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Skanska presents preliminary year-end results after taking charges related to restructuring and propose maintained dividend

1/17/2018 8:00 AM CET
Press release

Following a strategic review initiated in the fall 2017 Skanska will undertake a comprehensive restructuring to improve profitability. The review and following changes result in a charge of a total of about SEK 1.1 billion in the fourth quarter, and about SEK 600 M in 2018. Operating income for full-year 2017 is expected to be about SEK 5.3 billion corresponding to earnings per share of SEK 12. Skanska’s Board of Directors propose a maintained dividend of SEK 8.25 per share.

In order to improve profitability Skanska will reduce the size of unprofitable business units and increase focus on cost control and risk management. Skanska will also make a number of organizational and leadership changes. Due to the unsatisfactory performance of several construction units Skanska will take the following actions: restructure the construction operations in Poland, leave the power sector in the USA, focus on the core business in the UK and continue to adapt to tougher market conditions in the Czech Republic.

Skanska's Nordic construction units continue to deliver strong results.

In Residential and Commercial Property Development the opportunities and growth ambitions remain.

Due to a thin project pipeline in Europe Infrastructure Development will reduce the organization and mainly focus on the opportunities in the USA.

Restructuring of the construction units will result in an impairment charge totaling SEK 1.0 billion, with no cash flow impact, and a restructuring cost amounting to SEK 100 M in the fourth quarter 2017.

The unsatisfactory performance in the construction stream outside the Nordics during the fourth quarter of 2017 include write-downs amounting to a total of SEK 400 M, which relates to the construction operations in Skanska Poland.

After the impairment charge, restructuring cost and project write-downs, the operating income for the full year 2017 is expected to be about SEK 5.3 billion and the earnings per share SEK 12.

Operating income per business stream is expected as follows for the full year 2017

 

Jan-Dec 2017 excl one-offs

One-offs (Impairment and restructuring)

Jan-Dec 2017 incl one-offs

 Jan-Dec 2016

SEK billion

 

 

 

 

Operating income

       

Construction

2,1

-1,0

1,1

3,5

Residential Development

1,7

 

1,7

1,6

Commercial Property Development

2,7

 

2,7

2,3

Infrastructure Development

0,9

 

0,9

1,8

Central and eliminations

-1,0

-0,1

-1,1

-1,1

Total

6,4

-1,1

5,3

8,2

Earnings per share, SEK

   

12

15,89

 

The restructuring process will continue this year and also encompass a review of Group Governance in order to reduce costs and increase organizational effectiveness. The charges related to these activities are estimated to be about SEK 600 M in 2018, and connected to lay-offs of about 3,000 employees. Cost savings from these lay-offs are expected to amount to about SEK 1 billion annually.

Based on full-year financial results, Skanska's Board of Directors proposes a maintained dividend of SEK 8.25 per share.                                            

A telephone conference will be held at 9:00 am (CET), today Wednesday January 17. During the conference call, Skanska´s President and CEO Anders Danielsson and CFO Peter Wallin will describe the situation and respond to participants' questions.

To participate in the telephone conference, with the possibility to ask questions, please dial +46 8-505 564 74, or +44 20 3364 5374, or +1 855 753 2230.

All other information related to the fourth quarter 2017, will be presented in Skanska's year-end Report on February 1, 2018.

 

Contact: André Löfgren, Senior Vice President (SVP
Telephone +46 10 44 81 363