Earnings name: Skanska experiences strong Q2 with sturdy order consumption By Investing.com

Skanska AB (SKA B), the worldwide building and growth firm, reported a stable second quarter in 2024, with notable will increase in building income and a robust order backlog. The corporate’s residential growth sector noticed vital progress, and its industrial property growth recorded substantial positive factors from divestments.

Regardless of some challenges within the residential and industrial markets, Skanska’s monetary place stays sturdy, and the corporate is making strategic strikes in its funding properties portfolio.

Key Takeaways

• Building income elevated by 6% and residential growth revenues grew by 30% within the Nordics.
• Skanska achieved a report building order backlog of practically SEK 268 billion, with the U.S. market displaying the strongest order consumption.
• The corporate offered 50% extra residential models in comparison with the identical quarter of the earlier 12 months.
• 5 industrial property divestments contributed positive factors of SEK 1.2 billion with a divestment margin of round 20%.
• Skanska’s internet financials had been optimistic at SEK 146 million, and the corporate maintains sturdy liquidity.
• The U.S. building market stays strong, whereas the residential market within the Nordics and the industrial property growth market present weaker outlooks.

Firm Outlook

• Skanska anticipates the U.S. market to proceed because the strongest in building.
• The residential market within the Nordics is experiencing some weak spot.
• Whereas industrial property growth faces a weak outlook, there are optimistic indicators from the U.S. occupier market.
• The funding property market is steady, with a gradual demand for high-quality areas.

Bearish Highlights

• Skanska began 37 residential models, fewer than the earlier 12 months as a consequence of challenges find appropriate enterprise circumstances and rising prices.
• The divestment market is difficult, with various urge for food throughout property and geographies.
• The UK building market is predicted to stay sluggish for the subsequent 12 months.

Bullish Highlights

• Skanska’s first acquisition in Gothenburg strengthens its funding properties portfolio.
• The corporate’s carbon emissions have been decreased by 58% in comparison with 2015, showcasing its dedication to sustainability.
• Divestments in the course of the quarter exceeded inside valuations, indicating higher phrases for buyers.
• The corporate is assured in dealing with the U.S. building market’s quantity of labor.

Misses

• Skanska at the moment holds round 2,000 unsold residential models.
• There’s an working loss within the manufacturing unit in Sweden.
• BoKlok confronted provide chain points, leading to provisions of SEK 100 million.

Q&A Highlights

• CEO Anders Danielsson is just not involved in regards to the book-to-build charges at 89%.
• CFO Magnus Persson mentioned beginning new residential tasks in Sweden primarily based on gross sales and financial viability.
• The corporate is just not speeding divestments within the U.S. and prefers to attend for the proper bids.
• The next tax price in Q2 was attributed to the combination of properties offered and nominal tax price modifications in numerous nations.
• Bidding margins stay per the earlier quarter’s ranges.

Skanska’s second quarter of 2024 displays an organization with a strong monetary place and strategic progress in key areas regardless of market challenges. With a robust order consumption and deal with selective tasks, Skanska is positioning itself to navigate the various international market circumstances. The total recorded earnings name is out there on Skanska’s web site, and additional updates will probably be offered of their upcoming third-quarter report in November.

Full transcript – None (SKSBF) Q2 2024:

Operator: Good morning and welcome to the presentation of Skanska’s Second Quarter Report for 2024. I am Antonia Junelind. I am the Senior Vice President for Investor Relations right here at Skanska. And becoming a member of me right here immediately is our President and CEO, Anders Danielsson; and our CFO, Magnus Persson. Shortly, they’ll take you thru an replace on our efficiency over the previous quarter and give you an up to date market outlook. And after that preliminary presentation, we are going to as normal invite you to ask questions in the course of the Q&A session. And I’ll then ask you to hitch us through the use of the HD audio hyperlink or the phone convention quantity that we offered within the invite or on Skanska.com on the Investor Relations pages. And you’ll simply comply with the detailed directions offered by the operator. So with that brief introduction, I hand over to you, Anders, to start out the presentation.

Anders Danielsson: Thanks, Antonia. And earlier than I soar into the figures, I need you to have a look at the image right here on the proper hand aspect. And that is Studio B, a mission growth and industrial mission growth in Warsaw. Developed by Skanska, constructed by Skanska, and we additionally leased it out. It is 98% leased. And we additionally divested it to repeat buyers in the course of the second quarter. And we additionally began the subsequent part in that space. If I take a look at general the second quarter throughout this 12 months, we now have a stable efficiency. Building, the working margin is in step with our targets. We even have a robust order consumption. Residential growth rising gross sales quantity, however it’s from low ranges, however encouraging to see that additionally persevering with within the second quarter. Industrial property growth, we now have made 5 divestments within the quarter, which is on a excessive stage, on good ranges as nicely. Funding properties, the primary acquisition was made in Gothenburg, one of many three cities in Sweden that we’re specializing in. Working margin in building, 3.5% in comparison with 3.4% final 12 months. And the return on capital employed in mission growth and funding properties is impacted on a rolling 12-month foundation of a weak property market. And additionally it is impacting the return on fairness, which finally ends up on 7.3% on a rolling 12. We proceed to have a strong monetary place. And we even have a discount of carbon emission in our personal operation of 58% in comparison with the bottom 12 months 2015. If I’m going into every stream, begin with building. The income has elevated within the quarter with 6% adjusted for foreign money impact. And we additionally see order bookings touchdown barely above SEK60 billion for the quarter. So we now have a book-to-build of 114% on a rolling 12-month foundation. And the order backlog is on a report excessive stage of near SEK268 billion, working earnings, SEK1.5 billion, and once more, 3.5% margin. The strongest order consumption is within the U.S., and that goes each for our constructing operation and our civil operation. The order backlog is on a excessive stage, report excessive. And on a rolling 12-month foundation, the working margin was 3.3%. Going into residential growth, the income has elevated SEK2.2 billion. Within the quarter, we now have elevated the variety of houses offered to over 500. We have not began a lot this quarter, but it surely’s extra of 1 / 4 impact I might say. If you happen to take a look at the — extra on a rolling 12, you’ll be able to see. However we now have prepared tasks to start out, and we additionally introduced one other begin in Central Europe not too long ago. Working earnings, unfavorable SEK11 million, and the return on capital employed additionally unfavorable. So we will see elevated gross sales quantity within the Nordics, and we proceed to have a very good stage of the exercise in Central Europe. And the hit we took within the quarter from BoKlok was SEK167 million. And the underlying, in the event you take away BoKlok, the underlying working margin is 8%, which is barely beneath our goal of 10% margin. The industrial property growth, the working earnings is SEK1 billion. So we now have a achieve on sale of the divestment we fabricated from SEK1.2 billion. We have now 19 ongoing tasks, which corresponds to SEK26 billion upon completion in complete funding. And we now have accomplished 23 tasks, which is round SEK11 billion in complete investments, and people accomplished tasks has a lease price of 77%. 5 divestment, 4 exterior on good ranges and one inside. And leasing exercise is on a fairly good stage of 61,000 sq. meters within the quarter. Funding properties, the primary acquisition recorded in Gothenburg, and that’s Citygate. We have now working earnings of SEK108 million within the quarter, and the financial occupancy price is at 87%, so on a excessive stage. And the full portfolio property worth is SEK7.7 billion. And once more, right here we now have an ambition and goal to construct up a portfolio between SEK12 billion to SEK18 billion. So we’re nicely on our approach. If we return to building stream and take a look at the order bookings over time, so right here you’ll be able to see the event of the order backlog, the blue bars. So it continues to extend, as you’ll be able to see. You can too see the order bookings on a rolling 12-month foundation, the gray line right here, and likewise the order bookings per quarter, the orange and the income that has been elevated. The pattern has been rising for numerous quarters. And you’ll see, in comparison with final 12 months, how a lot order backlog. You can too see the rolling 12. If I’m going into each geography, you’ll be able to see that the strongest order consumption has been within the U.S. We see that the book-to-build ratio is beneath 100% within the Nordics and likewise in Europe. We proceed to be selective, however we now have a wholesome backlog. If you happen to take a look at the months of manufacturing in Nordics, 15 months of manufacturing, 15 months in Europe as nicely. So that’s on a wholesome stage. So we will proceed to be selective and go along with a mission the place we see that we now have a aggressive benefit and likewise the proper assets. However 151% within the U.S. is extraordinary, 24 months of manufacturing. And that order backlog, the period is longer now than earlier than. So it is a big mission that we now have received. So I am very assured with that. So with that, I hand over to Magnus.

Magnus Persson: Thanks, Anders. So we’ll begin with building. As has been mentioned, revenues climbed 7% in Swedish kronas, quarter-by-quarter, and 6% in native currencies. And that is on the again, in fact, of us having the ability to guide a number of good work over fairly a while now. So it is beginning to translate a bit into revenues right here. Notable drivers of that is, in fact, the U.S., the place we now have had — the market is actually sturdy. We have been very profitable with figuring out and bidding and successful the proper sort of jobs over there in that geography. Gross margin, 7.5% within the remoted quarter. A exceptional efficiency stability. If you happen to look on the desk right here, you’ll be able to see the 4 completely different columns. It says basically 7.5%, 7.5%, 7.5%, and seven.7%. I feel it says one thing on efficiency stability in such a form of broad geographical building operation that we now have, that strikes additionally with the market there. Similar factor on the S&A. We have now good value management, got here in 4.0% within the remoted quarter. Clearly, revenues are a bit up, however in the event you backtrack via the columns right here, you’ll be able to see that we’re in a position to form of keep this in a great way, working margin then within the quarter, 3.5%, so very steady efficiency in building. And if we glance on the completely different geographies then, you’ll be able to see on the right-hand aspect, you’ve got the working margin for the completely different geographies. The Nordics comes down barely to three.3%, however Sweden improves their full share unit as much as 4.0%. Finnish market is a bit more durable. In Norway, we now have, as Anders additionally alluded to earlier than, we now have large lengthy jobs. In accordance with our approach of recognizing earnings, we’re all the time cautious to start with of enormous complicated jobs that stretch over a very long time interval right here. Europe is performing rather well, 3.8% margin within the remoted quarter. Good in each of these geographies, UK and in Central Europe. And the U.S., 3.6% continues to carry out at this excessive stage, which is extraordinarily optimistic, in fact, as a result of that is the place we now have the at the moment the strongest market and are reserving a number of new jobs. If we go into residential growth, we acknowledged SEK2,150 million by way of revenues within the remoted quarter, which is a top-line progress right here of 30% quarter-over-quarter. Clearly higher gross sales within the Nordics, it is choosing up. We are able to see that once we take a look at the variety of offered models, comparatively talking, within the quarter, a bit slower gross sales within the Central European residential growth operations, however nonetheless at a very good stage. Working earnings, minus 11 in that is, as we now have additionally defined extra intimately within the quarterly report, a value cost of BoKlok of minus or loss for BoKlok of minus 169 million. If we take that out, the remaining a part of the operations have an working margin of 8%, which form of given the place we’re with the residential market is a fairly first rate efficiency immediately. Going to the geographies, once more, you’ll be able to see right here, we now have both zero or unfavorable on all of the completely different reported geographies, however the BoKlok impact impacts all these completely different areas. And within the Nordics, the affect of BoKlok right here is minus SEK68 million. And in Europe, it is minus SEK99 million. Underlying causes to form of the BoKlok losses right here, the largest, the 2 greatest impacts is us having offered for potential provider issues that we now have recognized within the UK. And we even have a value overhang from the manufacturing unit that’s at the moment underutilized, given the market urge for food for this kind of property in the meanwhile. There are massive variations throughout the geographies with the European market being clearly stronger. After which the Nordics is catching up, it’s beginning to enhance. As I mentioned, we’re promoting higher, however we now have a considerably decrease profitability there, comparatively talking to the European operations. So the gross sales combine, how a lot we promote in numerous geographies is clearly impacting the form of stream outcomes right here and can most likely try this for some quarters going ahead as nicely. Residence began and offered, we offered 515 models in Q2, which is up then from 343 in the identical quarter final 12 months. So we really grew the variety of offered models by 50% right here, very stable. We began 37 models, rather a lot decrease than the identical quarter final 12 months. And first, there is a fairly massive variation on this quarter-to-quarter. We in actuality must take a look at it extra over a while to make sense of the numbers. However there are a few issues that I feel is necessary to form of concentrate on. We have now a number of models already to promote from. I’ll come again to that on the subsequent slide and present you. And given the quantity, the form of capability of the market, we should not be form of have an excessive amount of models to promote from both. The opposite factor is that it’s tougher immediately to search out the proper enterprise circumstances. Prices have been going up, costs have been challenged. So we’re very selective once we resolve to start out a mission. There’s form of a smaller a part of the land financial institution we now have out there than normal that’s the place we will determine the proper enterprise circumstances and begin tasks. In order that’s another excuse to this. We will take a look at the houses in manufacturing and accomplished unsold models. It appears like this over time. We had round 4,000 on the finish of the second quarter. And in the event you take the sunshine grey a part of this bar and also you add the purple one, you find yourself with roughly 2,000 models, which is the variety of models that we now have now unsold that we’re in a position to promote from, which isn’t a very low determine. You backtrack a 12 months or two, you’ll find increased figures. However in the event you go additional again, that is in regards to the dimension we have had up on the market. So we now have a reasonably balanced portfolio in that sense. Gross sales price is bettering. We got here in at 51% within the first quarter. Now we’re at 57%, which could be very optimistic. And in addition the unsold accomplished is decreased. Within the first quarter, we reported 770 unsold accomplished. And now we’re down then to 671. So it is fairly clear that the actions we’re doing available on the market is gaining some traction. And we’re promoting higher right here, particularly within the Nordic a part of the operations. Transfer to industrial growth. As has been mentioned, we made 5 divestments within the quarter, which is possibly essentially the most divestment lively quarter we had for fairly a while. Very stable. Three of those divestments had been made within the Nordics and two of them had been made in Europe. One of many transactions was an inside transaction the place we offered a property in Gothenburg known as Citygate to funding properties. We amassed positive factors of SEK1.2 billion within the second quarter. And the divestment margin of this was round 20%. That is fairly stable. The divestment market, it stays tough. And the urge for food varies, I might say, considerably throughout property and throughout geographies. So it is not unlikely that on a project-by-project foundation, the form of profitability efficiency will probably be a bit extra assorted over the approaching quarters as we proceed to dump the at the moment accomplished but unsold properties. Unrealized positive factors on the finish of the second quarter, SEK2.7 billion. We had SEK4.2 billion on the finish of the primary quarter. A distinction there may be clearly than one and a half. The principle change right here is the properties that we now have now offered and therefore realized that positive factors SEK1.2 billion and the remaining is a component, its some smaller worth changes and a few smaller modifications to FX that form of makes up the steadiness of the modifications there. Completion profile, we had on the finish of the primary quarter, SEK12 billion in invested cash in accomplished unsold properties. Now we’re right down to SEK10.5 billion in cash invested in accomplished unsold properties. They’re leased to 75%. In order that’s a very good stage. And we now have additionally in the course of the quarter added two extra properties which were accomplished and moved into the purple bar right here from beforehand being blue. And in the event you recall, we reported in Q1 that we had some completion slippage in a couple of properties in direction of the tip of 2024. Sadly, one in every of these properties have continued to slide a bit in time and at the moment are anticipated to be accomplished within the first quarter in 2025 as an alternative. If we take a look at leasing, leased as has been mentioned, 61,000 sq. meters within the remoted quarter, of which 33,000 was in multifamily residentials and 28,000 was in industrial areas. If you happen to observe the inexperienced and orange, or if you’ll, yellow line right here on the graph, you can even see that the leasing and completion charges in our industrial portfolio at the moment are assembly one another once more, which there was a spot between these two for some time, indicating that we now have full, form of reached additional by way of finishing the properties than we now have carried out in leasing. However we’re catching up by way of leasing right here, which clearly is optimistic. The leasing market stays comparatively mushy with continued betterments in Europe and the Nordics, while the U.S. is sort of sluggish nonetheless. Funding properties, as I’ve already mentioned, we took on board one new property that we acquired from the industrial growth stream in the course of the quarter, Citygate in Gothenburg, and report now a really stable EBIT of SEK108 million, of which SEK58 million are immediately associated to IFRS accounting results following this inside transaction. So on a like-for-like foundation, it’s best to take a look at working internet and add the S&A bills to get a really feel for the traction within the portfolio. On a gaggle stage, the central merchandise right here, minus 159, we basically comply with our form of costing stage on the headquarter group with SEK170 million, SEK180 million in prices per quarter. Along with that, we now have the legacy enterprise that has been no specific results from that within the remoted quarter right here. Web financials continues to be optimistic, SEK146 million via a really well-managed central liquidity portfolio. And we taxed out very near our nominal tax price at 24% within the quarter. We had been balanced by way of money move within the quarter, excuse me, with SEK300 million optimistic. After which we handed out or distributed the dividend that was beforehand determined by the annual normal assembly in the course of the second quarter, resulting in minus SEK2.3 billion then in money move, taking us right down to minus SEK2 billion in complete for the remoted quarter right here. Fairly an enchancment then from the minus 5 billion within the comparable quarter. If we take a look at free working capital in building, we had a optimistic affect right here on money move within the remoted quarter of SEK600 million. The precise portfolio place stays at round 17% of income. And the pattern that we now have been alluding to over fairly a couple of quarters now remains to be with us. It’s barely tougher within the negotiations with shoppers to attain the form of front-loaded fee plans that we prefer to have, which is one thing that we feature with us in all our inside and strategic planning, clearly. So that’s the growth you could additionally see in the event you look on this slide that I am displaying you on the marginally downward slope of the inexperienced curve. Web investments had been in steadiness within the second quarter, as already been mentioned, and likewise for the rolling 12 months. And on the finish of Q2, we had round SEK67 billion in capital that was employed in our completely different property-related operations. Very sturdy liquidated entry, SEK21 billion ought to we’d like it. And we now have been working a bit in the course of the quarter to reshape the maturity profile of our inventory of loans and credit score commitments and matching this in a great way to the profile of our ongoing funding commitments. We’re very glad and really comfy with the liquidity place of the group as we stand immediately. Trying on the steadiness sheet, then stays very sturdy. SEK58 billion roughly in fairness, SEK1.8 billion in internet money. And that’s then after having distributed this 12 months’s dividend to the shareholders. With that, Anders, I hand again to you.

Anders Danielsson: Sure. I’ll go into the market outlook general right here and begin with building. Steady market outlook, we’ve not modified any market outlook from final quarter. So the U.S. stays the strongest market in building, each for constructing and civil. The infrastructure funding goes. It is a big pipeline there, undoubtedly for the long run. Within the Nordic and Europe, the civil market is extra steady in most nations. We have now a extra weaker outlook on the constructing phase pushed by the residential market and likewise the industrial market. However sectors like vitality, business and protection present alternatives for the long run. So we’re form of reallocating a few of our assets to these segments. Residential growth continues to be weaker market outlook within the Nordics, steady in Central Europe. And we will see a rise in exercise additionally within the Nordic from — however it’s from low ranges. We count on restoration to take a while. It would require additional decreases in rates of interest. And there’s a value of dwelling strain, an affect on low value segments continues. Industrial property growth additionally unchanged weak market outlook. We have now decreased macroeconomic uncertainty, slowly bettering actual property investor market within the Nordics and Central Europe, additionally the place we now have made our divestment this quarter. And we can also see some early optimistic indicators from the occupier market within the U.S. However it’s a polarized market. So it’s the top quality buildings in the proper location. However it’s additionally what we will supply within the U.S. Funding property is steady market. Additionally it is right here a polarized occupier market. However it’s a robust demand for top of the range areas. And we now have a very good leasing ratio and rents anticipated to stay steady. So if I summarize the group, it is a stable efficiency general within the second quarter. Building operated margin line with goal, sturdy order consumption, residential growth, rising gross sales quantity from low ranges and industrial property growth. 5 divestment recorded within the quarter on good ranges. Funding properties, first acquisition in Gothenburg and we sustaining a strong monetary place. So with that, I hand over to Antonia to open up the Q&A.

Antonia Junelind: Thanks, Anders. Sure. So now we are going to open up for questions from the viewers that’s becoming a member of us on-line. And as talked about earlier than, you’ll be able to ask questions through the use of the HD audio hyperlink or the phone convention quantity that has been offered within the invite to this press convention. And you can even discover these particulars on our internet web page, Skanska.com on the Investor Relations pages there. And while you name in, you’ll be able to simply comply with the detailed directions that will probably be offered. So with that, I’ll then ask the operator to please introduce to us the primary caller.

Operator: The primary query is from Simon Martinsson with DNB Markets. Please go forward.

Simon Martinsson: Hello, guys, and congratulations on a very good end result. I’ve a couple of questions. Once I take a look at the book-to-build, it is sturdy in very lots of the segments, however the Swedish division at 89% form of stands out. One, how are you trying on the enchancment of that within the brief time period? Or will you be needing to restructure, et cetera in Sweden? I will ask my query one after the other in the event you can reply that one first.

Anders Danielsson: No downside, Simon. Thanks for that. Sure, the book-to-build charges are 89%. I am not very involved of this case. We have now a wholesome backlog and likewise the period of the backlog. We’re selective in Sweden. And we’re specializing in phase and likewise geographies the place we will see we now have a aggressive benefit and likewise that we now have the proper assets. And so we’re persevering with to reallocate the assets from the remainder of market and industrial market to extra business, different social funding, social infrastructure funding that we will see. And in addition that we will see future markets. So, I am assured that we will reap the benefits of that sooner or later.

Simon Martinsson: And following a bit, my query is on the residential begins that had been zero mainly this quarter, however nonetheless have a excessive stock, particularly in Sweden, 528 models. Simply questioning how shortly can we count on Skanska to start out new begins within the Nordics and particularly Sweden will focus nonetheless be on promoting off accomplished unsold houses or how are you apt to taking over growth danger within the residential and RD within the brief time period?

Magnus Persson: Hello Simon, that is Magnus. I will attempt to reply your query. All of it relies on gross sales as we go, clearly, and the alternatives we now have. So it is very tough to say that we’d form of begin faster or so on. We do need to have a steadiness between what we produce, what we now have in inventory and what we promote. And that’s one thing that we constantly assess. We have now alternatives to start out tasks in Sweden and we are going to try this once we assume we have to begin them and when the economics of the completely different tasks attain the proper stage for us to underwrite the enterprise case. And each of these items have been form of slower than what we now have been accustomed to possibly over the past 5 or 10 years, as a result of it’s tougher to get the economics proper within the enterprise circumstances concurrently the present form of inventory of unsold models have been depleting at a slower tempo because of the sluggish gross sales tempo. And so we do not really feel any stress in any respect. And we now have the ammunition we’d like in case we have to begin tasks there. And we try this once we really feel that the form of scenario as a totality is warranted.

Simon Martinsson: Thanks. One other query is on CD. The U.S. now has 48% of the capital employed of that operations. We do not have to return many quarters to search for write downs within the U.S. Are you able to inform us a bit about your divestment plans and what we will count on to us from the surface by way of the profitability when these developments comes and at what time you intend to do U.S. divestments? The 5 within the quarter had been in Nordics and in Europe, and in the event you can learn something onto that?

Anders Danielsson: Let’s attempt to reply this query. I imply, we now have numerous properties within the US, as you say. Not all of those properties are clearly accomplished and able to be offered. So we particularly on this market, you form of want to finish or want, but it surely’s simpler to promote one thing that’s accomplished. So we now have a couple of very restricted quantity of properties are form of able to be offered within the U.S. And that market is significantly slower than what we will see additionally in Europe, even on the divestment market. We made the form of what we assess to be a needed valuation changes to those properties. If you happen to recall within the fourth quarter report for 2023, which form of makes the valuation of those immediately to mirror the place we expect the market is. Then we constantly reassess that as a result of the market is creating. We haven’t any ambition to form of sit on properties which can be accomplished. We nonetheless have our form of the enterprise mannequin is to develop and promote. However we do have the monetary endurance, if you’ll, to not have to fireside promote issues if we will not get the proper bids for them. And that could be a balancing act on a regular basis, as a result of you’ll get bids for properties which can be very low. There’s all the time prepared takers to low-cost costs. However it’s kind of of a mixer of being affected person and on the similar time, not being too affected person and look forward to a costs that may not happen ultimately. So we’re studying the market constantly. And once we assume the timing is true, we’re placing these properties out and testing the urge for food for them. And as we stand at the moment, we shouldn’t have any property available on the market within the U.S. In order that’s why we’re not promoting one thing now. We have to form of take them to the place the place they need to be offered first.

Simon Martinsson: And my final query goes on the tax price in Q2. Sort of a excessive company tax price given a lot divestments in CD. If you happen to may give any coloring on that correlation, which we now have seen previously between CD divestments and payable tax?

Magnus Persson: As a CFO, I all the time respect the query on our taxes. There’s been too little of them. The 24% tax that we now have within the second quarter really rhymes very nicely with our nominal tax price that’s round 24%. And traditionally, you’ve got seen us acknowledge decrease taxes. The rationale for that’s primarily enterprise combine, but in addition the truth that as we hand over properties, mainly acknowledge them in IFRS as transactions in Sweden, which is a really form of tax environment friendly approach of divesting properties via authorized buildings. Then we now have a form of a optimistic tax impact, if you’ll. However when the combination of handing over properties to exterior consumers in Sweden is decrease, partly because of the market, but in addition as a consequence of the truth that many of the properties that we’re promoting in Sweden now’s going to funding properties. Then that optimistic affect on taxes is way decrease. So that’s basically the rationale you’ll be able to say. Then we now have throughout the completely different geographies we’re working in seen not large, however over years, form of smaller will increase within the nominal tax charges in nations. And all of that is form of added as much as us now reporting at 24% as an alternative of a decrease quantity.

Simon Martinsson: Thanks. These had been my questions.

Magnus Persson: Thanks.

Operator: The following query is from Graham Hunt with Jeffries. Please go forward.

Graham Hunt: Hello there. Thanks very a lot for the questions. I will ask two and I will additionally do them one after the other if that is okay. First on BoKlok, UK clearly nonetheless a problem there. How ought to we take into consideration these prices going ahead? Are the provider points now absolutely provisioned? And may you quantify the continued UK prices if we simply assume exercise stays the identical?

Anders Danielsson: Sure. Thanks, Graham. BoKlok, we now have taken provisions, as you recall, each within the first quarter and the second quarter because of the provide chain within the UK predominantly. And naturally, the whole lot we see or the whole lot we’re involved of, see the danger, we take the availability in that quarter. So now we’re taking the total provision for the danger we see within the provide chain within the UK. And it is a small operation we now have within the UK. And we’ve not began any new tasks for fairly a while. So now we’re beginning to attain completion of the continued mission. So I see that the danger is lowering quarter-by-quarter right here, undoubtedly.

Graham Hunt: Thanks. And second query on industrial. Are you able to converse to the explanations for the mission slippage that you simply talked about? Does this have an effect on the return that you simply count on on the property while you do promote it? After which possibly you might converse to any variations between the native markets you are within the U.S. by way of demand between Seattle, Washington, DC and Texas? Thanks.

Magnus Persson: In fact. Hello, Graham. That is Magnus. By way of the slippage, it is fairly simple. We have had some delays within the facade provide. And in addition we now have been once more hit by an area strike that in totality form of pushes the completion of this property over a month finish, which in our reporting pushes it a full quarter within the exterior reporting. In order that’s a quite simple purpose. It has no impact on form of the profitability of the mission in itself. In fact, we doubtlessly, theoretically, would tie up slightly bit extra capital over one other quarter, however that is in the entire grand scheme of issues, that is insignificant. The second a part of your query associated to the demand over the completely different 4 geographies the place we’re lively, it is not an enormous distinction, I might say, but it surely appears a bit — the form of it’s a bit completely different. On the divestment market, it is about the identical scenario in all completely different 4 markets, I might argue. On the leasing aspect, we see a bit extra exercise on the east coast and it’s kind of slower form of return to workplace pattern on the west coast. So I might say in that case, Seattle can be slower by way of the form of return to workplace and therefore on the leasing demand, however on the divestment aspect, it is mainly the identical.

Graham Hunt: Thanks very a lot.

Magnus Persson: Thanks.

Operator: Subsequent query is from Gregor Kuglitsch with UBS. Thanks.

Gregor Kuglitsch: Hello, good morning. I had a query on the commercials. Simply taking a look at what you have form of disclosed, I feel by way of unrealized positive factors, I feel there’s form of SEK2.7 billion left, together with the stuff that you’ve got already divested. I feel arithmetically, the margin is actually low in the event you evaluate it to the market worth that you simply disclosed. So the query to you is, is that — I imply, I assume it is your greatest evaluation. However simply clarify to us, clearly printed 20% in Q2 on divestment, I feel. So that you mainly assume you simply form of offered essentially the most worthwhile ones in Q2 and you do not count on a lot margin on the remainder? Or is it form of conservative by way of the evaluation? In order that’s query one. Query two is on coming again to residential and BoKlok. So I assume what I need to perceive is how shortly may you get rid of that loss? I respect the availability most likely is a one-off, however the form of recurring losses on the manufacturing unit, I feel in Sweden, mainly how shortly are you able to get rid of that working loss? That is my query. Thanks.

Magnus Persson: I will begin along with your first query, Greg, after which Anders will tackle the BoKlok questionnaire. By way of the CD and the SEK2.7 billion that we report now in UDG [ph] and the way that’s distributed. I imply, in the event you comply with the decision, I am positive you probably did. You additionally heard me say that the attractiveness for buyers for properties could be very completely different throughout completely different geographies and asset lessons. And among the divestments we now have now made throughout this quarter has been to considerably higher phrases than what we had anticipated in our inside valuations. And I am positive we are going to find yourself in conditions the place that isn’t the case. However once we worth the properties, we for apparent causes cannot worth them as if we had been in a pointy bid competitors with buyers. So we have to worth our properties primarily based on form of what we expect the market is on the common. And so, have we form of offered off the very best stuff? I do not assume so. Time will inform, proper? However we’re completely happy that we now have managed to make some actually good offers now within the second quarter. We all know the standard of our properties. We have now made a very good mark, I might say, within the native markets the place we made these transactions. The others will take a look at these marks as nicely. And we’re form of assured within the high quality of the remaining portfolio. However what that can appear to be profitability sensible, I would not like to take a position on that clearly beforehand.

Anders Danielsson: And if I’m going to the second query concerning BoKlok, I will begin within the UK. We have now taken provisions near SEK100 million, the overwhelming majority is relying on the provisions within the provide chain, points within the provide chain. And we now have only a few ongoing tasks. So now we now have taken the provisions that we expect is important to finish these tasks. So that is what you see now within the second quarter. Relating to the manufacturing unit positioned in Sweden, we now have an working loss there. What we now have carried out throughout fairly many quarters now’s to cut back the variety of individuals employed within the manufacturing unit. So we’re decreasing and we are going to proceed to regulate ourselves and the operation accordingly to the market. So that is the actions we’re taking. So the danger — working danger will cut back quarter-by-quarter.

Gregor Kuglitsch: Can I come again to the unrealized achieve? Sorry, simply taking a look at Q1 to Q2, I feel it was SEK4.2 billion. Now it is SEK2.7 billion. So it drops a SEK1.5 billion. And clearly that is largely the achieve you booked. So in apply, how does it work? If you happen to promote, for instance, a property and also you had it in for 100, however you promote it for 200, you then — I assume I might count on the unrealized achieve to be increased, I assume, in the event you offered above your inside appraisal, in the event you see what I imply. Proper? You are telling me the two.7 is what’s left, proper? Of what is not offered, proper? I do not know if I am decoding accurately.

Anders Danielsson: Let’s examine if I can deliver some order to this over the cellphone. It isn’t fully simple. But when we now have assessed form of a surplus worth in a property to say SEK500 million in Q1, and we promote that property for a achieve of SEK1 billion in the course of the second quarter, the adjustment to the excess worth within the exterior reporting will nonetheless be solely SEK500 million, as a result of that’s the foundation for the valuation we had in the course of the first quarter. So it is fully doable that there are form of positive factors and earnings popping out that has not been a part of the unrealized positive factors that was included within the reporting, which makes this tough to trace, particularly once we promote a number of properties and among the properties are offered beneath, and among the properties are offered above. And I feel given the data we provide you with, will probably be very tough form of to backtrack that. I feel the very best recommendation is to offer our Investor Relations staff a name and see in the event that they may give you any form of shade on that if a deal comes and also you’re uncertain about the way to interpret issues.

Gregor Kuglitsch: Excellent. Thanks.

Anders Danielsson: Thanks.

Operator: [Operator Instructions] Your subsequent query is from Arnaud Lehmann with Financial institution of America. Please go forward.

Arnaud Lehmann: Thanks very a lot and good morning, everyone. Firstly, a few questions on building. Simply Q2 building margins, fairly stable as you highlighted. Is there something to say by way of positive factors or on accomplished tasks, or possibly losses or something slightly bit one-off to say for the second quarter?

Anders Danielsson: It is, Anders. There’s nothing materials within the quarter. Its extra — this enterprise is ongoing as normal. We full tasks and we begin new tasks with decrease revenue take. So nothing, no materials one-offs within the quarter.

Arnaud Lehmann: Okay. Thanks. And possibly a extra form of trying ahead query about building specifically within the U.S. I feel subsequent time you may be reporting Q3 outcomes would be the day after the U.S. elections. One matter that’s talked about relying on the result of the election that may very well be labor availability in building. So is it already a problem for you? And do you see it possibly a rising danger going ahead, particularly post-election? Thanks.

Anders Danielsson: No, we do not see a big danger on that. We’re very cautious. After we bid for a mission that we now have the proper assets in place earlier than we even bid for a mission, as a result of that is an enormous key for achievement — I’ve a worthwhile mission. And relating to the overwhelming majority of our enterprise is in unionized cities or states. And we now have been there for many years. And we now have an excellent relationship with the unions in our completely different market geographies. So additionally there, we do not see any subject with that.

Arnaud Lehmann: Thanks. And the final one is speaking about internet money and the steadiness sheet. You had a little bit of a discount within the internet money place in Q2. I feel this was largely from the dividend fee. Might you give us a sign of the outlook for internet money? I feel you have acquired a couple of industrial growth disposals to guide within the second half. However is there one thing on the funding aspect to focus on?

Magnus Persson: Hello, Arnaud, that is Magnus right here. Sure, we’re reporting in or writing out within the quarterly report. We have now some transactions that we now have already signed and booked that may yield some money influx throughout the remainder of the 12 months. So you’ll be able to depend that in. And aside from that, as we usually say, by way of working capital may need some swings, very tough to forecast. And the remainder of that relies on the event of gross sales in each RD and CD and productiveness, profitability and building, which we do not present any steering for.

Arnaud Lehmann: Okay. Thanks very a lot.

Magnus Persson: Thanks.

Operator: We have now a follow-up query from Graham Hunt with Jefferies. Please go forward.

Graham Hunt: Thanks for permitting the follow-up. Simply two on building, please. First within the U.S, identical to to get your ideas on. You are signing an enormous quantity of labor there. Are you continue to comfy with that scale of order consumption that you simply’re in a position to hit your 3.5% or above margin goal for the group? Simply making an attempt to sq. these two issues off. I perceive that there is been an enormous shift internally in Skanska over the previous couple of years in direction of specializing in profitability, however high line nonetheless appears to be rising very, very strongly?

Anders Danielsson: Sure. I am very assured that we will deal with the order consumption that we now have seen now within the U.S. And we additionally see elevated income in U.S. It’s a very wholesome backlog, I might say. And in addition, I am assured that it’s going to present the group, contribute to the group’s general efficiency within the building stream. So I am assured in that and glad.

Graham Hunt: Understood. After which only a second on the UK building market. I seen you signed a contract there very not too long ago in London. Any indicators of any enchancment in that market? There’s been every week for a while. And in addition within the context of the brand new authorities that is now in place?

Anders Danielsson: Sure, there stays to be seen. It is encouraging to listen to the brand new authorities specializing in infrastructure investments sooner or later. So that may undoubtedly be useful for the economic system within the UK and likewise useful for the business and us as nicely. However it’s too early to inform and too early to see any actual enchancment. So we count on the market to be sluggish for an additional 12 months, however encouraging for the long run.

Graham Hunt: Bought it. Thanks.

Operator: Subsequent query from Staffan Bülow with Nordea. Please go forward.

Staffan Bülow: Good morning and thanks. I simply have one query and that’s concerning bidding margin. I recall final 12 months on the capital market, you confirmed a graph of bidding margin and the way that has developed since 2019. And as of Q3 2023, it was round 9%. So I used to be questioning in the event you may elaborate on how that bidding margin has developed within the final quarter since then?

Magnus Persson: Hello, Staffan. That is Magnus. I feel you’ll be able to safely say that the bid margin is across the similar stage as we had in as we reported on the capital market assertion.

Staffan Bülow: Okay. Thanks. That is clear.

Operator: [Operator Instructions].

Antonia Junelind: Operator, do we now have anybody else calling in or is the road now empty?

Operator: The query is — the queue is empty and we now have no extra questions at the moment.

Antonia Junelind: Okay. Excellent. In order that implies that we now have answered all of the questions that you simply had for us immediately. If in case you have any extra questions afterwards, do not hesitate to succeed in out to the Investor Relations staff and myself. A recorded model of this audio solid will probably be out there on our internet web page later immediately. And we will probably be again with extra feedback on our third quarter report to start with of November. So I’ll now shut this press convention. Anders, Magnus, thanks on your shows and solutions right here immediately. And for these of you which were listening in. Thanks a lot and have an important day.

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