Skanska to lay off 3,000 people
January 18, 2018 – Skanska is to lay off 3,000 employees around the world in a bid to improve profitability – plans including quitting the US power sector and focusing on its core business in the UK.
The decision to undertake comprehensive restructuring follows a strategic review initiated in autumn 2017. Details are set out in the preliminary year-end results, published today.
As of 2016, Skanska had 41,000 employees in 10 countries.
Unsatisfactory performance of several construction units has prompted Skanska to restructure construction operations in Poland, leave the power sector in the USA, focus on the core business in the UK and continue to adapt to tougher market conditions in the Czech Republic. Skanska’s Nordic construction units, on the other hand, continue to deliver strong results, said the company.
The cost of starting the restructuring process to improve profitability has impacted Skanska’s year-end results. The review and following changes have resulted in a SEK1.1bn (£99m) charge in the fourth quarter and will cost SEK600m in 2018. Operating income for full-year 2017 is expected to be about SEK5.3bn.
The restructuring process will continue this year and also encompass a review of group governance in order to reduce costs and increase organisational effectiveness. The charges related to these activities are estimated to be about SEK600m in 2018, and connected to lay-offs of about 3,000 employees. Cost savings from these lay-offs are expected to amount to about SEK1bn annually.
Skanska will reduce the size of unprofitable business units and increase its focus on cost control and risk management. The company will also make a number of organisational and leadership changes.
In residential and commercial property development, opportunities and growth ambitions remain, said Skanska.
However, due to a thin project pipeline in Europe, infrastructure development will now mainly focus on the opportunities in the USA.
Restructuring of the construction units will result in an impairment charge totaling SEK1bn, with no cash flow impact, and a restructuring cost amounting to SEK100m in the fourth quarter 2017.
The unsatisfactory performance in the construction stream outside the Nordics during the fourth quarter of 2017 include write-downs amounting to a total of SEK400m, relating to construction operations in Skanska Poland.