Skanska profits drop, US backlog and optimism remain high

Dive Brief:

Swedish contractor and developer Skanska reported 3 billion Swedish Krona ($284 million) in profit in Q4 2022, down 2.4% from the same time frame last year. For the full year 2022, Skanska reported 7.7 billion SEK in profit, a 6% decrease from 2021.
Construction revenue was a much more positive metric in the firm’s report, which was released on Friday. In Q4, revenue from the sector hit 42.7 billion SEK, up 14% from Q4 2021. For the full year, construction revenue hit 156 billion SEK, up 17.6% year over year.
Skanska also reported a record high 229.8 billion SEK in backlog — with 29.4 billion SEK in Q4 order bookings in the U.S. — which fueled optimism for CEO Anders Danielsson. “We are in a very good position, we can continue to be selective, we can continue to keep our discipline and go for projects that we know have been successful in the future,” he said during an earnings call Friday.

Dive Insight:

The profit Skanska reported Friday amounted to 7.28 SEK in earnings per share for Q4 and 18.62 SEK in EPS for all of 2022.

Skanska reported the non-residential U.S. construction sector as the one market where its expectations have improved compared to the previous quarter. Other regions — Europe and the Nordics — and sectors — residential and commercial property development — had equal or lower expectations from the previous quarter.

“I think that’s really encouraging to see … the federal money coming out in the system, the different states are really investing a lot and we also see encouraging signs that inflation might go down in the U.S.,” Danielsson said during the earnings call.

For example, Skanska won the $167 million Brooklyn Bridge rehab project in November, as well as several other recent project wins in the U.S., including a $480 million bus depot in Queens, New York, and an $83.6 million life sciences building for George Mason University in Virginia.

CFO Magnus Persson said Q4 brought a lot of the headwinds the industry faces stacked on top of each other — such as inflation and material and labor struggles — but looking beyond the quarter should show that Skanska has weathered the storm.

“We expect to continue to deliver at a high performance level in the U.S.,” Persson said.