Tough residential market makes for a difficult first quarter for Skanska

Skanska is testing a new solution with solar cells on construction sheds as part of a 140m steel bridge it is building in the centre of Stockholm (Image courtesy of Skanska)

A tough residential development market and ongoing struggles at its modular homes business BoKlok have dragged down Skanska’s Q1 2023 numbers, despite a stronger performance in construction.

Skanska saw its revenue for the quarter of 2023 fall 13% compared to the same period a year before, to SEK 34.9 billion (€3.1 billion).

Operating profit slid by 81% to SEK 0.4 billion (€35.3 million).

Skanska said that its operating income in its residential development activities was impacted by low sales volumes. It also took a SEK 331 million (€29.2 million) hit in BoKlok, the modular homes business it runs in joint venture with Ikea, related to a weak market and turnaround measures.

But there was brighter news in its construction division, which is Skanska’s biggest by revenue, where operating income rose to SEK 1 billion (€88.2 million) over the period, representing a margin of 2.8%. Its construction order bookings stood at SEK 25.8 billion (€2.3 billion).

Skanska president and chief executive Anders Danielsson said, “First quarter performance was strong in construction. Revenue increased and the rolling 12-month margin remained well above target.

“The solid performance is the result of a deliberate focus on reducing risk in the construction project portfolio through selective bidding and strong commercial management.

“Revenue and operating income in residential development for the first quarter were negatively impacted by the low number of homes sold and costs related to turnaround in BoKlok.”

Danielsson added that the weaker first quarter came after third and fourth quarters last year and pointed to a “stable or strong” outlook for the Nordics and USA, which are Skanska’s largest markets.