Skanska First-Quarter Profit Rises as Construction Unit Gains
Skanska AB (SKAB), the Nordic region’s biggest builder, said first-quarter net income rose as its U.S. construction business held up and residential development benefited from more sold homes.
Net income, according to the company’s segment reporting, increased to 338 million kronor ($51.8 million) from 113 million kronor a year earlier, Stockholm-based Skanska said today in a statement. Sales rose 7 percent to 28.2 billion kronor. The shares gained as much as 5.7 percent in Stockholm trading, the biggest intraday gain in three months.
Skanska saw good development in Norwegian and Finnish construction and a strong quarter in the U.S. even as the long, cold winter weighed on margins, the company said. Construction is about 90 percent of revenue and one third of Skanska’s total sales occurs in the U.S. The unit’s operating margin rose to 1.9 percent from 1.2 percent a year earlier.
“Norway and Finland continued up toward the profitability levels they should be at in the quarter,” Chief Executive Officer Johan Karlstrom said by phone. “Our American business is very solid.”
Construction spending in the U.S. fell in March, the Commerce Department said May 1, reflecting the biggest slump in government projects in 11 years.
The operating-margin target for the construction unit is 3.5 percent to 4 percent on average, according to the company’s website. Sales in Residential Development rose 57 percent to 2.6 billion kronor as the number of homes sold increased. The unit “surprised positively,” Nordea Bank AB analyst Jonas Andersson said today in a note to clients.
Skanska had gained 5.6 percent to 116.1 kronor as of 12:33 p;.m. in Stockholm, giving the company a market value of 48.8 billion kronor.
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