Skanska's Strong Order Pipeline and Sector Tailwinds Position It for US Growth

Skanska AB (STO:SKAB), a global leader in construction and development, is leveraging its robust order pipeline and deep sector expertise to capitalize on growing demand in the U.S. infrastructure and higher education markets. With a backlog of $27.2 billion (SEK 263.6 billion) and recent contract wins totaling over $1.7 billion in Q1 2025, the company is well-positioned to benefit from sector tailwinds driven by infrastructure modernization and university expansion initiatives.

Infrastructure Projects: Anchoring Growth Amid Sector Challenges

The U.S. civil engineering division, which contributes 60% of Skanska's total revenue, has secured major contracts in transportation and public infrastructure. These include:
- The $303 million Rourke Bridge Replacement in Massachusetts, a seven-span design-build project set to finish in 2030.
- The $421 million Raritan River Bridge Replacement in New Jersey, a complex rail infrastructure upgrade.
- The $450 million Logan Airport Terminal E Parking Garage, a sustainable project incorporating solar panels and advanced traffic systems.

These projects reflect Skanska's focus on high-value public-sector contracts, which are less volatile than private projects. The U.S. civil division's 132% book-to-build ratio underscores its ability to maintain a healthy backlog despite macroeconomic uncertainties.

Higher Education: Modernization Drives Demand, Despite Delays

In higher education, Skanska's $240 million supplemental contract for Virginia Tech's new College of Engineering building highlights the sector's long-term growth potential. The project, which adds a 28,500m² facility with advanced labs and collaboration spaces, aligns with universities' need to modernize infrastructure to attract students and researchers.

However, the sector faces delays due to broader economic and political headwinds. Skanska's CEO, Anders Danielsson, noted that institutions are adopting a “wait-and-see” approach amid trade policy and Federal Reserve rate uncertainties. Yet, the $60 million UNC Greensboro Library Renovation (booked in Q2 2025) signals sustained demand for campus upgrades.

Financial Strength and Strategic Priorities

Skanska's $1.19 billion net cash position and selective bidding strategy enable it to navigate market volatility while pursuing high-margin projects. The company's focus on projects with clear demand (e.g., bridges, airports) and partnerships with public entities reduces reliance on volatile private-sector decisions.

Investment Case: A Play on U.S. Infrastructure and Resilient Execution

Skanska's 19-month backlog and 3.4% operating margin in Q1 2025 suggest strong cash flow visibility. With U.S. infrastructure spending poised to expand—particularly under bipartisan bills like the 2021 Infrastructure Investment and Jobs Act—the company's expertise in public projects positions it to capture long-term value.

While near-term headwinds (e.g., trade policy risks) warrant caution, Skanska's selective approach and financial flexibility mitigate downside risks. Investors seeking exposure to U.S. infrastructure and higher education modernization should view SKAB as a buy, especially if its stock price remains undervalued relative to its backlog and growth prospects.

Conclusion

Skanska's strategic focus on U.S. infrastructure and higher education sectors, coupled with its robust order pipeline and financial discipline, makes it a compelling investment. As public-sector demand for modernized infrastructure and campus facilities grows, the company is well-equipped to deliver sustained growth.

Investors should monitor upcoming contract wins and macroeconomic developments, but the tailwinds in these sectors are too strong to ignore.