*
Skanska op income SEK 394 mln vs estimate 854 mln
*
Swing to loss in residential and commercial property
development
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Co sees weakness in property development over coming year
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Construction order intake dips year-on-year in
construction
(Adds quotes, background, detail)
STOCKHOLM, May 4 (Reuters) - Swedish builder Skanska reported a sharp fall in operating earnings for the
first quarter on Thursday as central bank rate hikes and soaring
inflation weighed on real estate markets, hitting its property
development arms.
The Nordic region's largest builder, and one of the biggest
in the United States, reported an operating profit of 394
million crowns ($39 million) in the quarter, down from 1.85
billion a year earlier.
That compared with a Refinitiv SmartEstimate of 854 million
crowns.
Soaring inflation and aggressive interest central bank rate
hikes has weighed on activity in residential and, to a lesser
extent, commercial property development in recent quarters,
above all in Skanska's home market Sweden. Meanwhile,
construction orders have held up well.
"For Residential Development, activity in the market remains
low, impacting revenue and the number of sold units in the first
quarter," CEO Anders Danielsson said in a statement.
"Buyers in the affordable segment in particular are
adversely affected by increased interest rates and inflation,
reducing purchasing power."
Swedish housing prices have fallen by double digits since the Riksbank's tightening cycle began in earnest a year ago. While the decline has appeared to slow in the early months of this year, many economists predict further fall.
Skanska forecast weak markets for both residential and commercial development over the coming year while guidance for construction, which accounts for the brunt of group revenues, was mixed, but with continued strong activity in the United States.
Skanska's residential and commercial property
development divisions both swung to loss.
Order bookings for Skanska's construction business fell
to 25.8 billion crowns in the quarter from a year-ago 30.0
billion.
(Reporting by Niklas Pollard, editing by Anna Ringstrom)
