Skanska (SKA) Q3 2024 earnings summary

Executive summary

• Strong group performance in Q3 2024, led by robust order intake and margin delivery in Construction, improved sales in Residential Development, and solid operational results in Investment Properties.

• Construction delivered robust results with margins above target at 3.6% compared to 3.3% last year, and strong order intake, especially in the US, supporting a record SEK 267 billion backlog.

• Residential Development sales improved from a low base, with higher revenue and more homes sold, but profitability was negatively impacted by BoKlok losses and impairments.

• Commercial Property Development saw improved leasing activity, particularly in the US, with six assets divested year-to-date and a gain on sale of SEK 185 million in Q3, but impairment charges affected results.

• Investment Properties maintained high occupancy (89%) and stable operational performance, with a portfolio of six high-quality Swedish office properties.

Financial highlights

• Group operating income rose to SEK 1.3 billion, up from SEK 625 million last year, with profit for the period at SEK 962 million and earnings per share at SEK 2.28 (1.41) year-over-year.

• Construction revenue increased by 2% (5% adjusted for currency), with operating income up 11% (15% adjusted), reaching SEK 1,517 million.

• Strong operating cash flow of SEK 6.2 billion in Q3, driven by working capital improvements and net divestments.

• Book-to-bill ratio at 124% on a rolling 12-month basis, with order backlog at a record SEK 267 billion.

• Available funds totaled SEK 24.9 billion, including SEK 10 billion in unutilized credit facilities.

Outlook and guidance

• US construction markets remain strong, especially in civil and building sectors, with continued infrastructure investment expected.

• Residential development in the Nordics is gradually improving, but a full recovery will take time; low-cost segment remains weak.

• Commercial property development and investment properties are seeing a flight to quality, with stable rents and improving leasing activity.

• Central Europe remains active in residential and commercial property markets.

• Rents in class A buildings are expected to remain stable despite competitive conditions.