Skanska reports Q1 revenue decrease, uptick in construction profitability

Dive Brief:

During its first-quarter 2021 earnings presentation, Skanska announced that its year-over-year quarterly revenue decreased by 10% overall to 34.4 billion Swedish krona ($4.1 billion), with its construction operations experiencing a 12% reduction in revenue to 29.4 billion krona, when factoring in currency effects.
During the company's conference call with analysts, Anders Danielsson, Skanska's president and CEO, pointed to the strength of its construction business, despite the effects of the COVID-19 pandemic, highlighting a gross operating margin of 722 krona, a 23% increase from the first quarter of 2020. This strength in profitability, Danielsson said, reflects the success of the company's strategy of selective bidding and focus on management.
Bookings in the construction business in the first quarter of 2021 totaled 34.9 billion krona, with 9.6 billion krona in the U.S. The company's overall backlog was 193.4 billion krona, with 80.1 billion krona of backlog in the U.S.

Dive Insight:

In the company's earnings presentation, it said that the pandemic is having a "negative impact" on the demand for commercial office building but prospects for other types of commercial construction are getting better. Private clients, Danielsson said, who were holding off on projects during the pandemic are also becoming more certain about their future plans for construction.

Plans for massive U.S. federal infrastructure investment, Danielsson said, are also encouraging, but the company expects that those projects won't come online for some time. The present American infrastructure opportunities, he said, are at the state level.

Skanska USA is currently working on the $392 million contract for design and construction of the updated Long Island Rail Road concourse at Pennsylvania Station in New York City. That project is expected to wrap up in 2023.

The company's U.S. Civil Southeast division is also expected to re-open the Pensacola Bay Bridge in Pensacola, Florida, later this month. The span has been closed since September after construction barges damaged it. A host of businesses have claimed they were negatively impacted by the rerouting of traffic during repairs and have filed lawsuits against Skanska.

Last month, Florida state Rep. Michelle Salzman, according to the Pensacola News Journal, claimed that Skanska has not been doing its part in the effort to address alleged business and community losses as a result of the bridge's closure and called on Florida Gov. Ron DeSantis to deny Skanska the opportunity to bid on future state projects until it "made the region whole."