Swedish builder Skanska profit falls as property market slump weighs, ET RealEstate

July 21, 2023

STOCKHOLM: Swedish builder Skanska reported a slightly bigger-than-expected slide in second-quarter operating earnings on Friday, as a deep slump in its property development businesses offset more robust development in its larger construction arm.

The Nordic region’s largest builder, and one of the biggest in the U.S., said operating profit fell to 1.33 billion Swedish crowns ($129 million) for the three months ended June 30, from 2.40 billion crowns a year ago, which was also below a Refinitiv analysts’ estimate of 1.50 billion crowns.

Soaring inflation and repeated interest rate hikes have hit residential and commercial property markets over the past year, above all in Skanska’s home market Sweden, which is seen by economists as weighing on the construction sector.

“Group results for the period benefited from strong performance in construction, while the contribution from Residential and commercial development is small due to low market activity,” CEO Anders Danielsson said in a statement.

Skanska forecast broadly weaker markets for both residential and commercial property over the coming months while its expectations for construction foresaw continued strong activity in the U.S. and a decline in Swedish building.

“(The U.S.) remains the strongest market, both for civil and building, supported by pent up demand, need for investment in several sectors and access to federal funding,” it said.

Order bookings for Skanska’s construction business, which accounts for the brunt of group revenues, rose 68% adjusted for currency swings to 63.2 billion crowns, while its construction order backlog reached a historic high in the quarter.

  • Published On Jul 21, 2023 at 06:00 PM IST

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