Operating profits at Skanska UK’s construction business fell 8% to £35m in 2016, despite a 17% jump in revenue last year to £1.68bn, according to its latest results.
Tougher market conditions over the year resulted in construction margins sliding for the second year running, this time from 2.4% to 2.1%.
Skanska UK president and chief executive Mike Putnam said: “I am pleased to report a 17% increase in revenue for 2016. Operating margin is still firmly in the top tier of the sector, despite a small decline as the result of a challenging business environment.”
According to the results, a host of new orders at both the civils and building businesses has put the company on a strong footing for 2017 and 2018.
Contract highlights during 2016 included being chosen by Highways England to deliver the A14 Cambridge to Huntingdon road improvement scheme, worth £290m, and a £245m seven-year road maintenance contract for Devon County Council.
It also won a £165m contract to improve Waterloo Station and a £60m contract with Great Ormond Street Hospital to build the Zayed Centre for Research into Rare Disease in Children.
“A ‘book-to-build’ ratio of 107% is an increase on what we reported this time last year and our full pipeline of work for this year, including the full value of frameworks, is very healthy,” Putnam added. “This clearly indicates a solid basis on which to build in 2017 and beyond.”
