Skanska improves Q3 margin

By Chris Sleight04 November 2010

Johan Karlström, president and CEO at Skanska

Johan Karlström, president and CEO at Skanska

Skanska's revenues for the third quarter of the year were down -8,2% to SEK 32,7 billion (€ 3,50 billion), compared to SEK 35,6 billion (€ 3,82 billion) for the same period last year. However, operating profits improved from SEK 1,57 billion (€ 168 million) to SEK 1,70 billion (€ 182 million). These changes saw the company's operating margin rise from 4,4% in Q3 last year to 5,2%.

Skanska said the main reason for the fall in revenues was a decline in its construction work, with revenues for this segment of its business some -17% lower in the first nine months of this year than in 2009. Operating profit from this business was down some -16% over the same period, although again the margin improved from 3,7% to 3,8%.

Aside from this downturn in construction, the company painted an optimistic picture. It said its residential building division in Sweden was expanding, and that it was seeing interest from the capital markets in its real estate investments. However, it highlighted the UK as a problem area, and said public spending cuts here and in the Czech Republic were likely to lead to reduced investment in public construction.

Commenting on the US, Skanska said the market was still uncertain, although it was reassured by its own high order backlog. It also made the general comment that competition was fierce in construction markets. "We still see a large number of bidders for small and medium-sized projects, which means tight bidding margins. This is especially clear in the US market," it said in a statement.

At SEK 148 billion (€ 15,9 billion) the company's order backlog was +12% higher at the end of September 2010 than it was a year ago.

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