Skanska’s Earnings Call: Mixed Results Amid Market Challenges

Skanska AB Sponsored ADR Class B ((SKBSY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Skanska’s recent earnings call revealed a mixed sentiment, with strong performance in construction and order backlog, particularly in Central Europe, but challenges in the Nordic residential market and U.S. commercial property development. Significant write-downs in these areas have impacted the company’s profitability.

Strong Construction Performance

The construction segment of Skanska reported a robust 7% increase in revenue in local currencies, with an operating margin improvement from 3.6% to 4.2%. Operating income rose to nearly SEK 1.8 billion, up from SEK 1.5 billion, showcasing the segment’s strength and efficiency.

High Order Backlog

Skanska’s order bookings reached approximately SEK 40 billion, with a book-to-build ratio exceeding 100% on a rolling 12-month basis. This indicates a strong and healthy backlog, providing a solid foundation for future projects.

Central European Residential Development Success

The Residential Development in Central Europe demonstrated impressive results, with strong sales and margins. The company started 572 homes and achieved an operating income of SEK 131 million, reflecting a return on capital employed of 5.9%.

Carbon Emission Reduction

Skanska has made significant strides in sustainability, achieving a 64% reduction in carbon emissions compared to the baseline year of 2015. This highlights the company’s commitment to environmental responsibility.

Weak Nordic Market

The Nordic housing market continues to struggle, affecting Skanska’s sales and profitability in the region. The segment recorded a small loss due to low sales and a limited number of units sold.

Commercial Property Development Challenges

Skanska faced difficulties in its Commercial Property Development segment, with an operating income of minus SEK 397 million due to write-downs in U.S. properties. Despite this, there was a gain on the sale of SEK 377 million.

U.S. Commercial Impairment

The U.S. commercial properties required a write-down of SEK 658 million due to sluggish market conditions, which significantly impacted the overall profitability of the company.

Forward-Looking Guidance

Looking ahead, Skanska’s third-quarter report for 2025 highlights the company’s solid performance across its business segments. The construction division’s operating margin increased to 4.2%, with revenue up by 7% in local currencies and a historically high order backlog of SEK 264 billion. While the Nordic market remains weak, Central European residential development continues to perform well. Despite challenges in U.S. commercial properties, Skanska maintains a strong financial position with an equity of SEK 60 billion and adjusted net cash of SEK 9.3 billion, providing a competitive edge.

In summary, Skanska’s earnings call presented a mixed picture, with strong construction performance and order backlog contrasted by challenges in the Nordic and U.S. markets. The company’s commitment to sustainability and its solid financial footing offer a positive outlook, despite current market difficulties.