Skanska's paradox: record construction bookings meet a US property markdown

Skanska's second-quarter report for 2026 is, in the group's own words, "a solid performance," but the detail is closer to a record. Construction delivered a 4.3% operating margin in both the isolated quarter and the trailing twelve months, order bookings hit a record SEK 68 billion, and the rolling book-to-bill ratio reached 114% — roughly 21 months of production, with a backlog closing in on SEK 300 billion.

We have a record high order bookings of SEK 68 billion, which gives us a book-to-bill ratio of 114% on a rolling 12-month basis. A record high order backlog, close to SEK 300 billion.

The growth is concentrated where the market is robust — strong order intake in Sweden and the U.S., with a book-to-bill of 126% across the U.S. operation. Management is careful to keep the win rates honest: asked whether tariff refunds boosted the U.S. margin, Anders Danielsson was unambiguous: “we don't have any impact from recovering from tariffs. That's not included in the U.S. operation.” — Anders Danielsson, Chief Executive Officer and President · 2026-07-17 The margin is execution, not restitution.

Underlying demand is dominated by civil works and social infrastructure — roads, bridges, schools, hospitals, and the still-hot data-center pipeline. Skanska openly acknowledges the lumpiness of that engine: “It depends a little bit when you are starting new projects, and they are, so to say, burning into the revenue.” — Anders Danielsson, Chief Executive Officer and President · 2026-07-17 U.S. revenue is still running behind on conversion timing, but the backlog arithmetic argues the catch-up is a when, not an if.

The development businesses keep their cool

Project Development is the counterpoint. Residential Development printed just a 1.5% margin on SEK 25m of operating income, with costs for warranty provisions and restructuring of SEK 70m in the Swedish business weighing on the Nordics. That is the tail end of a deliberate cleanup — selling from older, lower-margin stock while refocusing on fewer cities and the 10% ROCE target. The bright spot is the Central European business, which delivered a strong result in Central Europe: SEK 122m of operating income at a 23% margin, with 132 units sold and stable rising prices.

Commercial Property Development is the more interesting story. The quarter booked US asset impairment charges of SEK 464m across a couple of completed U.S. properties, reflecting higher long-term U.S. interest rates and a muted transaction market. Pontus Winqvist framed it as a rates story, not a quality story: “we have seen increased long-term interest rates within U.S., which also is then resulting in uncertainty among U.S. property investors.” — Pontus Winqvist, Chief Financial Officer · 2026-07-17 Notably, Skanska also divested the PPP asset I-4 in the U.S. during the quarter — a reminder that the company can still monetize U.S. infrastructure even while its U.S. property book waits.

This patience is a consistent posture, not a new one. As far back as last year's second-quarter call, management was already framing the U.S. market the same way: “In the U.S., you're correct, we haven't divested in a few years anything. And there are — it's a very hesitant investor market in U.S.” — Anders Danielsson, President and CEO · 2025-07-18 The writedown is less a surprise event than the current instalment of a long-running ledger.

We're not in a hurry. We have positive cash flows during that time.

That cash-flow cushion matters. The group generated strong operating cash flow in the quarter, helped by the delivery of previously sold commercial properties and continued working-capital build in Construction; available funds ended at SEK 23.1bn with an adjusted net interest-bearing net receivable of SEK 8.7bn after paying out the SEK 5.9bn dividend.

What's really changed?

Two shifts are worth flagging. First, Skanska raised its building-market outlook for Sweden and Finland, citing demand in social infrastructure, industry, and data centers — and the company is actively importing U.S. and U.K. experience to capture that Nordics pipeline. That is a genuine strategic nudge, not a rehash of prior quarters.

Second, the tape around Skanska is unusually coherent with the broader market. Global market keywords for the quarter lean heavily on data-center and compute demand, and several of this week's reporters — United, GE, and FITB with "construction loans for data centers" — point at the same civil-and-data-center construction wave that feeds Skanska's backlog. When management says the U.S. civil market is holding up and cites a healthy federal pipeline plus congressional renewal discussions, it is speaking a market-wide language.

The prior quarter's framing holds: “We don't see any slowdown in the U.S. market.” — Anders Danielsson, President and CEO · 2026-05-07 And on margins, Anders was characteristically measured about the raised bar — pleased, but not surprised, given the quality sitting in the backlog. The combination of a record construction book and a stubbornly patient development book is the most honest read of Skanska today: one engine at full throttle, the other idling while it waits for the 10-year yield to cooperate.