Skanska AB (publ)

Good morning and welcome to the presentation of Skanska's second quarter report for 2024. I'm Antonija Ljundelind, I'm the Senior Vice President for Investor Relations here at Skanska and joining me here today is our President and CEO Anders Danielsson and our CFO Magnus Persson. Shortly they will take you through an update on our performance over the past quarter and provide you with an updated market outlook. After that initial presentation we will as usual invite you to ask questions during the Q&A session and I will then ask you to join us by using the HD audio link or the telephone conference number that we provided in the invite or on skanska.com on the investor relations pages and you can just follow the detailed instructions provided by the operator. So with that short introduction I hand over to you Anders to start the presentation.

Thank you Antonija and before I jump into the figures I want you to look at the picture here on the right hand side and that's Studio B, a project development, commercial project development in Warsaw, developed by Skanska, constructed by Skanska and we also leased it out, it's a 98% lease and we also divested it to repeat investors during the second quarter and we also started the next phase in that area. If I look at overall the second quarter during this year we have a solid performance, construction, the operating margin is in line with our targets, we also have a strong order intake, residential development, increasing sales volume but it is from low levels but encouraging to see that also continuing in the second quarter. Commercial property development, we have made five divestments in the quarter which is on a high level, on good levels as well. Investment properties, the first acquisition was made in Gothenburg, one of the three cities in Sweden that we're focusing on. Operating margin in construction, .5% compared to .4% last year and the return on capital employed in product development and investment properties is impacted on a rolling 12-month basis of a weak property market and it is also impacting the return on equity which ends up on .3% on a rolling 12. We continue to have a robust financial position and we also have a reduction of carbon emission in our own operation of 58% compared to the base year 2015. If I go into each stream, start with construction, the revenue has increased in the quarter with 6% adjusted for currency effect and we also see order bookings landing slightly above 60 billion for the quarter. So we have a book to build of 114% on a rolling 12-month basis and the order backlog is on a record high level of close to 268 billion. Operating income 1.5 billion and again .5% margin. The strongest order there in tech is in the US and that goes both for our building operation and our civil operation. The order backer is on a high level, record high and on a rolling 12-month basis the operating margin was 3.3%. Going into residential development, the revenue has increased 2.2 billion in the quarter. We have increased the number of homes sold to over 500. We haven't started so much this quarter but it's more of a quarter effect I would say. If you look at the more on a rolling 12 you can see but we have started the projects to start and we also announced another start in central Europe recently. Operating income negative 11 million and return on capital employed also negative. So we can see increased sales volume in the Nordics and we have continued to have a good level of the activity in central Europe and the hit we took in the quarter from Booklook was 167 million. The underlying, if you take away Booklook, the underlying operating margin is 8% which is slightly below our target of 10% margin. Operating commercial property development, the operating income is 1 billion. So we have again on sale of the divestment we made of 1.2 billion. We have 19 ongoing projects which corresponds to 26 billion upon completion in total investment and we have completed 23 projects which is around 11 billion in total investment and those completed project has a rate of 77%. Five divestment, four external on good levels and one internal and leasing activity is on a reasonably good level of 61 000 square meters in the quarter. Investment properties, the first acquisition recorded in Gothenburg that is Citygate. We have operating income of 108 million in the quarter and the economic occupancy rate is at 87% so on a high level and the total portfolio property value is 7.7 billion and again here we have an ambition and target to build up a portfolio between 12 to 18 billion so we are well on our way. If we go back to construction stream and look at the order bookings over time so here you can see the development of the order backlog, the blue bars so it's continued to increase as you can see. You can also see the order bookings on a rolling 12 month basis, the gray line here and also the order bookings per quarter, the orange and the revenue that has been increased, the trend has been increases for quite a lot of quarters and you can see compared to last year how much order backlog you can also see the rolling 12. If I go into each and every geography you can see that the strongest order intake has been in the US. We see that the book to build is below 100% in the Nordics and also in Europe. We continue to be selective but we have a healthy backlog if you look at the months of production in Nordics, 15 months of production, 15 months in Europe as well so that is on a healthy level so we can continue to be selective and go with a project where we see that we have a competitive advantage and also the right resources but 151% in US is extraordinary 24 months of production and that order backlog is the duration is longer now than before so it's a large project that we have won so that I'm very confident with that. So with that I hand over to Magnus.

Thank you Anders. So we'll start with construction. As has been said revenues climbed 7% in Swedish Kronas quarter by quarter and 6% in local currencies and this is on the back of course of us being able to book a lot of good work over quite some time now so it's starting to translate a bit into revenues here. Notable drivers of this is of course the US where we have had the market is really strong we've been very successful with identifying and bidding and winning the right type of jobs over there in that geography. Gross margin .5% in the isolated quarter, a remarkable performance stability if you look on the table here you can see the four different columns assess essentially 7.5, 7.5, 7.5 and 7.7. I think it says something on performance ability in such a sort of broad geographical construction operation that we have that moves also with the market here. Same thing on the S&A we have good cost control came in .0% in the isolated quarter obviously revenues are a bit up but if you backtrack through the columns here you can see that we are able to sort of maintain this in a good way. Operating margin then in the quarter .5% so very stable performance in construction and if we look on the different geographies then you can see on the right hand side you have the operating margin for a different geographies. The Nordics comes down slightly to .3% but Sweden improves their full percentage unit up to .0% up. The Finnish market is a bit tougher in Norway we have, as Sanders also alluded to before, we have big long jobs according to our way of recognizing profits we are always cautious in the beginning of large complex jobs that stretch over a long time period here. Europe is performing really well .8% margin in the isolated quarter, good in both of those geographies UK and in the Europe and the US .6% continues to perform at this high level which is extremely positive of course because this is where we have the currently the strongest market and are booking a lot of new jobs. For going to residential development we recognized 2 billion and 150 million in terms of growth here of 30% quarter over quarter. Clearly better sales in the Nordics it's picking up we can see that we look at the number of sold units relatively speaking in the quarter a bit slower sales in in the central european residential development operations but still at a good level. Operating income minus 11 in this is as we have also explained more in detail in the quarterly report a cost charge of book look of minus or loss for book look of minus 169 million. If we take that out the remaining part of the operations have an operating margin of 8% which sort of given where we are with the residential market is a quite decent performance today. Going to the geographies again you can see here we have either zero or negative on all the different reported geographies but the book look effect impacts all these different areas and in the Nordics the impact of book look here is minus 68 million Swedish kronor and in Europe it's minus 99 million Swedish kronor. Underlying reasons to sort of the book look losses here the biggest to the two biggest impacts is us having provided for potential supplier problems that we have identified in the UK and we also have a cost overhang from the factory that is currently underutilized given the market appetite for this type of assets at the moment. There are large differences across the geographies with the European market being clearly stronger and then Nordics is catching up it is starting to improve as I said we are selling better but we have a somewhat lower profitability there relatively speaking to the to the European operations so the sales mix how much we sell in different geographies is clearly impacting the sort of stream results here and we'll probably do that for some quarters going forward as well. Home started and sold we sold 515 units in Q2 which is up then from 343 in the same quarter last year so we actually grew the number of sold units by 50 percent here very solid. We started 37 units quite a lot lower than the same quarter last year and first there's a quite large variation in this quarter to quarter we in reality would have to look at it more over some time to make sense of the numbers but there are a couple of things that I think is important to sort of be aware of we have a lot of units already to sell from I will come back to that on the next slide and show you and given the volume the sort of capacity of the market we shouldn't be sort of have too much units to sell from either the other thing is that it is harder today to find the right business cases costs have been going up prices have been challenged so we are very selective when we decide to start a project there is sort of a smaller part of the land bank we have available than usual that this where we can identify the right business cases and then start projects so that's another reason to this. We can look at the homes in production and completed unsold units it looks like this over time we had around 4 000 at the end of the second quarter and if you take the light gray part of this bar and you add the purple one you end up with roughly 2000 units which is the number of units that we have now unsold that we are able to sell from which is not a particularly low figure you backtrack a year or two you can find higher figures but if you go further back this is about the size we've had up for sale so we have a pretty balanced portfolio in that sense sales rate is improving we came in at 51 percent in the first quarter now we're at 57 percent which is very positive and also the unsold completed is reduced in the first quarter we reported 770 unsold completed and now we are down then to 671 so it's pretty clear that the activities we are doing on the market is gaining some traction and we are selling better here especially in the nordic part of the ardy operations we move to commercial development as has been said we made five divestments in the quarter which is maybe the most divestment active quarter we had for quite some time very solid three of these divestments were made in the nordics and two of them were made in europe one of the transactions was an internal transaction where we sold a property in guttenberg called city gate to investment properties we amassed gains of 1.2 billion in the second quarter and the divestment margin of this was around 20 percent that's quite solid the divestment market it remains difficult and the appetite varies i would say significantly across assets and across geographies so it's not unlikely that on a project by project basis the sort of profitability performance will be a bit more varied over the coming quarters as we continue to sell off the currently completed yet unsold properties unrealized gains at the end of the second quarter 2.7 billion we had 4.2 billion at the end of the first quarter difference there is obviously than one and a half the main change here is the properties that we have now sold and hence realized that gains 1.2 billion and the remaining is a part it's some smaller value adjustments and some smaller changes to effects that sort of makes up the balance of the changes there completion profile we had at the end of the first quarter 12 billion in invested money in completed unsold properties now we are down to 10.5 billion in money invested in completed unsold properties they are leased to 75 percent so it's a that's a good level and we have also during the quarter added two more properties that have been completed and moved into the purple bar here from previously being previously being blue and if you recall we reported in q1 that we had some completion slippage in a few properties towards the end of 2024 unfortunately one of these properties have continued to slip a bit in time and are now expected to be completed in the first quarter in 2025 instead if we look at leasing leased as has been said 61 000 square meters in the isolated quarter of which 33 000 was in multifamily residential and 28 000 was in commercial spaces if you track the green and orange or if you will yellow line here on the graph you can also see that the leasing and completion rates in our commercial portfolio are now meeting each other again which there has been a gap between these two for a while indicating that we have complete sort of reached further in terms of completing the properties that we have done in leasing but we are catching up in terms of leasing area which obviously is positive the leasing market remains relatively soft with continued betterments in europe and the nordics whilst the u.s is quite slow still investment properties as i have already said we took on board one new property that we acquired from the commercial development stream during the quarter city gate in guttenberg and report now a very solid ebit of 108 million of which 58 million are directly related to ifrs accounting effects following this internal transaction so on the like for like basis you should look at operating net and add the sna expenses to get the feel for the traction in the portfolio on a group level the central item here minus 159 we essentially follow our sort of cost costing level at the headquarter organization with 170 180 million in costs per quarter in addition to that we have the legacy business that has been no particular effects from that in the isolated quarter here net financials continues to be positive 146 million through a well-managed central liquidity portfolio and we taxed out very close to our nominal tax rate at 24 percent in the quarter we were balanced in terms of cash flow in the quarter excuse me with 300 million positive and then we handed out the or distributed the dividend that was previously decided by the annual general meeting during the second quarter leading to minus 2.3 billion then in cash flow taking us down to minus 2 billion in in total for the isolated quarter here quite an improvement then from the minus 5 billion in the comparable quarter if we look at free working capital in construction we had a positive impact here on cash flow in the isolated quarter of 600 million the actual portfolio position remains at around 17 percent of revenue and the trend that we have been alluding to over quite a few quarters now is still with us it is slightly more difficult in the negotiations with clients to achieve the sort of front-loaded payment plans that we like to have which is something that we carry with us in all our internal and strategic planning obviously so that is the development that you can also see if you look on this slide that i'm showing you on the slightly downward slope of the green curve so net investments were in balance in the second quarter as already been said and also for the rolling 12 months and at the end of q2 we had around 67 billion in capital that was employed in our different property related operations very strong liquid at access 21 billion should we need we have been working a bit during the quarter to to reshape the maturity profile of our stock of loans and credit commitments and matching this in a good way to our the profile of our ongoing investment commitments we are very satisfied and very comfortable with the liquidity position of the group as we stand today looking at the balance sheet then remains very strong 58 billion approximately in in equity 1.8 billion in net cash and that is then after having distributed this year's dividend to the shareholders with that on the side hand back to you

yes and i will go into the market outlook overall here and start with construction stable market outlook we haven't market outlook from last quarter so the u.s remains the strongest market in construction both for building and civil the infrastructure investment is going it's a large pipeline there definitely for the future in the nordic and europe the civil market is more stable in most countries we have a more weaker outlook on the building segment driven by the residential market and also commercial market but sectors like energy industry industry and defense provide opportunities for the future so we are sort of reallocating some of our resources to those segments residential development continue to be weak market outlook in the nordics stable in central europe and we can see increasing activity also in the nordic from but it's a is from low levels we expect recovery to take some time it will require further decreases in interest rates and there is a cost of living pressure an impact on low cost segments continues commercial property development also unchanged weak market outlook we have reduced macroeconomic uncertainty slowly improving real estate investor market in the nordics and central europe also where we have made our divestment this quarter and we also can see some early positive signals from the occupier market in the u.s but it is a polarized market so it is the high quality buildings in the right location but it's also what we can offer in the u.s investment property stable market it is also here a polarized occupier market but it's a strong demand for high quality spaces and we have a good leasing ratio and rents expected to remain stable so if i summarize the group it's solid performance overall in the second quarter construction operator in line with target strong order intake residential development increasing sales volume from low levels and commercial property development five investment they are recorded in the quarter on good levels investment properties first acquisition acquisition in gothenberg and we maintaining a robust financial position so with that i hand over to antonio to open up the q a

thank you anders yes so now we will open up for questions from the audience that is joining us online and as mentioned before you can ask questions by using the hd audio link or the telephone conference number that has been provided in the invites to this press conference and you can also find those details on our webpage skanska.com on the investor relations pages there and when you call in you can just follow the detailed instructions that will be provided so with that i will then ask the operator to please introduce to us the first caller

the first question is from simon mortensen with denny b markets please go ahead

hi guys and congratulations on a good result i have a few questions when i look at the book to build it's in very many of the segments but the swedish division at 89 percent kind of stands out one how are you looking at the improvement of that in the short term or will you be needing to restructure etc in sweden i'll ask my question one by one if you can answer that one first

no problem simon thank you for that i yep the book to build rates are 89 percent i'm not very concerned of this situation we have a healthy backlog and also the duration of the backlog we are selective in sweden and we are focusing on segment and also geographies where we can see we have competitive advantage and also that we have the right resources and so we are continuing to reallocate the resources from the recid market and commercial market to more industry other social investment social infrastructure investment that we can see and also that you can see future market so i'm confident that we will be able to take advantage of that in the future

and following a bit my question is on the residential starts that were zero basically this quarter but you still have a high inventory especially in sweden 528 units just wondering how quickly can we expect skanska to start new starts in the nordics and especially sweden will focus still be on selling off completed on sold homes or how are you after to taking on development risk in the residential nrd in the short term

hi simon this is magnus i'll try to answer your question but i mean that's it all depends on sales as we go obviously and the opportunities we have so it's very difficult to say that we would sort of start quicker or so on we we do want to have a balance between what we produce what we have in stock and what we sell and that is something that we continuously assess we have opportunities to start projects in sweden and we will do that when we think we need to start them and when the economics of the different projects reach the right level for us to underwrite the business case and both of these things have been sort of slower than what we have been accustomed to maybe over the last five or ten years because it is more difficult to get the economics right in the business cases at the same as the the current sort of stock of unsold units have been depleting at a slower pace due to the slow sales pace then so we don't feel any stress at all and we have the ammunition we need in case we need to start projects there and we do that when we feel that the sort of situation as a totality is warranted

thank you and another question is on cd the u.s now has 48 percent of the capital employed of that operations we don't have to go back many quarters for to look for write downs in the u.s can you tell us a bit about your investment plans and what we can expect to us from the outside in terms of the profitability when those developments comes and at what time you plan to do u.s divestments the five in the quarter were in nordics and in europe if you can read anything on to that

let's try and answer this question i mean we have a number of properties in the u.s as you say not all of these properties are obviously complete and ready to be sold so we especially in this market you know it's you sort of need to complete or need but but it's easy to sell something that is completed so we have a few very limited amount of properties are sort of ready to be sold in the u.s and that market is considerably slower than what we can see also in europe even on the investment market we made the sort of what we assess to be a necessary valuation adjustments to these properties if you recall in the fourth quarter report for 2023 which sort of makes the valuation of these today to reflect where we think the market is then we continuously reassess that because the market is developing we don't have any ambition to sort of sit on properties that are completed we still have our sort of the business model is to develop and sell but we do have the financial endurance if you will to not have to fire sell things if we can't get the right bids for them and that is a balancing act all the time because you you will get bids for properties that are very low there's always willing takers to cheap prices but but so it's a bit of a of a mixer of being patient and at the same time not being too patient and wait for a prices that might not occur in the end so we're reading the market continuously and when we think the timing is right we are putting these properties out and testing the appetite for them and and as we stand currently we do not have any property on the market in the u.s so that's why we're not selling something now we need we need to sort of make the take them to the position where they should be sold first

and my last question goes on the tax rate in q2 kind of a high corporate tax rate given so much divestments in cd if you can give any coloring on that correlation which we have seen in the past between cd divestments and payable tax

as a cfo i always appreciate the question on our taxes this it's been too little and the 24 percent tax that we have in the in the second quarter actually rhymes very well with our nominal tax rate that is around 24 percent and and historically you've seen us recognize lower taxes the reason for that is mainly business mix but also the fact that as we hand over properties basically recognize them in frs as as transactions in sweden which is a very sort of tax efficient way of divesting properties through legal structures then we have a sort of a positive tax effect if you will but when the mix of handing over properties to external buyers in sweden is is lower partly due to the market but also due to the fact that most of the properties that we are selling in sweden now going to investment properties then that positive impact on taxes is is much lower so that is essentially the reason you can say then we have across the different geographies we are operating in seen not big but over years sort of smaller increases in the nominal tax rates in countries and all of this is sort of added up to us now reporting at 24 percent instead of a lower number

of the Thank you there are some of those are more questions

thank you

The next question is from Graham Hunt with Jeffreys please go ahead

Hi there thank you very much for the questions I'll have two and I'll also do them one by one if that's okay first on Bocloch UK clearly still an issue there how should we think about these costs going forward are the supplier issues now fully provisioned and can you quantify the ongoing UK costs if we just assume activity remains the same

Yeah thank you Graham. Bocloch we have taken provisions as you recall both in the first quarter second quarter due to the supply chain in the UK predominantly and of course we everything we see or everything we are concerned of see the risk we take the provision in that quarter so now we are taking the full full provision for the risk we see in the supply chain in the UK and it's a small operation we have in the UK so and we haven't started any new projects for quite some some times and we're starting to reach completion of the ongoing project so I see that the risk is decreasing quarter by quarter here definitely

Thanks

and

second question on commercial can you speak to the reasons for the project slippage that you mentioned does this affect the return that you expect on the property when you do sell it and then maybe you could speak to any differences between the local markets you're in in the US in terms of demand between Seattle Washington DC and Texas thanks

of course hi Graham this is easy we've had some delays in the in the facade supply and also we have been again hit by a local strike that in in totality sort of pushes the completion of this property over a month end which in our reporting pushes it the full quarter in the external reporting so that's a very simple reason it has no effect on on sort of the profitability of the project in itself of course potentially theoretically would tie up a little bit more capital over another quarter but but that's in the whole grand scheme of things that's insignificant the second part of your question related to the demand over the different four geographies where we are active it's not a not a huge difference I would say but it looks a bit the shape of it is a bit different on the investment market it's about the same situation in all different more all different foreign markets I would argue on the leasing side we see a bit more activity on the east coast and a bit slower sort of a return to office trend on the west coast so I'll say in that case Seattle would be slower in terms of the sort of return to office and hence on the leasing demand but on the investment side it's basically the same

thank you very much thank you next question is from Gretor sorry Gretor with UBS thank you

hi good morning I had a question on the commercials so just looking at what you've kind of disclosed I think in terms of unrealized gains I think there's sort of 2.7 billion left including the stuff that you've already divested and I think arithmetically the margin is really low if you compare it to the market value that you disclose so the question to you is is that I mean I guess it's your best assessment just explain to us you know obviously printed 20% in q2 on divestment I think so you basically saying you just sort of sold the most profitable ones in q2 and you don't expect much margin on the rest or is it sort of conservative in terms of the assessment so that's question one question two is on coming back to residential and box lock so I guess what I want to understand is how quickly could you eliminate that loss I mean I appreciate the provision probably is a one-off but the sort of recurring losses on the factory I think in Sweden you know basically how quickly can you can you eliminate that operating loss would be my question thank you

I'll start with your first question Greg and then Anders will take on the boot look questionnaire in terms of the the cd and the 2.7 billion that we report now in udg and how that is distributed I mean if you follow the call I'm sure you did you also say that the attractiveness for investors for properties is very different across different geographies and asset classes and some of the divestments we have now made during this quarter has been to significantly better terms than what we had expected in our internal valuations and I'm sure we will end up in situations where that is not the case but when we value the we for obvious reasons can't value them as if we were in a sharp competition bid competition with investors so we need to value our properties based on sort of what we think the market is on the average and so have we sort of sold off the best stuff I don't think so time will tell right but we are happy and that we have managed to make some really good deals now in the second quarter we know the quality of our properties we made a good mark I'd say in the local markets where we made these transactions the others will look at those marks as well and we are sort of confident in the quality of the remaining portfolio but what that will look like profitability wise I wouldn't like to speculate in that obviously beforehand

if I go to the second question regarding book look I started in the UK we have taken provisions close to 100 million the vast majority is depending on the provisions in the supply chain issues in the supply chain and we have very few ongoing ongoing projects so now we have we have taken the provisions that we think is necessary to complete those projects so that's what you see now in the second quarter regarding the factory located in Sweden we have our operating loss there what we have done during quite many quarters now is to reduce the number of people employed in the factory so we're reducing and we will continue to adjust ourselves and the operation according to the market so that's the actions we're taking so the risk operating risk will reduce quarter by quarter

can I come back to the unrealized gain sorry just looking at q1 to q2 I think it was 4.2 billion now it's 2.7 so it drops a billion and a thousand obviously that's largely the gain you booked so in practice how does it work if you sell for example a property and you had it in for 100 but you sell it for 200 you then I guess I would expect the unrealized gain to be higher I guess if you sold above your internal appraisal if you see what I mean right because you're telling me if the 2.7 is what's left right of what's not sold right I don't know if I'm interpreting correctly

let's see if I can bring some order to this over the phone it's not entirely so but if we have assessed sort of a surplus value in a property to say 500 million in q1 and we sell that property for a gain of 1 billion during the second quarter the adjustment to the surplus value in the external reporting will still be only 500 million because that is the basis for the valuation we had during the first quarter so it's entirely possible that there are sort of gains and profits coming out that has not been part of the unrealized gains that was included in the reporting which makes this tricky to track especially when we sell multiple properties and some of the properties are sold below and some of the properties are sold above and I think given the information we give you it will be very difficult sort of to backtrack that I think the best advice is to give our investor relations team a call and see if they can give you any sort of color on that if if a deal comes and you are unsure about how to interpret things

perfect thank you thank you

Is there a reminder if you wish to register for a question please press star 1 on your telephone the next question is from Arnaud Lemann with Bank of America please go ahead

Thank you very much and good morning everybody first a couple of questions on construction just Q2 construction margins pretty solid as you highlighted is there anything to mention in terms of gains or on completed projects or maybe losses or anything a little bit one-off to mention for the second quarter?

It's Anders there's nothing material in the quarter it's more businesses ongoing as usual we complete projects and we start new projects with lower profit it takes so nothing no material one-offs in the quarter.

Okay thank you and maybe a more of looking forward question about construction in particular in the US I think next time you report you will be reporting Q3 results will be the day after the US elections one topic that is mentioned depending on the outcome of the elections but could be labor availability in construction so is it already an issue for you and do you see it may be a rising risk going forward especially post-election? Thank you.

No we don't see a large risk on that we are very careful to when we bid for project that we have the right resources in place before we even bid for a project because that's a big key for success I have a profitable project and when it comes to the the vast majority of our business is in union unionized cities or states so and we have we have been there for decades and we have a very good relationship with the unions in our different market geographies so also there we don't see any issue with that.

Thank you and the last one is talking about net cash and the balance sheet you had a bit of a reduction in the net cash position in Q2 I think this was mostly from the dividend payment could you give us an indication of the outlook for net cash I think you've got a few commercial development disposals to book in the second half but is there something on the investment side to highlight?

Hi, this is Magnus here yes we as we are reporting in or writing out in the quarterly report we have some transactions that we have already signed and booked that would yield some cash inflow in during the rest of the year so you can count that in and apart from that as we normally say in terms of working capital might have some swings very difficult to forecast and the rest of that depends on the development of sales in both RD and CEDE and the productivity profitability and construction which we don't provide any guidance for.

Okay thank you very much.

We have a follow-up question from Graham Hunt with Jeffreys please go ahead.

Thanks for allowing the follow-up just two on construction please first in the US just like to get your thoughts on you're signing a huge volume of work there are you still comfortable with that scale of order intake that you're able to hit your three and a half million r percent or above margin target for the group just trying to square those two things off and understand that there's been a big shift internally in Skanska over the last few years towards focusing on profitability but top line still seems to be growing very very strongly.

Yes I'm very confident that we can handle the ordering intake that we have seen now in the US and we also see increased revenue in the US and it is a very healthy backlog I would say and also I'm confident that it will provide the group contribute to the group's overall performance in the construction stream so I'm confident in that and satisfied.

Understood and then just a second on the UK construction market I noticed you signed a contract there very recently in London any signs of any improvement in that market if there's been a week for some time and also in the context of the new government that's now in place?

Yeah it remains to be seen and it's encouraging to hear the new government focusing on infrastructure investments in the future so that would definitely be helpful for the economy in the UK and also helpful for the industry as well but it's too early to tell and too early to see any real improvement so we expect the market to be slow for another 12 months but encouraging for the future. Got it thank you.

Next question is from Staffan Bülow from Nordia please go ahead.

Good morning and thank you I just have one question and that is regarding the bidding margin I recall last year on the capital market you showed a graph of a bidding margin and how that has developed since 2019 and as of Q3 2023 it was around 9% so I was wondering if you could elaborate on how that bidding margin has developed in the last quarters since then.

Yeah hi Staffan this is Magnus I think you can safely say that the bid margin is around the same level as we had in as we reported at the capital markets day then.

Okay thank

you that's

clear. As a reminder if you wish to register for a question please press star 1 on your telephone.

Operator do we have anyone else calling in or is the line now empty?

The question is the queue is empty and we have no more question at this time.

Okay very good so that means that we have answered all the questions that you had for us today. If you have any more questions afterwards don't hesitate to reach out to the investor relations team and myself. A recorded version of this audio cast will be available on our webpage later today and we will be back with more comments on our third quarter report in the beginning of November. So I will now close this press conference. Anders, Magnus thank you for your presentations and answers here today and for those of you that have been listening in thank you so much and have a great day.