Financial and qualitative targets
Skanska's financial targets are based on an ambition that exceeds the industry norm. These were achieved by most business units during 2010. Qualitative targets embrace the five zeros vision. New targets were set in the new business plan, Profitable Growth 2011-2015.
Financial targets
Skanska's financial targets are based on an ambition that exceeds the industry norm in the Group's respective geographic markets and specific segments. In each market, Skanska has established "Outperform" targets. These targets provide the basis for incentive systems at various levels of the organization.
During 2010 the Group and a majority of its business units achieved their "Outperform" targets. For the next five-year period, new targets have been established for the Group and its four business streams.
| Financial "Outperform" targets, 2010* | | Target | Outcome |
| Group |
Income after financial items, SEK bn |
4.6 |
5.4 |
| |
Return on equity, % |
16.0 |
20.9 |
| Construction |
Operating income, SEK bn |
4.3 |
4.7 |
| |
Operating margin, % |
3.7 |
3.9** |
| |
Working capital as percentage of sales |
-11.7 |
-18.1 |
| Residential Development |
Operating income, SEK bn |
0.4 |
0.5 |
| |
Number of homes started as a percentage of homes sold*** |
130 |
140 |
| |
Percentage of completed homes on January 1, 2010 sold during the year**** |
90 |
72 |
| Commercial Property Development |
Operating income, SEK bn |
0.5 |
0.8 |
| |
Return on capital employed, %***** |
5.4 |
8.4 |
| |
Leases, sq. m |
150,000 |
100,900 |
| |
Number of project points |
25 |
30 |
| Infrastructure Development |
Operating income, SEK bn |
0.2 |
0.3 |
| |
Number of project points |
80 |
93 |
*) For further information, see Note 37, page 151 in the Annual Report 2010.
**) Outcome according to segment reporting.
***) Refers to Residential Development Nordic.
****) Refers to residential development in the Czech Republic and Slovakia.
*****) Including unrealized development gains and changes in market value.
Qualitative targets
In addition to the financial targets, Skanska has adopted qualitative targets, based on supporting the five zeros vision: zero loss-making projects, zero environmental incidents, zero work site accidents, zero ethical breaches and zero defects. Some of these targets are based on specific levels to be achieved in a given year, while others have absolutely zero tolerance − for example zero ethical breaches.
If qualitative targets are not met, any variable remuneration based on financial targets may be reduced.
Financial targets 2011-2015
In keeping with Skanska's new business plan, which aims at profitable growth in the four business streams, the Group has adopted the following new financial targets for the period 2011–2015.
Group
Return on equity for the period shall amount to 18–20 percent annually. Maintenance of a positive net cash position, excluding net pension liabilities and construction credit for cooperative housing associations and housing corporations.
Construction
An operating margin averaging 3.5–4.0 percent over a business cycle. Project development streams. Return on capital employed averaging 10–15 percent annually during the period for the combined development streams.
Project development streams
Return on capital employed averaging 10-15 percent annually during the period for the combined development streams.
Qualitative targets
Qualitative targets are also being added to the financial targets. These targets are connected both to supporting the long-term goals of the 2011–2015 business plan and to supporting the five zeros vision.