Projects are the core of Skanska's operations. Value is generated through the thousands of projects the Group executes each year. The goal is for every project to be profitable while being executed in line with Skanska's ambition to be an industry leader in sustainability.
Skanska operates in three business streams:
- Residential Development
- Commercial Property Development
Skanska's business model
How we create value
Multiple synergies within the Skanska Group generate increased value for shareholders. The main synergies are operational and financial.
Operational synergies are primarily generated by using the local, specialized expertise found in the various Business Units on a global scale. Units from different business streams often collaborate on projects, which reinforces their customer focus and creates the necessary conditions for sharing best practices, while ensuring efficient utilization of the Group’s collective expertise and financial resources. Units in the same business stream also collaborate to make better use of expertise or size. Business Units establish geographical clusters to share resources and expertise, with shared activities in procurement and production also boosting efficiency.
Skanska’s Construction business stream does not tie up capital but instead operates with free working capital. The free working capital combined with the profits generated by the Group, as well as its ability to leverage up its balance sheet to borrow money, enables the financing of investments in Project Development, which generate an excellent return on invested capital. These investments also create new contracts for the Construction stream that generate a profit. This is illustrated in the image above.
Size provides competitive advantages
By being a market leader, Skanska is well positioned to meet the highest expectations of customers. The Group’s size and financial strength give Skanska an advantage in the most complex assignments, where collective experience and know-how are used to meet customers needs. The Group’s operations are based on local Business Units with good knowledge of their respective markets, customers and suppliers. These local units are backed by Skanska’s brand and financial strength as well as Group-wide expertise and values. Consequently, Skanska is both a local company with global strength and an international construction and project development business with a strong local presence.