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Swedish builder Skanska's profits tumble, but less than expected

Published 02/09/2024, 01:45 AM
Updated 02/09/2024, 04:16 AM
© Reuters. Skanska logos are seen printed on steel beams undergirding the Sixth Street Viaduct replacement project in Downtown Los Angeles, California, U.S., August 11, 2021. REUTERS/Bing Guan

STOCKHOLM (Reuters) -Skanska, the Nordic region's biggest builder, on Friday reported a 73% fall in fourth-quarter operating profit due to property value writedowns in weak real estate markets.

The drop was however smaller than feared and the Swedish group's shares were up 6% in morning trade.

Skanska had already warned in January it would book 2 billion crowns ($191 million) worth of impairments in the quarter as well as value changes across its property development operations due to weak markets, in particular in U.S. commercial real estate development.

"The fourth quarter brought a strong finish to a solid year for Construction, while Residential and Commercial Property Development remained impacted by weak property markets," CEO Anders Danielsson said.

"In Project Development, the growth strategy is on hold and our focus is on sales and leasing activities...preparing for returned market activity," he said in a statement.

Operating profit at the group, which is also one of the biggest builders in the United States, was 957 million crowns ($91.4 million) against a year-earlier 3.53 billion.

Analysts at Jefferies said results were "solid", with wider-than-expected profit margins at the construction division, and housing sales ticking up.

"Skanska is in a tough market, but with valuation near lifetime lows ... and macro headwinds turning to tailwinds, we see a positive risk reward and re-iterate our 'buy' rating," they said.

Skanska said policy interest rate cuts could stimulate Nordic residential markets in the coming year, but it still expected demand to keep falling.

It also predicted further slowdowns in its commercial development markets.

Order intake at the construction division, which books most of group sales, fell to 44.1 billion crowns in the quarter, from 51.6 billion.

© Reuters. Skanska logos are seen printed on steel beams undergirding the Sixth Street Viaduct replacement project in Downtown Los Angeles, California, U.S., August 11, 2021. REUTERS/Bing Guan

The group proposed a dividend for 2023 of 5.50 crowns per share, against 7.50 crowns for 2022.

($1 = 10.4701 Swedish crowns)

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