The Nordic region's largest builder - and one of the biggest in the United States - cut its market outlook in April and warned that pandemic restrictions would squeeze volumes and earnings for some time.

On Thursday it reported an operating profit of 845 million Swedish crowns (74.84 million pounds) versus 2.74 billion a year earlier. Sales fell 12% to 35.5 billion crowns.

"It is still difficult to know how long this pandemic will last and exactly what the future will look like," CEO Anders Danielsson said.

Sales at its construction division fell especially in Britain, the United States and central Europe, Skanska said.

Order intake at the division, which books the bulk of group sales, rose 7% helped by a large railway order in Britain.

Margins at the division narrowed but Danielsson said in an interview that underlying profitability improved.

Skanska said activity at its project development businesses also suffered, with uncertainty hitting both property divestments and leasing. The commercial property development division swung to a marginal loss.

Its commercial and residential property development operations have grown rapidly in recent years to account for more than half of the company's profit.

"We have seen caution from both investors and tenants .. and I expect that to continue. This pandemic will affect us for some time ahead," Danielsson told Reuters.

The residential market showed some early signs of recovery towards the end of the second quarter, he said.

Skanska shares were down 6% in early trade.

(Reporting by Anna Ringstrom; Editing by Jacqueline Wong and Niklas Pollard)