoing project and the write-down of receivablesin two completed projects. Returning the operations tonormal profitability levels is highly prioritized.MarketThe U.S. market improved during the year, and orderbookings were strong, while there was also an increasein the number of projects available for tender. The fragmentedmarket in the U.S. also represents major growthpotential for Skanska.Skanska has a strong market position in transportationinfrastructure, the healthcare sector, the pharmaceuticalindustry and high-tech buildings for the informationtechnology (IT) industry, thanks to long-term customerrelationships, a geographic presence and expertise ingreen construction.Latin American operations were dominated by assignmentsin the energy sector.EarningsRevenues in the U.S. increased strongly compared with2011, and the operating margin is at a stable and healthylevel. In Latin America, earnings were negative as aresult of write-downs on projects.Outlook 2013BuildingconstructionResidentialUnited States –Latin America – –CivilconstructionThe market for large and complex civil construction projects continuedto develop favorably in the U.S., but there is intense competitionfor these projects. In building construction operations, the segmentfor healthcare, aviation and facilities for the information technology(IT) industry are developing favorably. By late 2012, the market forcommercial buildings was also performing well.40 Construction Substantial growth Growth Stable Decline Significant declineSkanska Review of 2012 – EUR version
38%The Americas accounted for38 percent of Construction revenue.”Operating margin forSkanska USA Civil in 2012was 9.0 percent.Construction in the AmericasRevenue Operating income Operating margin, % Order bookings Book-to-build, % Order backlogEUR M 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011USA Building 3,060 2,363 51 44 1.7 1.8 3,214 2,872 105 122 4,108 4,030USA Civil 1,436 1,128 129 104 9.0 9.2 2,035 1,456 142 129 3,316 2,782Latin America 945 667 –62 13 neg 1.9 1,036 1,058 110 159 994 999Total 5,440 4,158 118 161 2.2 3.9 6,285 5,385 116 130 8,419 7,811Two major lecture and laboratorybuildings are being constructed forthe City University of New York(CUNY) in upper Manhattan. Theproject, which comprises an area ofapproximately 55,000 sq m is to becompleted in 2013.Expansion of Bay Area Rapid Transit (BART) in California,USA. Skanska is constructing a 1.6 kilometer section inFremont and a further 16 kilometers into San Jose in theSilicon Valley.RichmondPittsburg/Bay PointEAST BAYSANFRANCISCODublin/Pleasanton1998-2001San FranciscoInternational Airport(SFO)MillbraeFremont2009-2012PENINSULASAN JOSE2012-2016Skanska Review of 2012 – EUR version Construction 41
Page 1: Review of 2012EUR version
Page 4 and 5: Skanska’s strengthsPositions Empl
Page 6 and 7: 2012 in briefFirst quarterSecond qu
Page 8 and 9: Comments by the President and CEOTh
Page 10 and 11: MissionSkanska’s mission isto dev
Page 12 and 13: ◀◀◀◀◀Business modelProjec
Page 14 and 15: Financial targetsSkanska’s busine
Page 16 and 17: Risk managementThe continuous stren
Page 18 and 19: 30,000potential projects analyzed e
Page 20 and 21: Skanska’s role in the communitySk
Page 22 and 23: -100of thousands of people get invo
Page 24 and 25: Earnings are generated by peopleCom
Page 26 and 27: 22,000employees are developed each
Page 28 and 29: Share dataFor more than ten years,
Page 30 and 31: Growth in equityDividends re-invest
Page 32 and 33: ConstructionThe Värtan Interchange
Page 34 and 35: Increased revenues and strong order
Page 36 and 37: Nordic countriesSwedenNorwayFinland
Page 38 and 39: StatoilBuilt by: Skanska NorwayCust
Page 40 and 41: Other European countriesPolandCzech
Page 42 and 43: Cross London Rail Links - Cross Rai
Page 46 and 47: High pace forhigher education
Page 48 and 49: Residential DevelopmentContinued gr
Page 50 and 51: Enhancing efficiency in the Nordic
Page 56 and 57: Commercial Property DevelopmentFull
Page 58 and 59: Profitable property divestments yea
Page 64 and 65: Strong expansionin PolandPoznańWar
Page 66 and 67: United StatesIn the U.S., Skanska i
Page 68 and 69: Infrastructure DevelopmentOne of Lo
Page 70 and 71: Improved conditions for new project
Page 72 and 73: Project portfolioSkanska’s Infras
Page 74 and 75: Elizabeth River Tunnels(Downtown Tu
Page 76 and 77: Sustainable developmentSustainable
Page 78 and 79: We play fairSkanska Czech Republic
Page 80 and 81: Väla Gård, Helsingborg, SwedenVä
Page 82 and 83: WasteSkanska’s targets for waste
Page 84 and 85: Global leadershipRecognitionSkanska
Page 86 and 87: Financial review 2012Revenue showed
Page 88 and 89: Operating incomeEUR M 2012 2011Oper
Page 90 and 91: Investments/DivestmentsEUR M 2012 2
Page 92 and 93: Greater standardization, with short
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NominationCommitteeCompensationComm
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The President and CEO and the eight
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term balance between financial resu
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The allotment of shares earned by t
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Consolidated statement of comprehen
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Consolidated statement of financial
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Consolidated cash flow statementCha
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Notes including accounting and valu
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Note01ContinuedEquityThe Group’s
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01NoteContinuedhanded over to the c
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01NoteContinuedwhich means that a p
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Note01Continuedwere an independent
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02NoteKey estimates and judgmentsKe
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Note04Continued2011 ConstructionRes
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06NoteFinancial instruments and fin
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06NoteContinuedContracted net flows
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06NoteContinuedReconciliation with
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06NoteContinuedImpact of financial
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07NoteContinuedPurchase price alloc
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08NoteContinuedRevenue by category2
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Note14Net financial items2012 2011F
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Note17Property, plant and equipment
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Note19Intangible assetsIntangible a
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20NoteContinuedInfrastructure Devel
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Note21FinancialassetsFinancial inve
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22NoteContinuedNoteDifference betwe
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26NoteContinuedActuarial gains and
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28NoteContinuedPlan assetsSweden No
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Note29ProvisionsProvisions are repo
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Note32Expected recovery periods of
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34NoteForeign-exchange rates and ef
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Note35Cash-flow statementAside from
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Note36PersonnelWages, salaries, oth
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Note37ContinuedIn addition to the a
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Note37ContinuedFinancial targets fo
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Note42Consolidatedquarterly results
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43NoteFive-year Group financial sum
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Note43ContinuedFinancial ratios etc
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Note45Supplementary information, Pa
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Independent Auditors’ ReportTo th
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Senior Executive TeamPositionJohan
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Board of directorsStuart E. Graham
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Major events during 2012This page s
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Below are the investments and dives
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Definitions and explanationsAverage
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Annual Shareholders’ MeetingInves
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Review of 2012 â EUR - Skanska