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.