STOCKHOLM, Sweden, Jan. 24, 2005 (PRIMEZONE) -- Skanska will take a SEK 685 M (GBP 51 M) charge in the fourth quarter 2004 on an LNG (Liquid Natural Gas) engineering and construction contract in the U.K. This contract was not included in the sale of the LNG specialist group Whessoe (an engineering and construction subsidiary of Skanska U.K.) in mid 2004 because the project was already in construction. Whessoe continued to provide engineering and technical procurement services to Skanska U.K. to finish the project.
During the process numerous engineering related changes and delays have contributed to the loss. The work necessary to overcome these problems and the excessive cost to expedite completion only became evident at an advanced stage of construction at year-end. A significant part of the cost overrun is due to the very high cost of working two shifts and overtime in adverse weather conditions. Recovery of the cost overruns will be pursued where possible.
Whessoe was identified for divestment in late 2003 as a non-core business and one in which the management of Skanska had limited knowledge or experience.
"This situation further strengthens our belief in the focus on core operations," says Skanska's President and CEO, Stuart Graham.
During the fourth quarter, Skanska's construction operations in Europe and Latin America, as well as the residential and commercial development business streams, have continued to perform well. Preliminary unaudited figures for the full year 2004 provide for a consolidated operating income of approximately SEK 3.8 bn and income after financial items of approximately the same amount. Order bookings showed a positive trend in the fourth quarter, reaching SEK 29 bn.
The complete year-end results will be presented on February 16.
For further information please contact:
Anders Lilja, SVP, Investor Relations, Skanska AB, tel +46 8 753 88 01 Peter Gimbe, SVP, Communications, Skanska AB, tel +46 8 753 88 38
This and previous releases can also be found at www.skanska.com
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