Skanska profits despite challenging economy

Skanska profits despite challenging economy
Swedish construction concern Skanska reported a better-than-expected third quarter profit, with the company's CEO adding that it has fared well despite challenging economic circumstances.

Income after financial items rose to 1.66 billion kronor ($251.39 million) in the third quarter from 1.49 billion kronor in 2009. The result topped the Reuters analyst poll, which had expected 1.52 billion kronor.

“In the third quarter, we showed a continued improvement in earnings, with good divestment gains from our commercial development businesses and strong margins in several of our construction business units,” CEO Johan Karlström said in a statement on Thursday.

However, revenue dipped to 32.65 billion kronor from 35.57 billion kronor last year.

“Revenue remains at lower levels than last year, both in Swedish kronor and in local currencies. We estimate that revenue in local currencies during 2010 will be about 10 percent lower than in 2009. Order bookings were, however, higher than revenue during the latest 12 months,” he added.

Karlström painted a mixed picture for the coming quarter, in which some portions of its operations, such as the Swedish construction and residential development units, will demonstrate clear expansion, while other areas, such as the UK construction market, will show a certain downturn.

“There is uncertainty regarding future developments in the US market, but Skanska’s order backlog there is strong,” said Karlström.

Adjusted for currency rate effects, order bookings for construction grew by 12 percent from January to September. The order backlog amounted to 147.9 billion kronor at the end of the third quarter compared with 131.8 billion kronor last year, currently equivalent to 17 months of production, compared with 12 months in 2009.

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