Skanska ends 2020 in profit thanks to real estate and PPP sale

Swedish multinational Skanska had a good 2020 despite the pandemic thanks to bumper windfalls in commercial real estate sales and the sale of its stake in a US toll road PPP scheme, it revealed in its annual results on 5 February.

Despite a 10% fall in operating revenue, the builder and property developer ended the year just over $1bn in profit (SEK9.27bn), 46% higher than 2019, beating the financial targets it had set for itself.

Behind that enviable figure is the $620m (SEK5.19bn) it netted from the sale of its 50% stake in the Elizabeth River Crossings toll road scheme in Virginia, USA, and $860m (SEK7.2bn) got from commercial real estate divestments.

Earnings per share increased 45%, prompting the board to propose a 46% hike in dividends to shareholders.

Its outlook for 2021 is sober, however, with the pandemic expected to play havoc with commercial property development, residential and non-residential construction in most of its main markets of the Nordic countries, Central Europe, UK and USA. An outlier is the market for residential construction in the Nordics, which it views as stable.

Civil construction it views as stable in all markets as governments pursue stimulus plans, but it says lead times could be lengthy.

However, the company said it needs to improve the profitability of its construction performance in 2021. In 2018, Skanska recorded a $70.8m loss for its US construction business and a $45.4m loss for its European construction business, which includes the UK. (See further reading.)

"Being selective in our bidding and focusing on commercial management remain in focus," said president and chief executive Anders Danielsson.

"This is increasingly important in a market such as the US where we see increased competition in the civil infrastructure market and public clients face funding uncertainties."

Image: Skanska’s global HQ in Stockholm, Sweden (Skanska)

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