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Skanska pretax profits fall

Contractor Skanska last week reported a massive 44% increase in its annual UK turnover but a fall in pretax profits.

Revenue for the 12 months to December 2007 was £1.3bn, up from £907M for the same period in 2006. However, pretax profits fell from £35.5M in 2006 to £32.9M in 2007.

This saw the contractor's profit margin fall from 3.9% for the 12 months to December 2006 to 2.5% for the same period in 2007. Three projects were blamed for the fall.

"Three projects were loss makers," said Skanska UK chief executive, David Fison. "We're still in profit but not as much as we wanted. Had they not happened, we would have been online with last year."

The three unnamed projects made a combined loss of £20.5M during 2007. All three were fixed price contracts and the losses were due to cost increases.

The contracts order book however is looking positive with an increase from 2006, despite that year featuring the Barts and the London hospitals redevelopment.

Looking ahead, Fison said Skanska was looking to make an impact on the prefabricated market with its modernahus housing systems.

"The supply chain is in place and units are being made as we speak," said Fison. "Also London is still a vibrant and exciting place to be working, prisons are exciting at the moment and we are also looking to move into Northern Ireland."

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