Interim report January-June 2017
The positive trend continues with the second quarter of the year showing strong growth throughout the Group.
Ola Serneke, President and CEO, comments on operations during the second quarter of 2017:
“The second quarter of 2017 showed continued strong growth with improved profitability in the contracting operations. I feel particularly proud that all four business areas now have a strong wind in their sails and that our business model, with turnkey solutions from start to finish, is appreciated in the market.
In June 2016, property fund NREP acquired 50 percent of the Karlastaden project and Serneke gained a strong strategic partner with extensive experience of developing major property projects. The sale was reported in the second quarter of 2016 and had a significant positive impact on our earnings. Today, as we report on development in the second quarter and consider the comparison figures, it is important to bear in mind that profit in 2016 was primarily attributable to the outcome of the largest transaction carried out by the Group to date.
In an analysis of Serneke’s underlying operations, it is clear that the Group as a whole is continuing to grow and I would like to highlight the contracting portion in particular. Business Area Construction increased its income by 60 percent over the quarter to SEK 1,292 million (809) and business area Civil Engineering increased its income by 63 percent over the quarter to SEK 152 million (93). For both business areas, the explanation is increased production capacity combined with strong demand. The operations currently have more and larger projects in progress than they did in the corresponding quarter last year. The order book continues to grow in pace with the increased rate of production and the order book for the entire Group now amounts to SEK 8,308 million (6,480). The increase of 28 percent is explained by continued good order bookings. The consolidated operating margin for the quarter was 6.5 percent, with Construction increasing to 3.4 percent (1.6) in the second quarter and Civil Engineering improving its results strongly for the second quarter, from a negative 12.9 percent to a negative 1.3 percent.”
Outlook for 2017
“The first half of 2017 was characterized by continued strong demand in the market and an internal focus on delivering profitable growth. We continue to be selective, choosing projects that build long-term sustainable customer relationships and a stable order book. The concept of Group collaboration will be central to our continued success and we are already seeing clear examples of how commitment and a lack of prestige, without internal thresholds, enables Serneke to deliver cost-effective transactions in close partnership with customers. The strategy of four collaborative business areas pushing jointly towards challenging and clear objectives forms a crucial part of our success, although the company’s culture is even more important to me.”
• Income amounted to SEK 2,602 million (1,910*), an increase of 36 percent
• Operating profit amounted to SEK 142 million (312*) and the operating margin was 5.5 percent (16.3*)
• Profit for the period amounted to SEK 120 million (316*)
• Earnings per share after dilution amounted to SEK 5.13 (17.99*)
• Shareholders’ equity amounted to SEK 1,621 million (1,469)
• The equity/assets ratio was 42.8 percent (42.7)
• Order bookings amounted to SEK 3,811 million (2,969)
• Order backlog amounted to SEK 8,308 million (6,480)
• Mälardalen University/Campus Eskilstuna was divested to Hemsö, generating a capital gain of SEK 52 M
• In June, Gothenburg City Council adopted the detailed development plan for Karlastaden and the Karlatornet tower
• In the second quarter, two properties were acquired, complementing the Group’s commitment at Säve flygplats and the Karlastaden project
*Operating profit for the second quarter of 2016 included the sale of 50 percent of the Karlastaden project to NREP, generating income of SEK 318 million and operating profit of SEK 444 million.
Presentation of the Interim Report January–June 2017
On July 18, 2017 at 10:00 a.m. (CET), Serneke Group will comment on this Interim Report in a conference call with an online presentation for investors, analysts and the media. The presentation will be in Swedish and can be followed live via webcast at www.serneke.group. Presentation materials for the presentation will be available on the website one hour before the webcast begins.
To participate, please dial:
From Sweden: 08-5664 2699
From the UK: +44 20 3008 9803
For additional information, please contact:
Tomas Järund, Communications Director
Tel: +46 (0)704 455 087
This information is such that Serneke is required to disclose under the EU Market Abuse Regulation. The information was submitted under the auspices of the contact person stated above, for publication on June 18, 2017 at 8:00 a.m. CET.
Serneke is a rapidly growing corporate group active in construction, civil engineering, project development and property management. The Group was founded in 2002 and today has income of nearly SEK 4 billion and some 850 employees. Through novel thinking, the Company drives development and creates more effective and more innovative solutions for responsible construction. The Company builds and develops housing, commercial buildings, industrial facilities, public buildings, roads and civil engineering projects, and other infrastructure. The Company’s customers are public and commercial clients, and operations are focused on the three metropolitan regions in Sweden, Gothenburg (Region West), Stockholm (Region East) and Malmö (Region South). Serneke’s headquarters are located in Gothenburg and the Company also has offices in Stockholm, Malmö, Helsingborg, Borås, Halmstad, Strömstad, Trollhättan, Varberg and Alingsås. The Company’s Series B shares (SRNKE) have been listed on the Nasdaq Stockholm exchange since November 2016.
Further information about Serneke is available at www.serneke.group