Skanska’s 2023 report: US market optimism, sustainability success, and new tech

Front cover of Skanska’s 2023 annual and sustainability report. (Image: Skanska)

Overall, Skanska’s total revenue for 2023 was US$15.2 billion compared with $15.6 billion in 2022.

In its construction operations, the company reported an operating margin of 3.5% on an operating incoming of SEK 5.6 billion (US$543 million) with 2023 revenue at $15.6 billion. The backlog remains historically high at $22.2 billion. 

The segment’s operating income between 2022 and 2023 was down -2.4%.

Skanska’s construction arm employed 25,826 people, which is down from last year’s figure of 26,892. Since 2019, Skanska’s construction workforce has fallen -22%.

The company’s forecast for 2024 included a “balanced portfolio of projects” and stability in its construction operations, particularly with civil projects over building projects. However, Skanska is preparing for lingering weakness in the property markets.

“Our market outlook for construction encompasses a robust outlook for the US market together with slightly more cautious assessments for the European and Nordic markets,” said Skanska. “The building market in Europe and the Nordics is affected by lower activity and increased competition, whereas the civil market is more stable. Our US operations are well-positioned toward segments and sectors that remain strong.”

The company noted that federal investment programs in the US are a big driver of infrastructure activity.

Regarding real estate, Skanska is holding back from a growth strategy as it analyses the market.

“The sharp increase in interest rates resulted in low divestment activity and made it more difficult to assess the market values of both residential and commercial property assets,” said President and CEO Anders Danielsson. “While our growth strategy for these businesses is on hold, we continue to focus on sales and leasing activities to ensure that we have an attractive offering to the market once activity increases.”

In commercial real estate, the company said it will focus on leasing, prioritizing profits over volume through selective bidding, and increase adoption of digitisation and new technology.

“By the end of the year, we had 23 ongoing projects with a leasable area of 499,000m2, of which 17 were commercial office properties and six were residential rental,” said Skanska. “In 2023, we started five projects. The portfolio of completed projects includes 22 properties with a total leasable area of 406,000m2.”

The portfolio is 74% leased, the company said.

Skanska strengthening success in sustainability 

In its 2023 sustainability report, Skanska said it has achieved a -60% carbon emissions reduction from its own (scope 1 and 2) operations, since 2015. The company stated a target of -70% emissions by 2030.

Skanska’s president and CEO, Anders Danielsson. Photo: Skanska

In terms of the energy usage from Skanska-developed new office buildings, the company said it achieved a -27% reduction.

Mr Danielsson said on sustainability, “The progress in 2023 was mostly explained by increased purchase of renewable energy and use of biofuels. Increased efficiency and further use of electric machinery and biofuels together with knowledge transfer will be important to our continued progress.”

Looking ahead, Danielsson said the company is well-positioned to further it’s climate-based goals by implementing new tech.

“In 2023 we have further developed our climate transition plan focusing on climate adaptation and mitigation and identified business opportunities in these areas,” he said.

“Technologies and tools, such as drones, robots, and image and video recognition, are already being tested on projects with the potential of being scaled across our units. Looking ahead, generative AI and machine learning have the potential to make large amounts of data available for improved decision making and increased efficiency.”