November 7, 2019 / 6:50 AM / 11 days ago

Sweden's Skanska beats profit expectations as construction unit recovers

STOCKHOLM (Reuters) - Swedish construction group Skanska (SKAb.ST) reported a bigger rise than expected in third-quarter operating profit on Thursday as its restructured Construction division swung back to profit.

FILE PHOTO: A logo of the construction firm Skanska is seen at a construction site in the centre of Warsaw February 6, 2012. REUTERS/Kacper Pempel

Operating profit at the Nordic region’s largest builder, and one of the biggest in the United States, was 2.15 billion crowns ($223 mln) against 507 million a year earlier when its U.S. operations booked restructuring costs, project writedowns and goodwill impairment charges.

The mean forecast in a Refinitiv poll of analysts had been for a profit of 1.78 billion.

The operating margin at the Construction division, which books the bulk of group revenues, was 2.8%. A year ago, it was negative.

The division has restructured due to weak profitability and project writedowns, mainly in Poland and the United States where costs had spiralled in a number of complex projects.

“With continued focused execution, profitability is now improving and by completing legacy projects with low profitability and adding new and more profitable projects to the backlog, profitability is expected to further improve over time,” Chief Executive Anders Danielsson said.

In a separate statement, Skanska announced a 2.7 billion crown order in the United States.

Danielsson also cautioned that several macroeconomic indicators were pointing to slowing overall economic growth.

“Except for the weak UK construction market, we have not yet seen any direct negative impact on the demand in our markets but we are following this development closely,” he said.

Order bookings at Construction increased to 34.9 billion crowns from a year-ago 30.6 billion.

Reporting by Anna Ringstrom; Editing by Niklas Pollard and Edmund Blair

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