Skanska AB (publ)

Good morning and a warm welcome to the presentation of Skanska's second quarter report for 2026. I'm Antoni Ljunglind, Senior Vice President for Skanska's Investor Relations. And here with me to present the second quarter report is our CEO and President Anders Danielsson and Group EVP and CFO Pontus Winqvist. So shortly they will take you through a business and performance update, look at the market outlook for the coming 12 months and provide an update on our financial position. And after that initial presentation, we will open up for questions. So if you have a question, please use the telephone conference provided in the invite, telephone conference number that we have provided and then just follow the instructions by the operator and we will get back to you and answer your questions in a little while. But now I will hand over to you Anders to start the presentation.

Thank you, Antonia. Before I start, I want you to look at the picture. You can see the Portrait Bay Bridge in Seattle, where we are replacing the existing Portrait Bay Bridge to meet higher standards when it comes to seismic resiliency standards. And we see a robust demand and good pipeline of projects for traditional infrastructure. And this is a good example of that and our capabilities and market position in the US. If I look at the second quarter, it's a solid performance. Construction, very strong operating margin and a record quarter when it comes to order intake. Residential development, strong results in Central Europe, but Nordics are impacted by low volumes, provisions and restructuring costs. Commercial property development, two project investments, and we also have U.S. asset impairment charges in the quarter. Investment properties delivered stable results, and we also divested the PPP asset I4 in the US during the quarter. Operating margin in construction 4.3%, also if you look at the rolling 12 months, 4.3%. And the return on capital employed in product development on a low 1.3%. a return on capital employed in investment properties, decent, 4.8%, and a return on equity of just shy of 11%. We maintain a robust financial position, which is critical for us, and we have reduced the carbon emission with 64% since the baseline year 2015. So if I go into each and every stream here, start with construction. Revenue pretty much in line with last year. We have a record high order bookings of 68 billion, which gives us a book to build ratio of 114% on a rolling 12 months basis. And the record high order backlog close to 300 billion Swedish. Operating income 1.8 billion, again representing an operating margin of 4.3%. So strong performance overall. I go into the residential development. Revenue was 1.7 billion. And we have solid sales and strong profitability in Central Europe. Weaker result in the Nordics due to weaker market. And the Nordic operation are impacted by low volumes, provisions and a restructuring cost. And we have started one project in Central Europe comprising 156 homes. And we started two small projects in the Nordics. Moving on to commercial property development. Operating income is minus 170 million in the quarter. And that's due to the asset impairment charges on a few US properties that negatively impacted the results. But we have a gain on sale in the quarter of 217 million. We have 17 ongoing projects. which representing 12.8 billion in total investment upon completion. And we have 16 completed projects, which correspond to 18.5 billion in total investment. In these completed projects, we have a decent leasing ratio of 77%. So we have a positive cash flow from those assets. Two residential rental projects were started and divested in the quarter. And we also handed over four previously sold properties to external buyers. Moving on to investment properties. Very stable operating income of 85 million. We have also a good economic occupancy rate of 83%. And the portfolio today consists of seven high quality office properties in Sweden with a total property value of 8.3 billion and a solid performance in the second quarter. I moved back to construction to look into the order bookings. Here you can see order backlog, order bookings over time, over five years. And you can see on the blue bar here, which is the order backlog, which is on historically record high levels. And it's a good, I would say it's a good quality in the backlog. And we have been successful in positioning ourselves and winning projects in in a position of self where the market is strong and good. And that goes for pretty much all the geographies. And you can see almost touching the 300 billion mark here, which is good. And if I look into the different geographies when it comes to order bookings. So here you can see very, very strong order intake in Sweden and US, which contributes to the 68 billion for the single quarter. And here you can also see the book-to-bill ratio rolling 12, ending up at 114%. which corresponds to 21 months of production. So it's unusually high also when we look at that. So with that, I hand over to Pontus to go into the details. Thank you, Anders.

Then starting with construction and the income statement. As you may remember, we had a somewhat weaker start of the revenue in Q1. You can see that we are now catching up by especially growing the Nordic business. US revenue is still somewhat behind, but You have all seen that we have a strong order booking in the quarter and you also saw that we released another order here during the day. So quite confident that we will gradually see an increase also with the US revenue. Totally, the revenue increased with 1% if you adjusted for currencies. Selling an admin of 1.7 is resulting in an operating income of 1.8 billion for the quarter. and a strong operating margin of 4.3%, both for the isolated quarter and for the rolling 12-month period. Looking, so... Looking then into the income statement for the different units, you can see that it's a strong delivery overall and I would say especially in the Nordics and in the US. Operating income increased by 12% in local currencies and resulting then in a margin of 4.3% compared to 3.9% for the same quarter last year. Going into residential then, you see here that we have a lower revenue compared to last year. This is mainly because of fewer started and then consequently fewer sold units, resulting in an operating income of 25 million and a weak operating margin, I would say, of 1.5%. For the different units then, we have had a low sales in Finland and Norway. It has been a better sales in Sweden, but still we are selling from a backlog with lower profitability. and added to that we had taken costs for warranty provisions and restructuring for 70 million in this Swedish business. Central Europe is continue to perform on a very strong level, started 156 units and sold 132 units in the quarter. And they came out then with 122 million in operating income, which is then 23% in operating margin. If you look into the rolling 12 months margin, it's 18% for the central European business. If you were excluding the restructuring and warranty provisions, the total RD margin would have been 5.6%. In the Nordics, two minor projects were started and, as I said, one larger project with 156 units in the Central European business was started. If you look into the sold unit, the absolute majority of the sold came from either Sweden or Central Europe. I would say that we have stable levels of the homes in production, where more than half is within our central European business. The sales ratio increased somewhat to 55% from 53% by the end of first quarter, and the number of unsold completed is decreasing. from 315 Q1 to 326. And here it's worth to mention that Nordics is decreasing more actually. They are decreasing with 42 units and the central European business is increasing somewhat with the completed unsold, increasing with 18. And that's basically good because we have a positive price momentum in the central European business. Going then into our commercial property development business, we sold two rent residential projects in the second quarter and we had divestments gains of 217 million and those includes also some provisions from previously sold projects. We have, as you heard, made impairments in a couple of our U.S. properties. Total amount of write-downs was 464 million Swedish. And the reason for that is that we have seen increased long-term interest rates within U.S., which also is then resulting in uncertainty among US property investors and therefore we have seen that there is a need to reduce the value of our US portfolio somewhat. When it comes to the development gains in our portfolio, it's stable unrealized gains. We completed one project during the quarter and therefore you can see that it's a slight increase here of the completed properties and the unrealized gains. The completion profile of our unsold products has increased. You can see here the bar far to the left increased from 71 to 77%. One project was completed, so generally you can see that it's a good leasing activity in our completed portfolio. And there are some other, if you're tracking this, other increasing of leasing ratios if you compare to previous quarters. Yes, as I said, stable leasing in the portfolio. We leased out 54,000 square meters in the second quarter and you can see that we steadily are keeping the occupancy rate above the completion rate of our ongoing projects. Investment properties continues with a stable operating income similar to previous quarter of 85 million and an occupancy rate of 83%. There are no changes in the market value and we have an average valuation yield on the portfolio of 4.7%. So summing up the group, you see that we have an operating income from our businesses of 771 million and that includes then the write-downs in the CD business of 464 million and the warranty and restructuring costs of RD of 70 million. On the central line, we have a positive contribution of 334 million, and that includes then a net contribution from our business operation of 559 million. This includes the profit from the PPP portfolio, including the divestment of I4, and also cost from legacy operations. Net financial items of 241 includes interest payments from dispute settlements. Tax rate is the same as we had in Q1 and ends on 24%. Cash flow, we had a very strong operating cash flow during the quarter that was supported by payment and delivery of previously sold commercial properties as well as a positive development of working capital in construction. Also, the dividend was distributed out to the shareholders of 5.9 billion during the quarter. And you can see also after that we had a positive cash flow in the group. continued strong development of the working capital. And by the end of the quarter, it amounts to 33.9 billion. We had 31.6 billion by the end of Q1. And 1.7 of that is based on improved working capital within the business. And especially, I would like to mention that there are milestone and mobilization payments in recently started projects in especially our U.S. business. It's also 0.5 billion in a positive currency effect of the working capital. Investments and divestments. We had strong net divestments during the quarter mainly then because the earlier mentioned delivery and payments of CD assets also already contributed with net divestments during the quarter. This also then resulted in a reduced capital employed and sum up to 63.4 billion. We had 66.3 billion by the end of Q1. When it comes to available funds, it has went down somewhat from 27.7 to 23.1, of which 7 billion is unutilized credit facilities. And the reason for the decline here is that we have choose to reduce some of our unused credit facilities and also repaid some parts of our external debt in order to have a more efficient management of our financial position. Then we continue with a strong financial position with an adjusted net bearing interest net receivable of 8.7 billion. You can say that the reason for the reduced adjusted net cash position, even with the strong operational cash flow that I mentioned, is explained by a lot of the cash that has been coming in is coming into our joint ventures and then is treated as a restricted cash and that is then deducted from our adjusted net cash position. So by that I hand over to Anders and comment about the market outlook.