Builder Skanska profit falls as property market slump weighs

SWEDISH builder Skanska reported a slightly bigger-than-expected slide in second-quarter operating earnings on Friday (Jul 21), 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 US, said operating profit fell to 1.33 billion Swedish kronor (S$170.3 million) for the three months ended Jun 30, from 2.40 billion kronor a year earlier.

This was also below a Refinitiv analysts’ estimate of 1.50 billion kronor.

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.

This 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,” chief executive officer Anders Danielsson said in a statement.

Skanska forecast broadly weaker markets for both residential and commercial property over the coming months.

At the same time, its expectations for construction foresaw continued strong activity in the US and a decline in Swedish building. “(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,” it said.

Order bookings for Skanska’s construction business, which accounts for the brunt of group revenues, rose 68 per cent adjusted for currency swings to 63.2 billion kronor.

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Meanwhile, its construction order backlog reached a historic high in the quarter. REUTERS