Skanska profits dip as backlog rises

Dive Brief:

• Sweden-based contractor Skanska recorded $118.4 million (1.3 billion Swedish Krona) in profit for the third quarter, down from $186 million* in the second quarter, and up over $2 million year over year, a change of less than 1%.
• The contractor reported $3.5 billion in Q3 revenue Wednesday — up 15% from Q2 — and $15.2 billion for the last 12 months. Skanska reported about 28 cents in earnings per share.
• In the earnings report, CEO Anders Danielsson acknowledged economic uncertainties and their impact on Skanska’s performance. Danielsson said market activity in the residential sector has slowed and impacted revenue. Meanwhile, commercial property development has had a strong first nine months of the year, he said.

Dive Insight:

Skanska reported an estimated $20.7 billion in backlog for the quarter, the highest in the last four years. Additionally, Skanska’s $2.2 billion worth of order bookings in the U.S. was more than double that amount from Q3 2021. It accounted for more than half of the company’s Q3 overall bookings and equates to 19 months of work.

In August, the Virginia Port Authority tapped Skanska for a $223 million, 72-acre offshore wind project in Portsmouth, Virginia, the largest of its kind in the U.S. That same month, a Skanska/Traylor Bros. joint venture broke ground on the $1.56 billion Portal North Bridge replacement project in New Jersey.

During the earnings call, Danielsson said the commercial construction outlook remains strong in Europe and the U.S., and is largely buoyed by continued infrastructure funding.

Of more concern to the builder’s bottom line is residential development — which is seeing low activity, and the commercial development market — which hasn’t seen leasing fully recover yet, Danielsson said.

“The strategic direction remains for the company,” Danielsson said. “We’re going to keep the discipline, continue to improve the profitability in construction, and grow some part of the profitable business in a responsible way.”

*Based on currency conversion rates at the time of earnings release.