Skanska UK’s pretax profit margin has fallen to 1.5% in its latest full-year results.
According to documents filed at Companies House, the contractor posted a pretax profit of £23.6m for the year to 31 December 2016, down 44% compared with £42.1m a year earlier, while revenue rose 19.3% to £1.65bn, up from £1.38bn.
The company blamed “a challenging business environment” for the decline in its profit margin, and said it had “added an additional layer of scrutiny to bolster tender review processes”, as well as implementing a system “to better monitor large project performance”, as a result of the decline in profit.
The group also cut its construction staff by 118, reducing headcount to 1,465, but increased administration staff by over 300. As a result, staff numbers increased to 5,559, up from 5,312.
Earlier this year, the contractor’s Stockholm-based parent company issued a profit warning after £33m of writedowns in the UK business.
Group chief executive Jonas Karlström is due to step down from his role next year after 30 years with the company, although he will remain in an advisory role until January 2019.
Skanska UK said its chief executive Gregor Craig, who took over from Mike Putnam in May, was “actively addressing the issues” relating to the writedowns.
The group has secured a number of major contract wins in the year, including a £165m deal with Network Rail to upgrade Waterloo Station and its rail systems, a £45m contract to build the Copyright building in London’s West End as well as a £245m seven-year road maintenance contract with Devon County Council.
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