Skanska Investment Story Profit with Purpose
We build for a better society. European Spallation Source, Lund, Sweden Skanska in brief Our business streams
− One of the world’s leading project development and construction groups − Operations in the Nordics, Europe and USA − 2020 revenue of SEK 159 bn − 32,500 employees − Listed on Nasdaq OMX
Local presence, global strength
43% Norway Finland Well diversified USA Sweden 40% Revenue EBIT Denmark United Poland Kingdom 9% Czech Slovakia Construction 17% Republic 8% Hungary Romania 40% 43% Residential Development Commercial Property Development
% of total revenue at Dec 31, 2020 83% 17%
% of total revenue and operating income at Dec 31, 2020
2020 Investment story 2 Why invest in Skanska? Skanska is a market leader in its selected home markets − Supported by strong trends in demographics, urbanization and sustainability − Increased need for new and more sustainable solutions drives investments in infrastructure, healthcare, housing, offices and education with innovative, sustainable and climate-smart solutions − Our financial strength, deep knowledge and foresight, and drive to be at the forefront of sustainability enable us to offer compelling solutions contributing to sustainable futures for our customers and society and a solid business model − Through an integrated business model, positive cash flow from Construction is continuously invested in Project Development for enhanced returns that creates value for shareholders − Driven by our values and business model, we helps shape sustainable futures for customers and society as well as attractive long-term shareholder value.
2020 Investment story 3 Global trends and key market drivers Global trends such as urbanization and climate-smarter societies are driving investments in resilient infrastructure and increasing demand for sustainable facilities.
Climate Digitalization impact
Economic Urbanization development and Partnership and changing demographic is the key geopolitical changes landscape
2020 Investment story 4 Where we can make a positive impact in society
Promoting community Climate-smart solutions investment, diversity and that cut carbon and build inclusion resilience
An ethical role model Pushing forward the industry’s safety standards
2020 Investment story 5 One Skanska business model
Free working capital
Investment opportunities Revenue clients Construction Project Development External financing Revenue with associated Internal contracts Development gains are generated contract profits and are realized upon divestment
Operating margin ≥3.5% Return on capital employed ≥10%
Operating margin 2.5% Return on capital employed 12.2%
Return on equity ≥18%
Return on equity 26.0%
Financial targets Dividend 40-70% of profit
2020 Dividend 42% of profit
2020 Investment story 6 A history of competitive returns
Total Annual Shareholder Return, Return on Equity Dividend 5 years
45% 10 6% 16% 9 40% 14% 8 35% 12% 7 5% 30% 4% 10% 6 3% 25% 5 8% 20% 5% 4 6% 15% 2% 3 9% 10% 4% 4% 8% 2 5% 5% 1 2% 2% 0% 0 0% 0% Skanska OMX SBI* DJ Titans 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 B Stockholm Con & Mat GI Index Extra dividend, SEK Ordinary dividend, SEK Outcome Average Target Price return Dividend yield Dividend yield, % *SBI: Strategic Benchmark Index consist of companies that, taken together, reflects Skanska’s operations
2020 Investment story 7 Targets
Target Outcome 2020 Project Development Return on capital employed ≥ 10% 12.2% Construction Operating margin ≥ 3.5% 2.5% Group Adj. Interest-bearing net receivables (+)/net debt (-) Financial strength, SEK bn limit of SEK -9 bn 16.0 bn
Return on equity ≥ 18% 26.0% -50% until 2030, Carbon reduction neutrality by 2045 -9%
2020 Investment story 8 Skanska Group carbon emissions 2015 – 2020
450 3 400 350 -34 % 300 2 Absolute carbon 250 reduction 200 e (Thousands) 2 150 1 100
Tonnes CO 50 0 0
2015 2016 2017 2018 2019 2020 Intensity (total emissions/MSEK revenue) Group Scope 1 Group Scope 2 -36 % Targeted Emission Reduction 50% Target Line Intensity (total emissions/MSEK revenue) Intensity carbon reduction Scope 1: direct emissions from owned or controlled sources Scope 2: indirect emissions from the generation of purchased energy (carbon/revenue)
2020 Investment story 9 Strong balance sheet
SEK M According to target of financial strength: 30,000 Adj. Interest-bearing net receivables (+)/net debt (-) limit of SEK -9 bn 25,000
20,000
15,000
10,000
5,000
0 2015 2016 2017 2018 2019 2020
Investment capacity Investments in Project Development
2020 Investment story 10 Increasing value contribution from Project Development Group EPS vs. unrealized Project Development gains Per share 35
30
25
20
15
10
5
0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Group EPS Unrealized gains per share, Project Development, less 10% standard tax
2020 Investment story 11