Skanska Q3 Profit Falls 6 Pct In Weak Market

MALIN RISING

STOCKHOLM (AP) — Skanska AB, the Nordic region's biggest construction company, on Thursday reported a 6 percent drop in third-quarter profit as the global economic downturn continued to weigh on the market for property development.

Skanska, based in Stockholm, said net profit for the July to September quarter fell to 1.1 billion kronor ($156 million) from 1.2 billion a year ago. Revenue decreased by 1 percent to 35.6 billion from 36.1 billion.

Still, the result beat analysts' expectations for revenue of 34.1 billion, according to a poll by SIX estimates, and shares in Skanska rose 4.3 percent to 111.7 kronor ($15.8) in Stockholm.

"Although there are various indications that the economic cycle has passed its low point, the fact remains that the construction and real estate sector is late in the economic cycle and that total construction investments in Skanska's markets are continuing to decrease," Skanska Chief Executive Johan Karlstrom said in a statement.

"A situation where the total market is shrinking also means more intense competition, resulting in pressure on tender margins," he added.

Despite that, Skanska's biggest unit, construction, saw its operating margin rise to 3.8 percent from 2.8 percent in the same period 2008.

The company said the margin improvement was mainly due to improved risk management and project execution and that a number of projects with good margins were completed.

Karlstrom said Skanska expects continued revenue declines in its construction unit during 2010, mainly in the Nordic countries and the Czech Republic.