Skanska Says COVID-19 Postponements Still Slow New Contract Awards

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

COVID-19 continues to hamper Skanska AB’s construction operations in the U.S. and Europe. The company’s construction operating income in the first quarter of 2021 rose to $86 million, on about $3.5 billion in revenue, compared to $61 million on about $3.7 billion in the same quarter of 2020.

The Stockholm-based company's profit margin rose to 2.5% for the quarter, up from 1.6% in 2020’s first quarter.

Skanska (SKSBF: OTCMKTS) continues to focus on improving its margins, CEO Anders Danielsson told investors on an April 29 conference call, and compete for projects “where we have a competitive advantage and we have the right team in place and we have a good history and track record on similar projects in order to reduce the risk and improve the profitability.”

Danielsson said in the written report for the quarter that “this has to some extent impacted revenue negatively," noting that "the main reason for the lower revenue is the pandemic, which started to delay decisions on new investments by our customers during the second quarter 2020.”

Spending on infrastructure has kept up “relatively well,” the company report added, “even though some decisions are being postposed.” Funding could become a problem due to the pandemic’s drain on government treasuries.

Demand for office buildings is weak, although other nonresidential construction is picking up steam, Skanska reported. Big infrastructure development programs being planned aren't expected to become contract awards for a long time.

Residential and commercial development in Europe are big businesses for Skanska, but civil and commercial construction remain a crucial part of its U.S. operation.

The financial data in the first paragraph was incorrect and was updated on May 4, 2021. ENR apologizes for the error in the first posted version.

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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