Skanska takes a hit

During 2016 Skanska’s shares improved by 30%. It went particularly well for the construction company during the second half of the year after Donald Trump was elected president in the USA and promised investment in infrastructure.

However despite great hopes for 2017, profitability has not kept up. In the first quarter operating margins were only 1.6%. On Friday the company notified of a write-down of 420 million kronor for its civil operations in the USA and a write-down of 360 million kronor for its British operations.

The profit in the group’s construction operations was only 0.2 billion kronor, which means the quarter’s profits are expected to fall to 1.5 billion kronor from 1.7 billion during Q2 last year.

Lift for Swedish business

Prior to last week’s G20 summit Japan and the EU announced an agreement on a free trade deal. The Swedish government expects 97% of Japan’s and 99% of the EU’s tariffs will be scrapped. Ann Linde, the minister for EU affairs and trade, stresses the importance of the agreement, saying that two-thirds of companies exporting to Japan today are SMEs.

Five years ago a similar agreement was signed with South Korea, and since then exports have increased by 55%, according to the minister.

Sweden’s services, retail trade and food sectors could all benefit from the agreement, say experts Dagens Nyheter has spoken to.

Prosecutor ends inquiry

Prosecutor Alf Johansson has decided to end the inquiry into elk hunting trips organised by paper making giant Holmen. Anders Borg, the former finance minister, investor Fredrik Lundberg and Pär Boman, chairman of Handelsbanken, were among those questioned by prosecutors investigating allegations of bribery connected to the hunting trips.

Anders Borg expressed relief after the prosecutor ended the inquiry, saying: “I have been certain all along that I acted correctly, but it is still a huge relief that the process has come to an end”.

According to Holmen CEO Henrik Sjölund, the company intends to continue with its hunting trips.

Concerns over tighter monetary policcy

In 2016 Sweden’s national pension funds reported aggregate earnings of SKr 118 billion, corresponding to an average return of 9.7%.

After five years of exceptional growth, which has primarily been fuelled by expansionary monetary policy, there are now indications that monetary policy will tighten.

Kerstin Hessius, the CEO of the Third Swedish pension fund (AP3), has expressed concerns over what will happen when Sweden’s central bank, the Riksbank, starts raising interest rates. She wonders if the adjustment will be dramatic, or orderly, saying that in the worst case scenario it will lead to significant “destruction of capital”.

Sweden focuses on rail network

One year ago during Almedalen week, a group made up of Ramböll, FS Links, Setterwalls law firm, a number of consultants and the US company Hyperloop One, presented plans to build a hyperloop high-speed transportation network, linking the Finnish capital Helsinki to Stockholm.

According to FS Links Mårten Fröjdö, the Swedish government has since been in contact with the group’s consultants, but Infrastructure Minister Anna Johansson says she is unaware of this. While the government is interested in following developments and receiving an idea of the investment cost, Johansson considers a hyperloop network theoretical at the moment, although it could be of interest in the future. The minister says the government’s focus is instead on the plans to build a high-speed rail network, linking Sweden’s three main cities.

In Finland, meanwhile, the group has plans to make the city of Salo home to the first test station for the hyperloop technology.

Gripen could replace Austria’s Eurofighter jets

Amid a dispute with Airbus (ed.), Austrian Defence Minister Hans Peter Doskozil said on Friday that the country’s 15 Eurofighter jets would be replaced early.

New fighter jets will be delivered between 2020 and 2023, and the current version of Saab’s Gripen is favoured to replace the Eurofighter.

Austria would like to strike a deal with Sweden, which via the Swedish Defence Materiel Administration, FMV, is offering 15 single-seater Gripen C, and three two-seater Gripen D jets, the version used by the Swedish Air Force.

Svenska Dagbladet (SvD) reports that Lockheed Martin’s F16 is also a potential candidate, and it is feasible that other alternatives could be in the running.

A deal will need to be struck by 2018 in order for deliveries to be made in 2020, and the Austrian government therefore intends to lease the aircraft to save time.

There is said to be broad political support in Austria to replace the Eurofighter jets, which could be significant as the country goes to the polls on 15 October.

Saab could have an advantage in that the Gripen is already used in two of Austria’s neighbouring countries, and is also being eyed by Slovakia.

Not right now

Finance Minister Magdalena Andersson has investigated several paths forward towards lowering interest rate tax deductions, she tells DI.

Experts, including the Riksbank, the Financial Supervisory Authority, the Swedish National Debt Office and the Swedish Fiscal Policy Council have been calling for these deductions as the most effective measure against Swede’s soaring debt.

The Left Party’s economic policy spokesperson Ulla Andersson, says it is time to override the Moderates on this issue, but Magdalena Andersson says that the issue is not current right now and there are other measures to stop debt growing.

Liberal economic policy spokesperson Mats Persson, says, “The Social Democrats and the Moderates are showing a lack of courage. The day that house prices fall then there will be a tough verdict against the political system, which despite warnings, did nothing.”

Johansson era almost over

Two major changes in the ownership of Ericsson in the past couple of years have dramatically changed the playing field in the telecoms giant and have now led chair Leif Johansson to throw in the towel.

The first incident was a shift of power at Ericsson’s principle owner Industrivärden in 2015. This change led indirectly to Christer Gardell, of Cevian Capital, seizing a chance to buy as many shares as it could in Ericsson, making it the largest owner in terms of capital. With Christer Gardell, who clearly wanted Leif Johansson out of the post of chair, at the top of the owners’ list, and a new management at Industrivärden with little sympathy for Johansson, it was difficult for even Investor to save the chair.

Leif Johansson’s time as chair of Ericsson has been a disaster in terms of the company’s progress and how the board has managed its duties. As he leaves the post an era in Swedish business comes to an end. For almost three decades he has been one of the heavyweights in Swedish business although his star status has dipped as it became clear the returns he brought shareholders were no longer in the top league.

Interest rate unchanged

The central bank, the Riksbank, is leaving the benchmark interest rate, the repo rate, at a negative 0.5%. The decision was expected.

Riksbank governor, Stefan Ingves, said, “It is important that inflation is more permanently at two per cent and does not just touch on two per cent. For that reason it is pressing and important to continue with an expansive monetary policy for some time longer.”

The first increase in the repo rate is expected in the middle of 2018.

Confidence in Kinberg Batra at rock bottom

A new Dagens Industri (DI) barometer shows a majority within the business world believe Moderate leader Anna Kinberg Batra should resign. According to 1,100 business leaders that took part in the survey, a majority, 52%, believe she should resign, and only 34% believe she should stay.

The barometer also shows that support for her from business has collapsed over the past year and that Centre leader Annie Lööf has more than doubled her figures, while Sweden Democrat leader Jimmie Åkesson is also closing in.