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INTERVIEW-Builder Skanska chases U.S. energy sector growth
March 7, 2013 / 6:28 PM / 5 years ago

INTERVIEW-Builder Skanska chases U.S. energy sector growth

STOCKHOLM, March 7 (Reuters) - Swedish construction company Skanska is seeking to buy U.S. companies with revenues of up to $1 billion which build and service power plants as well as factories in energy-intensive industries such as steel.

Skanska wants to capitalise on an expected boom in building related to a drop in U.S. energy prices at a time when European construction activity is depressed, U.S. and Latin American operations head Mike McNally told Reuters.

“With what’s happening in the energy sector in the U.S. it wouldn’t be a bad idea to increase our capability,” McNally said this week.

The Nordic region’s biggest builder, which is also the fourth-largest U.S. construction firm, said it is looking for companies whose revenues are already up to $1 billion to complement a 2011 purchase of Indiana-based Industrial Contractors, which builds power plants and other factories.

“If there was another Industrial Contractors out there that would be appealing ... As big as maybe a billion dollars in revenue is possible.”

Skanska has been attracted by the flurry of activity around lower U.S. gas prices, which have fallen to a third of those in Europe on an increase in the extraction of shale gas, known as fracking.

The lower energy costs have drawn interest from energy firms and manufacturers of steel, glass and fertilisers and other industrialists with high energy needs.

“We now have a low-cost supply of energy for a long time,” McNally said. “We see energy intensive manufacturing coming back to the U.S. because the U.S. will be the cheapest place to manufacture energy-intense products like fertilisers, glass and steel.”

The United States is the single-biggest market for Skanska, where last year it pulled in a third of its 132 billion crown ($20.6 billion) turnover and nearly half of its profit. Skanska has operations in 18 different countries across Europe, the United States and Latin America.

Skanska has been banking on strong demand in the United States to help offset weakness in crisis-hit Europe where it expects slow business also in 2013, particularly for large new civil construction projects.

Its USA Civil division mainly focuses on public infrastructure projects such as roads and bridges. The acquisition of Industrial Contractors was a first step in a push to grow in into energy sector construction.

McNally said the U.S. market for infrastructure projects was strong currently, with interest in public-private partnerships (PPPs) also on the rise, amid an infrastructure spending push by President Barack Obama to stimulate the economy.

“We are seeing more infrastructure jobs in the Unites States than we have ever done before,” he said.

Chances of healthy profits on large infrastructure projects were good as there were only about 10 firms big enough to bid for such contracts, he said. 1 = 6.4063 Swedish crowns) (Reporting by Anna Ringstrom and Helena Soderpalm)

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