Bloomberg News

Skanska to Book $77 Million Cost for Finland, Norway Unit

January 23, 2012

(Updates with analyst comment in the third paragraph.)

Jan. 20 (Bloomberg) -- Skanska AB, the Nordic region’s biggest construction company, said it will book a 520 million- kronor ($76.7 million) charge in the fourth quarter after a review of operations in Finland and Norway led to project writedowns.

A reassessment of the Stockholm-based company’s operation in Finland by newly installed management resulted in 350 million kronor in charges, mostly for writedowns and provisions for commercial-building premises in the Nordic nation and Estonia, it said in a statement today.

“We’ve known for a while they have problems” in Finland and Norway, said David Zaudy, an analyst at Pareto Securities, who recommends investors buy Skanska’s shares. “We hope they now have taken the necessary writedowns and that they now can proceed and work on profitable projects.”

The losses in Norway are related to building projects such as schools and shopping malls, Skanska Chief Executive Officer Johan Karlstroem said in an interview in November. Skanska agreed to fixed prices for the work during the global recession and now finds that costs are higher than expected, he said then.

Skanska is focusing increasingly on the U.S., and last month bought Evansville, Indiana-based Industrial Contractors Inc. for $135 million.

Skanska shares fell as much as 4.5 percent percent, the biggest intra-day decline since Nov. 3, and was down 2.3 percent at 117.5 kronor as of 9:32 a.m. in Stockholm. The share have risen 2.5 percent this year after falling 14 percent in 2011, valuing the builder at 49.6 billion kronor.

“To improve the profitability in the Finnish and Norwegian construction units, a major review is ongoing,” Skanska said in the statement. “During the quarter both units have performed deep analysis of the operations as well as the project portfolio.”

--Editors: Andrew Noel, Robert Valpuesta

To contact the reporter on this story: Ola Kinnander in Stockholm at okinnander@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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