The company did not identify the project or its exact location, but says the contract was not included last year when Skanska sold Whessoe, an engineering and construction subsidiary, because the project was already in construction.
In a Jan. 24 announcement, Skanska attributed the write-off to "numerous engineering-related changes and delays." A significant part of the cost overrun, which only became apparent at years end, was the cost of working two shifts and overtime in poor weather, the company says. Some of the costs may be recoverable, Skanska adds.
"This situation further strengthens our belief in the focus on core operations," says Stuart Graham, president and chief executive.
As Skanska promises to stick close to its core strengths, another European construction company, Geneva-based cement giant Holcim, says it is hoping to do the same. That companys board of directors reached agreement to buy out Aggregate Industries plc, the British construction materials group, for a cash offer of about $3.4 billion.
The acquisition will add aggregate and ready-mix concrete businesses in key market regions served by Holcim in the U.S., Holcim says. In addition, the acquisition adds 5.1 billion tonnes of aggregate reserves with an average life exceeding 70 years, the company says.
Among Aggregate Industries recent acquisitions in the U.S. are Frehner Construction Co., an aggregates, asphalt and contracting business based in Nevada and Utah. That purchase in May 2004 followed the acquisition in late 2003 of Southern Nevada Paving, a contractor and material supplier based in Las Vegas.
In a domestic U.S. acquisition, Perini Corp., Framingham, Mass., announced Jan. 21 it had completed its previously disclosed acquisition of Cherry Hill Construction Inc., a heavy construction firm based in Jessup, Md. Perini says it paid $20 million in cash to acquire all of Cherry Hills capital stock.
"The acquisition extends Perinis civil construction presence into the Mid-Atlantic and Southeast regions and is expected to make a positive contribution to Perinis results in 2005," says Ronald N. Tutor, Perini chairman and chief executive officer.
$98.6-million charge will be recorded in the fourth quarter by Skanska AB, the Stockholm-based contractor, because of cost overruns at a liquid-natural-gas terminal project in Great Britain.
