Skanska CEO sees ‘very stable’ US operations

Sweden-based builder and developer Skanska reported a record-high backlog as its building division continued to see sturdy demand, notably in infrastructure, knowledge facilities and public tasks.

“We’re nicely positioned relating to [data centers,] particularly within the U.S., the place we see the strongest exercise,” stated Skanska CEO Anders Danielsson through the firm’s earnings name Friday. “There are a number of purchasers, repeat purchasers, that need to construct out.”

Danielsson added that different progress sectors inside Skanska’s portfolio embrace conventional infrastructure, faculties, hospitals and airports. These sectors have remained core areas for Skanska within the U.S., notably as public sector funding helps a majority of these tasks.

“We’re sturdy in different segments as nicely. We’re in additional conventional infrastructure, for instance, roads, railways and so forth,” stated Danielsson through the name. “We’re additionally sturdy relating to faculties, hospitals, college, airports. So, we’re in the proper locations.”

The corporate’s complete order backlog reached 285 billion crowns ($26 billion), a 24.1% enhance from 229.6 billion crowns a yr in the past, in keeping with the earnings report. That represents about 20 months value of manufacturing, in keeping with the discharge.

Income for the fourth quarter climbed to 50.6 billion crowns, a 20% enhance yr over yr when adjusted for forex fluctuations, in keeping with the report. For the complete yr, income reached 177.2 billion crowns, up 13% when adjusted for alternate charges.

“We’ve got bigger tasks within the U.S.,” stated Danielsson through the name. “The market continues to be sturdy, positively.”

An analyst requested whether or not Skanska had skilled any disruptions in federal challenge funds or if the corporate anticipated that future authorities contracts would possibly turn out to be much less favorable for personal companies underneath the brand new administration. Danielsson responded Skanska has not seen any points with its U.S. public sector work.

“We’ve got a really steady operation. We’ve got good contracts with repeat purchasers within the U.S. on the general public aspect,” stated Danielsson. “We don’t see any development downwards relating to the pipeline, both. It continues to be sturdy and steady.”

Excessive rates of interest

Whereas total building exercise stays sturdy, Danielsson famous U.S. business property growth is lagging different elements of the world because of the high interest rate environment.

“For business property growth, we see transaction market is coming again considerably in Europe. May see our divestment there lagging a bit within the U.S. because of the rate of interest scenario there,” stated Danielsson. “However the leasing market is steady in Europe and likewise bettering within the U.S., in order that’s encouraging.”

Firms bringing workers again to the workplace full-time have contributed to some enchancment, however demand stays combined in that sector.

“It’s a polarized market,” stated Danielsson. “Flight to high quality is actually clear and that’s precisely what the kind of product we are able to provide the market. That’s useful for us.”

To diversify past workplace buildings, Skanska is trying to broaden its work in life sciences and multifamily rental property building within the U.S. as nicely, stated Danielsson.

“Within the business growth operation, we proceed to imagine within the workplace market long run,” stated Danielsson through the name. “However we even have stated that we are going to attempt to diversify the portfolio. We’re trying into life science, for instance, in elements of the U.S. We even have began residential for rental use, that’s additionally a very good market.”