May 9, 2018 / 8:56 AM / a month ago

UPDATE 2-Skanska profit falls more than expected on Poland writedowns

* Q1 operating profit down 65 pct to 652 mln SEK

* Construction division underperforming in several markets

* Restructuring costs bigger than expected in Q1

* Books 600 mln SEK project writedowns in Poland

* (Adds CEO comment, updates shares)

STOCKHOLM, May 9 (Reuters) - Construction group Skanska on Wednesday reported a bigger-than-expected fall in first-quarter profit mainly on the back of writedowns related to project delays in Poland, sending its shares down.

The Nordic region’s biggest building company embarked on a restructuring in January under new CEO Anders Danielsson to improve profitability, which is focused on several of its markets, but mainly Poland.

The results included 670 million crowns of restructuring costs and around 600 million of new project writedowns for Poland. It had in January estimated restructuring costs for the whole year at around 600 million.

“Disappointingly, the weak performance of our Polish operations continued during the quarter. After a deeper review by the new management in Poland, additional project delays and cost increases were identified,” Danielsson said.

“For the remainder of the year we expect the operations (in Poland) to stabilise, but at limited profit levels,” he said.

Operating profit fell by 65 percent to 652 million crowns ($74 million). Analysts polled by Reuters had expected a 51 percent fall to 901 million.

Danielsson, a company veteran who shook up the management team on taking up his new job, told Reuters he did not expect to book further restructuring costs this year, and currently there was nothing to indicate the programme would need to be expanded.

“I can’t make any guarantees for the future. But this is what we believe in now, the decisions we have made. Focus is set firmly on restoring profitability within (division) Construction,” he said in an interview.

Skanska shares were down 4.6 percent at 0850 GMT, which means they are down around 24 percent on the year.

In the quarter, the company received benefits worth about 500 million crowns from claims resolutions in its U.S. civil engineering business and the effect of pension curtailments in Britain.

Order intake at its construction division, which makes up the bulk of the company’s sales, fell slightly more than expected to 32.9 billion crowns from 38.2 billion.

Skanska’s higher-margin property development business, which has been increasing its contribution to group profit, said construction in the Nordics remained stable and strong, mainly driven by Sweden.

$1 = 8.8294 Swedish crowns Reporting by Anna Ringstrom; editing by Jason Neely and Jane Merriman

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