Skanska Posted Record Q1 Revenue. Outlook for Q2? Not So Great

The company says 370 projects are affected by virus-related delays or added costs

A sign outside Skanska's UK office in Rickmansworth, Hertfordshire in September 2019: *Photo: Getty Images*

Skanska AB reported record-high revenue of all kinds and improved construction margins for the first quarter of 2020. But trouble could be just ahead.

"The impact of COVID-19 pandemic is yet to be seen" and "currently it is very difficult to say how severe the impact will be and exactly how long it will last," said company CEO Anders Danielsson during its most recent briefing for investors on April 28. "It is crucial for us to both protect the people and company, to protect the strong balance sheet and the good liquidity."

Skanska's Q1 results briefing fit the pattern reported by other companies: one last strong quarter and then a journey into the financial and operational unknown.

The Stockholm-based construction and real estate giant is a major building and heavy and highway prime contractor in the U.S. It also builds nonresidential projects in its home country and in Norway, Finland, Poland, the Czech Republic and the UK. Roughly half of the construction revenue is generated in the U.S.

The company's shares are listed on the NASDAQ Stockholm exchange and traded under the SKA B symbol. They closed at about $19.60 on the day of the investor briefing.

For Q1 2020, Skanska reported construction operating income of $58.9 million, up significantly from the prior year's $37.1 million, on $3.53 billion in revenue, compared to $3.59 billion the year before.

Danielsson said the first quarter proved the company is "on the right path" to improved profitability, with better construction margins. But he and the company described the market conditions as "rapidly deteriorating" with the future uncertain.

In all, 370 projects in all countries and markets are affected by "inefficiencies or shutdowns" related to the virus pandemic, the company stated.

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Deputy Editor Richard Korman helps run ENR's business and legal news and investigations, selects ENR's commentary and oversees editorial content on ENR.com. In 2023 the American Society of Business Publication Editors awarded Richard the Stephen Barr Award, the highest honor for a single feature story or investigation, for his story on the aftermath of a terrible auto crash in Kentucky in 2019, and in 2015 the American Business Media awarded him the Timothy White Award for investigations of surety fraud and workplace bullying. A member of Investigative Reporters and Editors, Richard has been a fellow on drone safety with the McGraw Center for Business Journalism at the Craig Newmark Graduate School of Journalism at CUNY. Richard's freelance writing has appeared in the Seattle Times, the New York Times, Business Week and the websites of The Atlantic and Salon.com. He admires construction projects that finish on time and budget, compensate all team members fairly and record zero fatalities or serious injuries.

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