Sweden-based construction and development giant Skanska has reported strong performance in its U.S. operations, buoyed by a deep backlog of projects and a booming data center and infrastructure market. The company said it expects this momentum to continue, even with the upcoming changes in the White House.

Dive Brief

Skanska saw a robust third quarter, with profits soaring 130% year-over-year to 1.3 billion crowns ($120.1 million USD). The company’s construction division alone contributed 1.5 billion crowns in profit, while its commercial and residential development sectors continued to face losses. Despite these challenges, Skanska remains confident in its outlook, especially in the U.S. market.

Addressing the aftermath of the 2024 U.S. presidential election, Skanska's acting CFO, Pontus Winqvist, told Construction Dive that the company remains “quite neutral” about the election results at this stage.

Dive Insight

Winqvist emphasized that the key factors driving Skanska’s business in the U.S. are unlikely to change, regardless of who occupies the Oval Office in January. He pointed out that a Republican president would likely lead to lower taxes for businesses, which would positively impact Skanska’s financial performance.

“The infrastructure bill continues to be there. There will continue to be a lot of investments in the infrastructure. Also in the big building segment with data centers,” Winqvist noted.

CEO Anders Danielsson also highlighted the U.S. data center and infrastructure markets as significant contributors to Skanska’s ongoing success. During an earnings call with investors, Danielsson commented on the strength of the U.S. market:

“We don’t expect any change in the [U.S.] market, we believe it’s going to be a strong market for at least 12 months,” Danielsson said.

Skanska’s U.S. operations are thriving. The company reported U.S. order bookings of 32 billion crowns, which accounts for more than half of its total bookings. This backlog, representing a 25-month pipeline of work, allows the company to be selective about the projects it takes on.

“So we are able, I would say, to be relatively selective in what we are focusing on,” Winqvist explained. “The [U.S.] market is good. We know where we have our core competence and we will focus on those projects where we have a match. We don’t need to chase everything everywhere. And I think that gives us some kind of comfort.”

Development Strategy Shift

While Skanska’s construction segment continues to outperform, the company has faced difficulties in its commercial and residential development divisions. On the residential side, Skanska reported a loss of 154 million crowns, although this was an improvement from the 494 million crowns loss the company posted during the same quarter the previous year.

The losses were attributed to two main factors: property and impairment charges, as well as underperformance by BoKlok, Skanska’s home-building arm that operates in Sweden and the U.K. Skanska announced plans to close BoKlok’s Swedish operations by 2025, merging it with its residential development unit. While BoKlok will complete its ongoing projects in the U.K., there are no further plans for new developments in the region after those homes are delivered.

“The restructuring of BoKlok will help improve the residential development arm,” Winqvist noted. “Without BoKlok and impairments, we would have had a 7.9% operating margin.”

On the commercial development side, Winqvist mentioned that while return-to-office rates have been stronger in Europe than in the U.S., Skanska sees greater opportunities in the U.S. market. The company’s strategy for commercial development remains unchanged: focus on high-quality, modern office spaces in prime locations.

Leadership Changes

Skanska is also undergoing a leadership transition with its CFO role. After Magnus Persson left the company earlier this year, Jonas Rickberg, currently CFO and executive vice president at Scania Group, will take over as Skanska’s CFO no later than January 31. Scania is a Swedish subsidiary of Volkswagen, focused on heavy commercial vehicles.

Despite the leadership change, Skanska’s outlook for the U.S. market remains bullish, with a strong project pipeline and confidence in the country’s infrastructure and data center sectors.