Skanska to miss construction margin target this year and next

Stockholm

SWEDISH builder Skanska has warned it does not expect to reach its target for an operating margin of at least 3.5 per cent in its construction business this year or next, sending its shares down some 2 per cent in early trade.

The Nordic region's biggest builder, and one of the biggest in the United States, is restructuring its construction division due to weak profitability and project writedowns, mainly in Poland and the United States.

It has also tweaked the division's strategy towards only bidding on contracts with relatively low risk, resulting in slower order intake.

"Based on expected performance in current order backlog, Skanska will unlikely be able to reach the operating margin target in construction for 2019 and 2020," Skanska said in a statement ahead of investor presentations later on Thursday.

The division, which accounts for the bulk of group sales, last achieved the target in 2014. In 2018, it was 0.7 per cent.

In the fourth quarter the margin was 2.0 per cent and chief executive Magnus Danielsson said last month the division was starting to see the impact of restructuring measures launched a year earlier.

Skanska's shares were down 2 per cent by 0821 GMT, having risen on Wednesday to their highest in five months. REUTERS