Pre-tax profit at the UK arm of Swedish conglomerate Skanska almost trebled last year, thanks in part to a pair of £100m-plus London office deals.
In its latest annual accounts, released today (14 May), Skanska UK posted a pre-tax profit of £77.8m for the year to 31 December 2024, compared with £27.4m the year before.
The latest total was higher than the firm’s pre-Covid peak of £44.1m in 2018.
Skanska said its performance was partly driven by the two major contract wins in the capital.
One was a £105m deal in July last year to build a nine-storey, 12,100 square metre office block with two basement levels at 7 Millbank (pictured), for Baola Properties.
The other was a £197m contract in November from a joint venture between Grosvenor and Mitsui Fudosan UK. In this deal, Skanska UK is leading the construction of two offices in Mayfair with a total area of 24,800 square metres.
The contractor’s turnover dipped for the second consecutive year, however, falling by 5 per cent from £1.33bn to £1.27bn.
This resulted in a margin of 4.3 per cent.
The latest revenue decrease followed a 4 per cent fall in 2023 – but Skanska UK still finished 17th in the most recent CN100 table of top contractors.
The firm’s profit performance would have been even stronger but for provisions of £78.6m. These included £30m for unspecified liabilities and £16.2m for “forward loss on contracts and disputes”.
In its latest accounts, the company said it expects to utilise £48.9m in provisions by the end of this year.
Skanska UK’s cash reserves increased from £396.3m to £472.3m, helped partly by the lack of a dividend payout last year. In 2023, the firm paid a dividend of £40m.
The contractor has no external bank loans or overdraft facilities.
It hired 411 staff last year, with women accounting for 27 per cent of that number and employees from a minority ethnic background totalling 25 per cent.
However, the overall average monthly headcount fell by 6 per cent to 3,239.
As a result, Skanska UK’s annual wage bill decreased from £230.7m in 2023 to £206.2m the following year.
Looking ahead, the firm expects revenue from long-term contracts that are already booked to generate £707m this year, £713m in 2026 and £267m in 2027.
Skanska UK also booked £958m in new orders last year.
“We remain mindful of the market conditions driven by the wider economic and geopolitical challenges,” directors said in the accounts.
As a result, they added, the firm continues to work “proactively with both our customers and supply chain to monitor and mitigate headwinds in commodity and energy costs to protect the financial performance of the business in the short, medium and long term”.