Write downs in U.S. and UK operations in second quarter 2017
Skanska makes project write downs of SEK 420M in the U.S. civil operations and of SEK 360M in the UK operations in the second quarter 2017.
After the write downs the operating income in the second quarter 2017 for the Skanska Group is expected to be about SEK 1.5 billion (1.7) and for the first six months 2017 about SEK 3.3 billion (3.6). Operating income per business stream is expected as follows:
| Apr-Jun | Apr-Jun | Jan-Jun | Jan-Jun | |
| SEK billion | 2017 | 2016 | 2017 | 2016 |
| Operating income | ||||
| Construction | 0,1 | 0,9 | 0,5 | 1,3 |
| Residential Development | 0,7 | 0,4 | 1,1 | 0,7 |
| Commercial Property Development | 1,0 | 0,5 | 1,3 | 1,8 |
| Infrastructure Development | 0,0 | 0,1 | 0,9 | 0,2 |
| Central and eliminations | -0,3 | -0,2 | -0,5 | -0,4 |
| Total | 1,5 | 1,7 | 3,3 | 3,6 |
In the U.S. civil operations the project write downs are mainly due to not achieving estimated production rates and projects being delayed.
The earlier communicated ongoing negotiations with clients regarding design changes in certain projects are progressing and have no financial impact in the second quarter.
To reduce organizational costs and restore profitability the U.S. civil operations will focus on its core geographies and product lines going forward.
In the UK operations the project write downs are mainly due to not achieving estimated production rates, projects being delayed with estimated penalties and multiple changes driven by clients causing cost overruns.
A telephone conference will be held at 9:00 am (CET), today Friday July 14. During the conference call, Skanska’s President and CEO Johan Karlström and CFO Peter Wallin will describe the situation and respond to questions.
To participate in the telephone conference, with the possibility to ask questions, please dial +46 8 505 564 74, or +44 203 364 5374, or +1 855 753 2230.
Skanska’s full and final Six Month Report will be presented on July 20, 2017.