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Skanska softens stance on US market despite solid Q1
14 May 2025
Sweden-based contractor Skanska has taken a more cautious view of the US building market in its Q1 2025 results, marking a sharp shift in tone from the bullish outlook delivered in 2024’s full-year report.
Cover page for Skanska’s Q1 2025 earnings report. Image: Skanska
Overall, the company reported strong financials for the quarter, with revenue up 15% year on year to SEK 42.3 billion (US$4.3 billion) and operating income reaching SEK 1.1 billion (US$113 million).
Skanska reported a 17% year-on-year decline in order bookings, falling to SEK 39.3 billion (US$4.06 billion) in Q1.
The Construction division’s backlog also dipped slightly to SEK 263.6 billion (US$27.2 billion), although that still represents 19 months of production and a rolling book-to-build ratio of 115%.
Its construction division posted a 2.8% operating margin for the quarter and 3.7% on a rolling 12-month basis, both ahead of internal targets.
Skanska switches view on US construction market
Yet alongside those results came a notable narrative reversal.
In February, Skanska CEO Anders Danielsson had described the US as a “strong and stable” driver of growth, largely shielded from political volatility.
But in the Q1 earnings call, he said Skanska now sees the US building market as “more normalised”. Citing delays in investment decisions across sectors such as hospitals, schools, airports and data centres, Danielsson said that owners, clients, and developers are remaining in a ‘wait-and-see’ pattern. The inaction is due in large part to uncertainty caused by the Trump administration’s approach to global trade and the US Federal Reserve’s reluctance to lower bank borrowing rates.
Still, even a deflated US market can be strong compared the rest of the world.
“It’s not a weak market,” Danielsson clarified. “But boards are taking longer to greenlight projects.”
Danielsson noted that Skanska’s US civil operations remain durable, with a 132% book-to-build ratio and what he called a “very healthy pipeline.”
He added the company is well positioned to stay selective; a posture the company has employed in recent years. “We don’t need to chase volume. We go for projects where we have a competitive advantage,” the CEO said.
A look at Skanska’s Q1 regional and divisional performance
Skanska’s president and CEO, Anders Danielsson. Photo: Skanska
Revenue in the construction division rose 14% to SEK 41.8 billion (US$4.3 billion), driven by stable execution across all geographies. The US contributed 60% of total construction revenue and posted a 3.4% operating margin for the quarter.
Residential Development faced macro uncertainty, with revenue falling 27% and only 365 units sold (down from 511 a year earlier). Danielsson acknowledged increased consumer hesitation, particularly in the Nordics.
“The willingness to sign contracts has gone down,” he said, citing inventory challenges in Finland and slow-moving units in Sweden.
Central Europe was the residential segment’s standout, delivering a 12.9% margin, but struggled in the Nordics; that region slipped into negative territory. The company acknowledged consumer hesitation and noted that a substantial portion of sales in Finland and Sweden were from completed units with limited profitability.
Cautious confidence going forward: Skanska’s 2025 outlook
Digital render of the wooden Karlgårdsbron bridge over the Skellefte River in Skellefteå, Sweden. While residential housing construction in Europe has been mixed, civil projects like these have been vital for contractor Skanska. (Image: Skanska)
Despite the softer tone on the US market, Skanska maintained a positive outlook overall.
“We remain in a very strong financial position,” said CFO Jonas Bay, highlighting the company’s ability to bid for large projects and selectively start new residential and commercial builds.
Skanska confirmed its full-year outlook: still a strong US civil market, stable European infrastructure, and a gradual recovery in residential development. But with political uncertainty and capital cost pressures rising, the company appears to be shifting from high confidence to relative caution.
Danielsson said, still, he expects it to be a strong year for Skanska.
“We still have the capacity and willingness to start new projects,” he added. “But the market will need to show the right signals first.”
Contractor confidence diverges by size, ABC data shows
New survey data from Associated Builders and Contractors (ABC) – a trade association representing more than 20,000 US builders and contractors – suggests larger US contractors continue to build backlog despite growing macro uncertainty, while mid-sized firms are facing more pressure.
ABC’s Construction Backlog Indicator rose to 8.7 months in April 2025, its highest reading in 20 months. The increase was especially pronounced among contractors with more than US$100 million in annual revenue.
“Contractors remain busy despite… headwinds,” said ABC Chief Economist Anirban Basu. “Backlog rose in April and is now at the highest level since September 2023.”
But backlog decreased on a year-over-year basis for firms in the $30 million to $100 million range, indicating a widening gap between the largest firms and mid-level companies.
And overall, all sizes of construction outfits are feeling increased stress from today’s economic environment in the US. Basu said, “Nearly 22% of contractors had a project delayed or cancelled in April due to tariffs, up from 18% in March.
“And 87% have been notified of tariff-related materials price increases.”
ABC’s Construction Confidence Index showed improved expectations for profit margins in April, but slightly weaker sentiment on staffing and sales, adding to a picture of cautious planning.
The data lends further support to the strategy pursued by firms like Skanska – one of the world’s largest contractors – which reported strong Q1 results but acknowledged delays in US private-sector building projects.
With a 19-month backlog and a net cash position of SEK 11.6 billion (US$1.19 billion), Skanska has the financial headroom to remain selective and bid on projects with perceived value – something many mid-sized contractors may struggle to match in today’s environment.
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