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UPDATE 1-Infrastructure boosts Skanska profit, order book hits record
May 5, 2017 / 7:46 AM / 7 months ago

UPDATE 1-Infrastructure boosts Skanska profit, order book hits record

* EBIT 1.85 bln SEK vs consensus forecast of 1.43 bln SEK

* Construction unit EBIT 392 mln vs consensus 595 mln

* Order intake 38.2 bln SEK vs consensus 37.7 bln

* Repeats overall construction market outlook still positive (Adds detail, background)

STOCKHOLM, May 5 (Reuters) - A strong performance in infrastructure development boosted quarterly profit at Swedish construction group Skanska, which reported a record order book on Friday.

Skanska, the Nordic region’s biggest builder and one of the largest in the United States, is seeking to increase its share of profits from higher-margin commercial, residential and infrastructure development.

The group’s infrastructure development division, which sold a motorway in Poland in the quarter, made an operating profit of 939 million crowns, far above a forecast 433 million crowns, while residential property development also beat expectations.

Chief Executive Johan Karlstrom told Reuters the profit from the motorway sale far exceeded the company’s own initial valuation of the project.

Residential property development also improved profit by more than expected in the quarter, helped by a strong market in Sweden.

Group operating profit for the period, which is often relatively weak due to unfavourable weather, fell to 1.85 billion crowns ($209 million) from the year-ago 1.97 billion, when the result was boosted by commercial property divestments.

But the earnings were ahead of a 1.43 billion crowns forecast in a Reuters poll of analysts.

Order intake at Skanska’s construction unit, which books the bulk of group sales, increased to 38.2 billion crowns from 30.3 billion, beating a forecast 37.7 billion and taking the order backlog to a record high.

But its profit lagged expectations at 392 million crowns, partly due to 100 million in writedowns in Poland and cost overruns at projects in the United States, Karlstrom said.

Karlstron said the group’s highest priority is to improve profitability in the construction business, whose operating margin was 1.2 percent in the quarter, well below a 3.5 percent target.

Shares in Skanska, which made no changes to its market outlooks for the next 12 months, were up 0.7 percent at 0727 GMT, taking a 12-month rise to 21 percent. ($1 = 8.8392 Swedish crowns) (Reporting by Anna Ringstrom; editing by Johannes Hellstrom and Alexander Smith)

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