Operating profit at the Nordic region's biggest builder, and one of the largest in the United States, fell 11 percent to 1.29 billion crowns ($145.1 million), the third quarterly fall in a row. Analysts polled by Reuters forecast a 5 percent rise.

Skanska's shares tumbled on the news dropping as much as 7.5 percent, and taking the fall in the past 12 months to 20 percent. The stock was down 5.5 percent by 0822 GMT.

The company said its construction division, which books the bulk of group sales and which has made large writedowns in the United States and Poland in recent quarters, booked additional writedowns at its U.S. business of about 520 million crowns for cost overruns in a civil construction project.

"The strategic initiatives to restore profitability levels in our construction stream have begun stabilising our operations in Poland but we experienced additional setbacks in the U.S. operations, where second quarter results were far from satisfactory," CEO Anders Danielsson said in a statement.

Danielsson told Reuters the writedown was related to a project that had been running several years.

"We're cleaning out. This is down to a low production pace, and also design changes that are resulting in delays. We have made assumptions for this project once upon a time that we haven't managed to live up to," he said.

Danielsson, a company veteran who became CEO in January, kicked off with a shake-up of the management team and the launch of a restructuring programme to boost the construction unit's profitability in several markets, mainly in Poland.

Danielsson said the measures were proceeding to plan and he saw no need to expand the programme. But he said the business was not yet "out of the woods", particularly in Poland.

Asked if Skanska had so far in the third quarter identified any projects where writedowns might be needed, he said the company had not uncovered such cases "to any larger extent".

The Construction division achieved an operating margin of 1.4 percent in the quarter, against 0.3 percent a year ago and a negative margin in the first quarter.

Order intake at the unit fell to 39.1 billion crowns from 46.3 billion, reflecting a strategy to bid for fewer but higher-margin projects as it focuses on profitability.

At Skanska's higher-margin property development business, which has been increasing its contribution to group profit to account for more than half, operating profits at the residential and commercial development segments shrank in the quarter.

(Reporting by Anna Ringstrom; editing by Niklas Pollard)

By Anna Ringstrom