Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Skanska AB (SKBSY, Financial) reported a solid increase in operating margin for the construction segment, rising to 2.8% from 1.8% the previous year.
- The company achieved a record high order backlog, maintaining a book-to-build ratio of 115% on a rolling 12-month basis.
- Skanska AB (SKBSY) successfully reduced carbon emissions by 62% compared to its base year 2015, demonstrating strong environmental commitment.
- The investment properties segment showed stable profit and cash flow, with an operating income increase to 80 million SEK from 50 million SEK last year.
- The company maintains a strong financial position with a net cash position of 11.6 billion SEK and an equity-to-asset ratio of 37.7%.
Negative Points
- Residential development revenue decreased to 1.5 billion SEK due to fewer apartment sales, reflecting increased macroeconomic uncertainty.
- No divestments occurred in the commercial property development segment during the quarter, impacting potential revenue generation.
- The Nordic residential market remains weak, with decreased consumer confidence affecting sales and contract signings.
- The US commercial property market is lagging in transactions, with investors hesitant due to economic uncertainties and interest rate concerns.
- The company faces challenges with unsold completed homes in the Nordic region, particularly in Finland, impacting profitability.
Q & A Highlights
Q: What was the reason for the decrease in residential development starts this quarter? Is it a change in strategy or just a temporary fluctuation?
A: The decrease in residential development starts is not a change in strategy. It's more of a temporary fluctuation. We still have the capacity and willingness to start new projects, but we need to be careful and selective due to increased consumer uncertainty. We have a good pipeline and are ready to start when the time is right. - Andersson Nelson, CEO
Q: Regarding commercial properties in the US, do you see any interest or ongoing discussions for transactions?
A: Currently, the uncertainty needs to decrease, and long-term interest rates need to go down before we see normal investor activity. We are not planning any fire sales and will wait for the right occasion to divest. - Andersson Nelson, CEO
Q: Can you provide more details on the delays in investment decisions in US building construction? Are there specific sub-segments affected?
A: We see delays in investment decisions mainly in social infrastructure like schools, universities, hospitals, and airports. It's not specific to any segment or client but rather due to market uncertainties. However, we expect most projects to proceed eventually. - Andersson Nelson, CEO
Q: How is Skanska positioned for increased infrastructure and defense spending in Europe, and when might this impact orders?
A: We see a stable market in Europe with European funds coming into Central Europe and stable infrastructure outlook in the Nordics. The UK is an exception due to funding issues. We are well-positioned to benefit from increased spending. - Andersson Nelson, CEO
Q: Could you explain the impact of FX on working capital and whether the underlying working capital was neutral or positive?
A: The working capital outflow was less than 2 billion, with a 2 billion headwind from FX. The underlying working capital was slightly negative but improved from last quarter. - Jonas Rickbari, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
