Earnings

Skanska profit beats forecast as construction margin improves

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Key Points
  • Skanska, the Nordic region's largest builder and one of the biggest in the United States, said its markets were positive overall but slightly lowered its outlook for the civil market in Sweden and the U.K.
  • The operating margin in its construction business, the company's biggest division, rose to 2.9 percent from 1.4 percent a year ago.
Skanska name on hoarding. (Photo by David Potter/Construction Photography/Avalon/Getty Images)
Construction Photography/Avalon | Hulton Archive | Getty Images

Swedish building group Skanska's efforts to improve margins are on track, it said on Wednesday as it reported better than expected second-quarter operating profit.

Skanska, the Nordic region's largest builder and one of the biggest in the United States, said its markets were positive overall but slightly lowered its outlook for the civil market in Sweden and the UK while sticking to previous guidance for other market segments.

"In the UK the uncertainty related to Brexit is limiting investments in the non-residential building market and also impacting the civil market negatively," Skanska said.

The operating margin in its construction business, the company's biggest division, rose to 2.9 percent from 1.4 percent a year ago.

Skanska said low-profitability projects in Poland and the United States are near completion.

"We are also reducing the risk in our backlog of future work by being very selective in our bidding process," Chief Executive Anders Danielsson said in a statement.

Operating profit was 2.74 billion Swedish crowns ($289 million), compared with a mean forecast of 2.26 billion crowns in a poll of analysts and with 1.29 billion crowns a year earlier.

Order bookings at the construction division fell to 34.6 billion crowns from 39.1 billion.