Construction firms are in the process of publishing their first quarter results, and a glance at some of the leading European contractors shows that despite relatively even keels, they have fallen short of high expectations.
In Sweden, Skanska‘s pre-tax profits for January to March 2003 were US$69.5M, which was down against expectations of US$92M, but up against the US$14.4M earned in the same period 12 months earlier. Skanska’s biggest problem is its interests in the US; slow sales were exacerbated by a weak US$. On the whole, “despite the weaker construction market, order bookings in local currencies rose by 22%,” Skanska said in a statement. “For the first time in seven quarters, order bookings were larger than net sales.”
Over in Germany, Hochtief‘s results showed pre-tax profits of US$35.9M for the first quarter, less than the US$65.1M posted for the same period the previous year. Furthermore, the group posted a first quarter net loss of US$18.9M, compared to a profit of US$87.8M for the same period a year earlier. Hochtief attributed the loss to the risk provision made for the company’s securities holdings, and partly blamed the weak US$ for not truly reflecting some of the company’s successes. It was also bullish about the rest of the financial year: “We expect FY 2003 to bring high single-digit percentage increases in new orders, the order backlog and sales,” the company said in a statement. “We anticipate that net income will also be above the previous year’s figure by a greater margin than the increase in business volume.”
Elsewhere, French contractor, Bouygues Construction posted sales of US$1.3bn for the first quarter, compared to US$1.72bn for the same period a year earlier. Overall, the group’s consolidated sales amounted to US$5.44bn, down 5.7% on the same period in 2002. This was attributed to the disposal of Bouygues Offshore.
Norwegian contractor Veidekke announced a pre-tax loss of US$2M, compared with a profit of US$1.1M in the same period 2002. Veidekke admitted that the building and construction markets in Scandinavia have shown a negative trend: “From a market point of view, the past quarter was weaker than expected and there is little indication of an early recovery,” the group said recently. The group maintained that orders-on-hand for Veidekke’s construction operations as a whole, continued to grow in the first quarter and reached a record high level at the end of the quarter.
Things were brighter in Spain, however, as contractor Dragados reported an increase of 16% in its net profit to US$53.8M. Net sales increased 17.4% to US$1.64bn, while the gross operating income was US$109M – a 20% rise. The construction division contracted US$1.5bn of new work, 65% more than the first three months of 2002. The first quarter of 2003 was especially good in the Concessions division, which was awarded four new contracts, including one to build, finance and operate the first subway line in Seville, Spain (see news story).
