COVID-19 Impacts Bottom Line of Two Euro Giants
COVID-19 “severely impacted” the business of Europe’s largest contractor, France-based Vinci Group, according to chairman and CEO Xavier Huillard, In announcing the firm's interim annual results on Feb. 5. By contrast, Sweden’s Skanska A.B, made “record high profits,” said president and CEO Anders Danielsson on the same day.
Vinci Group’s sales fell nearly 10% to $51.7 billion with profit before interest and tax dipping nearly 3% to $3.4 billion. Revenue fell by 12.9% in France, and by 6.9% internationally, raising the share of foreign business from 45% to 47%.
When France ordered its first lockdown last March 17, "almost all of the group’s (French) activities came to a halt,” Huillard said.
French construction revenue plummeted by 14.4%, while internationally the pandemic effects varied from country to country. Consequently, group construction revenue fell at a slower rate of 8.6% to $16.3 billion.
A contracting upturn in the second half of 2020 at home and abroad limited the decline.
“From our current position in early 2021, it remains very unclear how the pandemic will unfold, and unfortunately a worsening in the public health situation cannot be ruled out,” warned Huillard.
For Skanska, the pandemic contributed to a group revenue decline of 10% in local currencies to $18.8 billion. Construction revenue fell 12% to $16.6 billion.
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But because of “good cost control,” Danielsson said, construction margins rose from 2.4% to 2.5% while activity “is steadily improving, despite the COVID.” He added that "we are selective in bidding … we improve the commercial focus in our projects.”
Skanska has a “very high order book” in Europe with 20 months of backlog, while order growth in the U.S. was “somewhat slower” than expected with backlog at 17 months, he said.
The civil construction market generally is stable but slower than expected in the U.S., said Danielsson. While the Biden administration has a big infrastructure ambition, “it will take some time (before) it hits the market and we can bid,” he added.
The U.K.’s final departure from the European Union last month “significantly” reduced the uncertainly of Brexit in one of Skanska’s core markets, said Danielsson.
