Skanska Building profitable growth 1
We are Skanska 2
Skanska Investment Story Skanska is a world leader Construction and Project Development Focused on selected home markets in the Nordics, other European countries and North America Supported by strong global trends in demographics, urbanization and energy Strong focus on green construction, health and safety and ethical business practice with a competitive offer Meeting requirements in the most complex assignments where price, expertise, comprehensive solutions and life-cycle costs all are of crucial importance, such as: PPP projects, health care and hospitals, data center technology, bridge rehabilitation and green construction and an attractive business model Positive cash flow from Construction is continuously invested in well-defined project development for enhanced returns that creates value for shareholders, The business model has provided a history of strong returns and consistent dividends and we will grow. With a maintained focus on profitability the Construction business will grow faster than the market and investments in project development will increase 3
Skanska in brief Facts in brief Skanska is one of the world s leading project development and construction groups Skanska offers expertise in construction, development of commercial properties and residential projects as well as in public private/partnerships Revenue of SEK 145 bn in 2014 No of employees 58,000 Revenue, operating income (EBIT) Revenue EBIT Construction Residential Development Commercial Property Development Infrastructure Development Share information Market cap. SEK 69 bn No of shares 410.8 million Market NASDAQ Stockholm Ticker SKA B ADR SKSBY (OTC) Indices/member Dow Jones 30 Titans Construction Dow Jones STOXX 600 S&P Global 1200 S&P Europe 350 FTSE4Good UN Global Compact Nordic 260 Carbon Disclosure Leadership Index Our home markets United States United Kingdom Denmark Norway Czech Republic Sweden Hungary Poland Finland Slovakia Romania 4
Local presence global strength Nordic countries 40% of 5 year EBIT United States Construction Residential Development Commercial Property Development Infrastructure Development Sweden Finland Revenue 2014, SEK bn: 64 EBIT 2014, SEK bn: 3.6 Norway North America 37% of 5 year EBIT United Kingdom Denmark Construction Commercial Property Development Infrastructure Development Revenue 2014, SEK bn: 50 EBIT 2014, SEK bn: 2.0 Construction Residential Development Commercial Property Development Infrastructure Development Other European countries Construction Residential Development Commercial Property Development Infrastructure Development 23% of 5 year EBIT Revenue 2014, SEK bn: 35 EBIT 2014, SEK bn: 1.8 Czech Republic Hungary Poland Slovakia Romania 5
Strengths Developing communities Employees Financials 6 Strong focus on clients and users Strong local roots in selected geographical markets Diverse operations covering various sectors Complete solutions from planning to handover Driving sustainable development Strong corporate culture with shared values Optimizing value through customized solutions Skilled in project development and execution Committed and responsible Developing skills and sharing experience Solid balance sheet Solid cash flow Proven business model with synergies Strength to realize business opportunities Long-term value creation
How we do it 7
Global market trends and drivers Demographics & Urbanization Urbanization and changes in demographics drives investments in Mass transit, roads and bridges Schools Health Housing Water Waste treatment Sports Culture Global demand for energy and energy efficiency will increase dramatically Percentage of population in urban areas in the developed world 100 % 80 60 40 20 0 Consumption per capita Tonnes oil equivalent 2010 Energy, Green & Technology 8
Taking Advantage of Global Trends Geographic Home Markets Nordic countries North America Other European countries Global trends Demographics & Urbanization Energy, Green & Technology Klipporna, Malmö, Sweden Oculus, New York City, U.S. M25, London, UK New Karolinska Solna, Sweden Florida Polytech, Lakeland, U.S. Swinna Poreba, Poland 9
Business model The free working capital in Construction combined with the profits generated by the Group enables the financing of investments in project development. Revenue from external clients Construction Investment opportunities Project Development EBIT 3.5-4.0% Internal Contracts generated by investments in project development. ROCE 10-15% Financial targets Return on equity 18-20% Dividend 40-70% of profit 10
Business model Outcome 2014 Free working capital in Construction SEK 18 bn Revenue clients Construction SEK 129 bn Investment opportunities Internal contracts SEK 15 bn Project Development EBIT 3.5% ROCE 10.4% Return on equity 20.1% Dividend 68% of profit 11
Track record 12
A history of competitive returns Total Shareholder Return compared to indices Dividend Return on capital employed 13
Where do we take the company 14
Our journey Rapid expansion 1997 2003 Strong top line growth Acquisitions and project export Consolidation 2004 2010 Improved profitability Operational stability Home market strategy Risk management focus Profitable growth 2011 2015 Competitive returns Increased investments in project development CD in US, CEE and the Nordics RD in Poland ID in the Americas Growth in Construction Americas and CEE Power, wind, waste treatment, green retrofit, industrial and mining Geographical expansion Maintained excellence in capital efficiency 15
Summary 16
Investment highlights Strong global trends Demographics & Urbanization Green & Energy Leading market position Leading market positions on all our home markets Construction to grow faster than the market with maintained focus on profitability Risk diversification Geographical footprint Sector footprint Financial synergies Strong cash flow from construction invested in high return project development Increase investments in project development Strong cashflow Attractive business model Net cash position Attractive yield A history of competitive returns 10 years of maintained or increased dividend 17