Skanska CEO Eyes Acquisitions to Realize U.S. Growth Ambitions
Skanska AB (SKAB), the builder of New Jersey’s MetLife Stadium, wants “significantly bigger” U.S. operations in five to 10 years, with higher sales in current operations supplemented by acquisitions, Chief Executive Officer Johan Karlstrom said.
U.S. growth is Skanska’s main focus, Karlstrom said yesterday in a telephone interview. That market now represents 35 percent of total sales, compared with about 27 percent the company had in December of 2011.
The Nordic region’s biggest builder first entered the U.S. in 1971 and has had its stronghold in New York, where it’s reconstructing the Brooklyn Bridge. Stockholm-based Skanska plans to spread operations toward the west coast, the Midwest and Boston, capitalizing on growing demand in the energy, information technology and health-care industries. Acquisitions will come in these areas, the CEO said.
“We are very picky, but we are continuously looking,” Karlstrom said. “It’s not only a question of price, someone needs to be willing to sell and it needs to be the right type of business.”
The company agreed to buy Industrial Contractors Inc., based in Evansville, Indiana, for $135 million at the end of 2011. The purchase expanded Skanska’s presence in commercial, industrial and power markets in the Midwest. Skanska’s first- quarter sales and profit held up in large part due to the demand in the U.S. construction business area, the company said yesterday in its quarterly earnings statement. Skanska focuses on big projects in the U.S.
While it’s one of the biggest construction companies in the U.S. market, Skanska’s market share is still only about 1 percent, Karlstrom said. It hasn’t published a growth target. Competition is fierce in getting the contracts now that emerging political will to invest in infrastructure and low energy prices resulting from shale-gas extraction are helping to push investments, he said.
Construction spending in the U.S. fell 1.7 percent in March, the Commerce Department said May 1. It reflected the biggest slump in government projects in 11 years and followed a 1.5 percent increase in February, revised numbers for the month showed. January saw a drop by 4 percent.
“These are too short time horizons to go by as we only really work with megaprojects,” Karlstrom said. “It’s a very strong market, there are a lot of large infrastructure projects coming and we don’t really see an end to it.”
First-quarter net income, according to the company’s segment reporting, increased to 338 million kronor ($51.8 million) from 113 million kronor a year earlier, Skanska said today. Sales rose 7 percent to 28.2 billion kronor. The shares gained 6.4 percent in Stockholm trading yesterday, the biggest gain since November 2011. The stock is up 10 percent this year, valuing the builder at 49.1 billion kronor.
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