Skanska AB (publ)

Good morning and a warm welcome to the presentation of Skanska's third quarter report for 2025. For those of you that don't know me, I'm Antonia Junlilind. I'm the senior vice president for Skanska's investor relations. And here on stage in our studio today, I've got president and CEO Anders Danielsson and CFO Jonas Rickberg. We're going to follow the typical structure of these press conferences. We will start by walking through the past quarter to provide you with a business, financial and market development update. And after that initial presentation, we will move over to questions. There are two ways in which you can ask questions. If you're watching online, then I encourage you to use the telephone conference number or the HD audio link, and you can just follow the instructions by our operator, George, and he will guide you through. If you are here in the room with us, then you can, of course, just ask questions by raising your hand. We will bring a microphone to you and we will take it from there. But yes, I will no longer hold you off. We'll take you through the third quarter. Anders.

Thank you, Antonija. Good to see everyone. Before we jump into the figures, I want you to look at the picture here on the slide. That's called The Eight, one of our project development office buildings in Bellevue, part of the greater Seattle area in the United States. And it's actually a Class A building, one of the biggest or the biggest commercial investment we have had. And we're also proud to be able to announce in a couple of years back that we have the greatest, the biggest lease here as well. And today, the office building is leased more than 80%. So it's a great, great building. I'm happy to say that we're going to host the Capital Market Day in a few weeks in the same building. So I look forward to seeing everyone who will show up there. And we will also have a deep dive, of course, of the US operation at the time, together with a commercial direction forward for the group. But now, the third quarter. It's a solid quarter. Solid third quarter. The construction is performing very well in all geographies, and we have strong market generated by a solid project portfolio. In residential development, we have very strong sales and margin in our central European business, so very high performance there. The Nordic market remains weak, which impacts both the sales and the profitability level. Commercial property development, we have two large lease contracts signed in the quarter and I will come back to the profitability level here. Investment properties, stable performance, stable cash flow and a stable leasing ratio. Operating margin in construction is 4.2%, very high level, very high compared to last year, 3.6%, and well above our target, as you know. Return on capital employed in product development, 1.4%, and that's on the low level, below our target, but it's driven by a slow market in different parts of our operation. Return on capital employed in investment property is 4.7%. Stable performance there on a rolling 12. Return on equity 10% on a rolling 12 months basis. And we continue to have a solid performance on the financial position. And that's very important for us, of course, and a competitive advantage going forward. and we also managed to continue to reduce the carbon emission and now we are at 64 reduction compared to our baseline year in 2015. so i will go into each and every stream starting with the construction Revenue increase in local currencies, 7%, which is good. Order bookings is around 40 billion. And we do have book-to-bill rates over 100% on a rolling 12-month basis. So we have a very good position when it comes to order backlog. I will come back to that, but it is on historically high levels. And operating income close to 1.8 billion. Increase from last year, 1.5. And again, the operating margin is very strong here, 4.2%. So strong result and high margin across all geographies. And that's very encouraging and also proof that we have kept our discipline and we have been successful in the strategic direction here. And we have a rolling 12 months group operating margin of 3.9%. Solid order intake for the group and a strong backlog. Moving on to residential development. Revenue is pretty much in line with last year. We have sold 383 homes and we have increased the started homes, mainly driven by the Central European operation, 572 started homes. And we have an operating income of 131 million, representing a return on capital employed on 5.9% on rolling 12. very strong sales and result in central europe we have started two new projects and we have a with a very good pre-sale level which drives of course the sales in the in the quarter the nordic housing market remains some weaker and nordic businesses recorded very very small loss here but the Overall, it's driven by a weak market. We can see some signs of improvement in the Norwegian operation here, but overall quite slow. Commercial property development operating income is minus 397, which is driven by write-downs in impairments, write-downs in few projects in the US properties. We'll come back to that. But we also have a gain on sale of 377 in the quarter. Return on capital employed is zero, rolling 12. We do have 15 ongoing projects representing 15 billion in investment upon completion of those projects. And we have 22 completed projects representing 18 billion in total investment. The leasing ratio in those completed projects is fairly good. We are at 77% leased. So we have a good position there, giving us a positive cash flow. Three project investments and one internal land transfer in the quarter. The result includes these impairment charges, of course, in the US. And we have two large lease contracts signed in the same quarter. Investment properties, operating income stable, 143 million. And we do have a stable occupancy rate of 83%. It was the same as last quarter. The total property values continue to be on the same level, 8.2 billion. If I go back to the construction stream now and look at the order bookings, and here you can see over time for the last five years, the order backlog, the bars, the blue bars here. You can also see the rolling 12 order bookings, the light gray line and the order bookings per quarter the orange and also the revenue the green rolling 12 which you can see is has had a slow increasing trend the last few years and that's thanks of course that we have been successful in increasing the order backlog which again is on historically high level And you can see the yellow line, the book-to-bill ratio over 12 months. So I think it's important here to look at the rolling 12-month trend, because when it comes to order bookings, it can fluctuate quite a lot between a single quarter. And that you can see also when you look at the order intake in the quarter, which is down from 50 billion to around 40 billion. And we'll come back to each and every geography here. But we are in a very good position. And if I look at the order bookings per geographies, you can see here that Overall, we have a book-to-build ratio of 106%, and we have over, well above, in the Nordic and European operation, slightly below in the US operation on a rolling 12-month basis. But look at the months of production, 19 months in overall, and I'm very confident that we have a very good position. So we can continue to be selective, going for projects that we see we have... competitive advantage and that we have a good track record as well for the future. So with that, I hand over to Jonas to go through the financials.

Thank you, Anders. And we'll continue here with the construction side. And as you can see, the revenue is fairly flat here in SEK, but it's actually up then with 7% in local currency. The green line, we're actually then having a gross margin that has increased to 8% in the quarter, which really emphasizes the great quality that we have in the order book. We continue to have a strong and good cost control within the stream, and that is then generating, that you can see over the line there, but that is also then showing here with a good result in the operating margin of 4.2%. Operating income of 1.8 billion, an increase with 22% versus last year. Worth mentioning again, I would say, is the rolling 12 of 3.9% in operating margin. Looking here on the geographies, we still see that we have a solid delivery for all the areas, Nordic Europe and US. That sticks out a little bit on the positive side here is actually Sweden with 4.9. That is building up from a strong portfolio right now. And it's very clear natural trends within the quarter and so on. So if we summarize the construction line here, the construction stream, we can see that we have a strong performance in all geographies right now. We have actually a five-year track record here on margins that are on or above our target of 3.5%, which is strong. And of course, as you said, Anders, we have 264 billion here in our order book that we can harvest from, and that is a real strength going forward. Moving on then to residential development. Here we can see the income statement, and of course, you can see that half of the revenue actually comes from Central Europe, which is really a strength from that delivery point of view. We started two new projects in Central Europe, in Prague and Krakow, and that had a really good pre-sales level as well. We have reduced S&A significantly over the years, and right now we have an organization that is set for higher volumes going forward to really get the leverage here on the S&A going forward. Also, please note that we have the upward trend on the Roebling 12 operating margin at 8% here, which is strong. Looking at the operating income or income statement biographies, you can see here very clear that Europe of 159 million, that is really lifting or keeping up the strong performance here in the stream on a margin of 17.5%. Secondly, here you can see that Nordic is a little bit on the weaker side, and that is mainly driven by low revenue, actually low sales, few units sold, and also it confirms a trend here that we have said before that buyers really would like to buy close to completion, and that we are selling mostly from produce that will lead a bit weaker margin that is reflected here. Moving on to home started, you can see that we have out of the 572 units, we have 430 that is coming from Central Europe, and then 142 in Nordic here, and that is actually that we have started places here in Oslo and Uppsala and Öresund. And looking at the homes sold of the 383, you can see that 240 is actually then coming from pre-sales started in Central Europe and 141 from the Nordic areas here. Rolling 12 lines, you can see that we are very balanced when it comes to the sold and started homes, I would say. If we turn into our stock situation, you can see that we have the homes in production actually then ticking up to a level of almost 2,900 homes in production, and that is up since Q2. Unsold completed homes is also coming down from Q2 level of 486, which is good as well. If you summarize the residential development area, we can see that we have a good performance, despite we have a challenging situation in the Nordic, but it's really lifted up from the central European unit here. And also that we are preparing here good projects within pipeline for start when the market condition is in a better place as well. If we move to commercial development, you can see here that revenue side, there are three divestments, one in Poland and two in Sweden. And also we have the internal sales of land in Europe here. Impacting the operating income is actually the gain from sales, mostly related from a situation of 234 million here in the gain of sales. Also, as we were into, we had an asset impairment in US of 658 million. And as we have mentioned earlier, it's low transaction volume in US and it's very slow there. So the visibility is hard to compare there. So it's a few units only. The impairment has done, of course, to really ensure that we are having the right balance, the assets value in the balance sheet. And we are doing this continuously over quarters. And it's very clear that it has no cash flow impact. And it's then representing a little bit more than 3% of the book value of total US portfolio. Moving on to unrealized and realized gains. Here we can see that we had 5 billion in the quarter, and it's an upward trend, which is good. And that is then a sign, actually, of the fact that we are starting to see the positive impact of slowly starting new projects here with profitable and solid business cases. We have a situation, we have a good land bank in attractive locations that we really would like to build and harvest from going forward and actually making sure that we have solid business case for this going forward. In the portfolio, we have unrealized gains of 10% here in Q3. And as we have said many times before, it's very, very quite much in the portfolio between the different regions of started and older, more as new product versus older product and so on. If we move on here to the completion profile of all the commercial development properties that we have, we have 18 billion of already completed and 22 projects. And as we can see here, it's on the purple line, it's 77% in leasing and that is up from 74% last year. So it's a good trend there. Also, if you look into the green dots, and if you are very particular comparing them to the last quarter, they all have moved up. And that is a real strength here that we are leasing more with ongoing projects. And in Q3, we also made sure that we are having a better outlook here for Central Europe and Nordics when it comes to the commercial property. And it's very much based on the fact that we can see that there's better access to depth as well as the pricing on depth and so on. And that is driving a little bit the market here. And that is, of course, very encouraging to see. Focus even more here when it comes to the leasing part of commercial operation. We can see that we have in the bar there to the blue, last right, you can see 77,000 square meters let, and that is actually then coming from two big leases, H2 offices in Budapest, as well as Sonalink that we have started there. Also, we can see, I'm very glad also that we have a trend shift here. Average leasing ratio of the ongoing produce is 64% versus then compared to completion of 55%. And that is a strength, of course, that we are increasing the leasing versus then the completion that we have. To sum up, we have a strong leasing activity in the quarter, and of course, we see the importance here to turning all the completed assets that we have and translate them going forward, and also being able to make sure that we have solid business case to start with when the market is ready and so on. We have a lot of things to sell, but we're also very cautious about how... We have a very patience and good value for the... We really would like to capture the good value that we have created over the years. So very good patience here to sell the good things that we have, obviously. When it comes to the investment properties, it's stable operational and financial performance within the stream. Operational income is possibly impacted by a reassessment of the property value of some units here, and it's actually then 53 million up. And that is also a sign that we can see that we have better outlook here for the Nordic markets real estate as well. Moving into the income statement, here I would like to take the focus a little bit on the central items, that is 58 million, and that is actually then coming from a positive effect from release of provision of the asset management business related to some milestones in the projects there. Also, we can see that cost varies between quarters and so on. And as I said last quarter too, we are on the level that we are representing more or less the first half year of this year for the full year. And we are seeing a little bit higher cost here due to the fact that we have outsourced IT infrastructure that is impacting this year. But of course, it will be better here going forward once we can see these synergies. Also, looking at the elimination line there, you can see that that is then connected to the internal transfer, that of 234 million recognized in the commercial development area. And no swings really in the financial net, and we actually then recorded a profit of 1.3 billion and an earnings per share increase by 36% versus last quarter. Moving into group cash flow, we can see that we had a zero cash flow for the quarter and that was a result of that we are in a net investment for residential and construction stream right now. If we lift ourselves a little bit more and look into the bigger trend of rolling 12, we can see that we have a really good underlying cash flow from the business operation and we can see good and continue to have good level of negative working capital as we will come into soon as well. And also we can see that we continue being a net divestment cycle that we really would like to be and releasing more cash and so on. Focusing on the construction and the free working capital, you can see it's fairly flat there between the Q2 and Q3. And we are quite comfortable with these levels as we have right now and so on. Also worth mentioning here is that the higher bars here last year, quarter three and quarter four, are not representing really because it was very much connected to mobilization of some milestones in big projects that we have an advantage of. And of course, we have 18.2% here in relation to revenue, which is strong. Moving on to the investment side, as mentioned, the quarter we had net investment for the group, but rolling 12 period, we remain on the net divestment territory here. This means that we are taking down the capital employed level within residential and commercial development here, as you can see in the bottom from 64 billion then to 62 billion and so on. Looking ahead, of course, as I said, we have a few assets on the balance sheet that we really would like to transfer and making ready for divestments. We are starting and preparing new products with really good solid business case as well. But the timing of these flows are of essential that the market and the demand and supply are meeting. Then, of course, we will shoot off these. uh for sure once we see that we are secure as succeeding here with the divestments we're making sure that we will then invest more going forward If we look into the liquidity point here, we can see that we have a good liquidity situation of 28.1 billion here. And that is then a super strong position. And we have a loan portfolio that have a balanced maturity profile as well. Finishing off here with the financial position, which is very, very strong, as you know, who has followed us. We have an equity of 60 billion, and that is almost a level of 38% equity ratio. We have an adjusted net cash of 9.3 billion. And as you were into Anders, it's a good situation to be in and also good for all our customers that are really relying on us and making sure and trusting us in the fact that we are here to complete the projects no matter what. So we have the financial strength to do that, I would say. And by that, handing over to you, Anders.