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Investing.com -- Swedish construction giant Skanska has raised its long-standing operating margin target for its Construction division to ≥4.0% from the previous ≥3.5% ahead of its Capital Markets Day in Seattle on Tuesday.
The company reiterated all its other financial targets, including shareholder returns and Property Development targets of ≥10% return on capital employed (ROCE).
Current market consensus estimates project margins of approximately 3.9% for 2025-26, suggesting the new target could potentially translate to a 2-3% uplift in earnings per share.
Jefferies analysts described the upgraded target as "a clear positive reflecting Skansa’s strong order book and project selection criteria, which should continue to drive structurally higher margins going forward."
Despite the positive margin target update, Skanska shares fell 2% on Tuesday. Analysts noted that some market participants may have expected increases to shareholder return targets, which remained unchanged.
Jefferies indicated there might still be potential for higher returns "through the top end of the reiterated payout ratio, or via a special dividend at FY results" and expressed interest in management commentary during the Capital Markets Day.
The firm also welcomed Skanska’s reiterated Property Development targets and anticipated more information on the company’s recovery path in that segment.
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