Skanska’s strong construction performance dragged down by property development slump

Swedish construction company Skanska’s revenue dropped by 15% in the second quarter of 2023, as a slump in its property development business dragged results down.

The decline in the development arm was in contrast to a stronger performance in Skanska’s construction business.

Skanska’s revenue for the quarter was SEK 39.9 billion (US$3.8 billion), down from SEK 44.8 billion ($4.3 billion) in the same period a year before.

Adjusted for currency effects, that meant a decline in revenue of 15%. Skanska said the fall was due to lower sales volumes in residential and commercial property development.

Meanwhile, the group’s operating profit fell to SEK 1.33 billion ($129 million) for the three months ended June 30, from SEK 2.4 billion.

But there was brighter news in its construciton arm, which accounts for the larger part of the group’s revenue.

Order bookings increased 68%, adjusted for currency effects, to SEK 63.2 billion crowns ($6.1 billion).

Skanska’s rolling 12-month book-to-build ratio was 115%, compared to 95% for the same period a year ago.

CEO Anders Danielsson said, “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.

“The US 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.”