Financial targets & outcome
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 a number of targets. These financial targets are judged to be those 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. The Group's financial strength enables continued investments in Project Development.
Operating margin will be greater than or equal to 3.5 percent.
The combined return on capital employed in Skanska's Project Development operations will be greater than or equal to 10 percent. As of January 1, 2019, Infrastructure Development is no longer a business stream. Consequently, the Return on capital employed target for Project Development is no longer including Infrastructure Development. In addition, return in Commercial Property Development business stream is based on yearly earnings and not on successive value creation.
Return on equity will be greater than or equal to 18 percent.
Group - Financial strength
As of January 1, 2019, Skanska has a new target measuring financial strength by comparing to limit, set by the Board of Directors, of SEK -9 billion in adjusted interest-bearing net receivables (+) /net debt (-).
Outcome - 2019
TThe table shows the financial targets for the period 2016–2020 as well as the outcome for 2019. In 2019, the financial targets for Project Development, the Group and financial strength were met.
|Area||Targets 2016-2020||Outcome 2019||Goal met|
|Construction||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 10.3%||Yes|
|Group||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|
Read more about how Skanska plans to reach the targets on Strategy.