Skanska's financial targets are to ensure that Skanska creates value for shareholders, as well as reflecting the business environment in which Skanska is active.
Financial targets 2016-2020
Skanska’s business plan for the period 2016–2020 sets financial targets that best reflect the profitability of operations and show the Group’s financial capacity for investment and growth. The operating margin is an expression of the profitability and efficiency within Construction. The margin is dependent on the mix of contract types and the different geographical markets. Return on capital employed and on equity are measures of how well lender and shareholder capital are being used (capital efficiency), and are considered fair measurements for the Project Development business streams and the Group, respectively. A Group target for financial strength, measure financial position and investment capacity. The latter is derived by comparing adjusted interest-bearing net receivables/net debt to limits set by the Board of Directors.
Outcome - 2019
The operating margin in the Construction business stream was still below the target. Underlying profitability has improved, as a result of a strategy that include improving the performance of current projects through more proactive risk management, a stronger commercial focus and increased cost efficiency. Project development continued to perform on a high level, topping the target of at least 10 percent. Commercial Property Development had yet another record year in 2019 with an all-time high in gains from divestments surpassing SEK 4.2 billion.
In 2019, return on equity of 21.4 percent, was above target. Skanska’s financial position remains strong.
|Area||Targets 2016-2020||Outcome 2019||Goal met|
Average margin ≥ 3.5%
|The operating margin was
|Project development||Annual return on capital employed for the combined project development operations ≥ 10%||
Return on capital employed was
Return on equity ≥ 18%
|Group: Return on equity was 21.4%||Yes|
|Financial strength||Limit of SEK -9 billion in adjusted interest-bearing net receivables (+) / net debt (-)||Adjusted interest-bearing net receivables (+) / net debt (-) were SEK +3.2 billion||Yes|