Report from Skanska’s annual meeting of shareholders
"Skanska’s strategy is to focus on its core businesses in construction, constructed-related industry and real estate. We have made it clear that we regard holdings in unrelated companies as financial investments, to be divested over time. We have now implemented this. By timing each transaction properly, we have also achieved a favorable final outcome for Skanska’s shareholders," declared Melker Schörling at Skanska’s well-attended Annual Meeting of Shareholders in Malmö on Monday, May 5. Mr. Schörling has now relinquished his position as President and Group Chief Executive of Skanska to become Chairman of the Board.
REPORT FROM SKANSKA’S ANNUAL MEETING OF SHAREHOLDERS
"Skanska’s strategy is to focus on its core businesses in construction, constructed-related industry and real estate. We have made it clear that we regard holdings in unrelated companies as financial investments, to be divested over time. We have now implemented this. By timing each transaction properly, we have also achieved a favorable final outcome for Skanska’s shareholders," declared Melker Schörling at Skanska’s well-attended Annual Meeting of Shareholders in Malmö on Monday, May 5. Mr. Schörling has now relinquished his position as President and Group Chief Executive of Skanska to become Chairman of the Board.
"If I had followed the advice I received when I assumed the job of President – to immediately sell Skanska’s entire stock portfolio – in 1992 this would have yielded us a capital gain of SEK 4 billion. Instead, we have sold shares gradually, earning an overall capital gain of more than SEK 12 billion – a difference of SEK 8 billion. Sometimes it is good not to be in such a hurry...
"This is what made possible the Board’s decision to transfer SEK 8-10 billion to Skanska’s shareholders. Furthermore, in our judgment, the Group’s capital base currently exceeds the needs we see in its core businesses. This does not mean that we are lacking in ideas and investment plans. We have the financial capacity to implement these plans even after the capital transfer.
"The Board proposes that the transfer take place by redeeming every tenth share in Skanska. Provided that the offer is fully accepted, shares worth a total of approximately SEK 5 billion would thereby be redeemed. An extraordinary meeting of shareholders on May 23 will be called in order to decide on the Board’s proposal."
In his presidential address to the Annual Meeting, Mr. Schörling further noted that the Skanska Group’s 1996 earnings had been the best in its history and that the return on capital employed at Skanska compares favorably to that of many other listed companies.
Turning to specific business operations, Mr. Schörling said he was pleased that the downward interest rate trend during 1996 had stimulated interest in real estate investments, both in the form of direct property investments and through the purchase of shares in real estate companies. For Skanska’s part, this trend opened the way to attractive restructuring transactions with the Swedish real estate companies Norrporten and Piren, among others. In this context, Mr. Schörling also mentioned the planned stock exchange flotation of the hotel property company Pandox.
Melker Schörling emphasized that Skanska takes pains to be an active property owner:
"To Skanska, real estate operations are an active value-adding process. In other words, it is not a matter of a passive financial investment. This is one of the things that distinguishes Skanska from many other market participants."
In a weak Swedish construction market, Skanska has continued to perform well compared to other construction companies. Looking at the civil engineering field, Mr. Schörling said he was especially pleased that during 1996, Skanska strengthened its position as Sweden’s leading bridge and tunnel builder.
Last year Skanska’s international operations showed continued strong growth. Their share of total Group invoiced sales is now approaching 50 percent. Mr. Schörling said that he felt there was still more room for expansion. However, he noted, it is difficult to acquire major companies abroad without taking large risks.
"Expanding on our own power into local European markets is hardly an alternative either. We must simply be patient."
Industry, Skanska’s third core business aside from Construction and Real Estate, doubled its invoiced sales as a result of last year’s acquisition of Skåne-Gripen.
"This purchase gave us strong market positions and brand names in kitchens, flooring and roofing, with good development potential and an attractive structure on which to build. The acquired units also have more than 80 percent of their sales outside Sweden, thereby enhancing Skanska’s international image," Melker Schörling said.
The Annual Meeting elected Claes Björk – Skanska’s new President – as well as Gustaf Douglas, Sören Gyll and Christer Gardell to the Board of Directors. Percy Barnevik, Sven-Eric Hersvall and Gudrun Norberg had declined re-election. At its first meeting following the election of its members, the Board of Directors appointed Melker Schörling as its new Chairman, succeeding Mr. Barnevik, and Bo Rydin as Vice Chairman.
The Meeting resolved, based on a proposal from the Swedish Association of Share Investors, to appoint a special nominating committee.
The Meeting also approved the dividend of SEK 10.00 per share (up from SEK 5.00 last year) and approved May 9, 1997 as the date of record to qualify for a dividend.
Malmö, Sweden, May 5, 1997
SKANSKA AB
Group Public Affairs
Lennart Hallberg
This and previous releases are also available on http://www.skanska.se