Increased growth in Block Watne Gruppen
(Oslo 22 August 2007) The pro forma operating revenues in the 2nd quarter 2007 amounted to NOK 856 million, up NOK 99 million (13.1 percent). The pro forma operating profit (EBIT) was NOK 103 million, up NOK 2 million (2 percent). The pro forma EBIT margin was 12 percent corresponding to 13.3 percent in the 2nd quarter 2006. The order backlog at the end of the quarter was NOK 2 104 million, an increase of 9.1 percent.
- The operating revenues and the operating profit confirm a stable and profitable growth in the 2nd quarter, comments Lars Nilsen, CEO in Block Watne Gruppen.
Block Watne Gruppen completed the aquisition of Prevesta AB on 31 May 2007. A pro forma income statement and a pro forma balance sheet have been prepared, as if the acquisition, share issues and loan had been implemented at the beginning of 2006.
The operating revenues are reflective of increased production capacity and higher average prices for the group's products. The operating profit for the quarter is on a par with the corresponding periods in 2006. The somewhat poorer margin can be attributed to increased payroll costs due to wage settlements and increased staff, and a planned rebuild of the production facilities in the Swedish operations.
The development in segment Norway and segment Sweden
Following the purchase of Prevesta AB, Block Watne Gruppen presents figures for two geographical segments - Norway (product trademark Block Watne) and Sweden (product trademarks Myresjöhus and SmålandsVillan), with effect from 1 June 2007.
Operating revenues in the 2nd quarter 2007 amounted to NOK 412 million, an increase of 11.3 percent compared to the 2nd quarter 2006. Operating profit was NOK 62 million, an increase of 8.2 percent compared to the 2nd quarter 2006.
The EBIT margin was 15 percent, a little lower than in the 2nd quarter 2006. The margin variation in the quarter is attributable to wage settlements during the period and increased staffing levels aimed at handling increased activity in the 2nd half year and the 2008 expectations.
During the last two quarters, Block Watne has postponed sales starts for certain projects in order to improve the balance between order backlog and production capacity due to extraordinary strong sales in 2nd half year 2006. This situation is expected to gradually normalise by the end of 2007.
Segment Sverige
Operating revenues in the 2nd quarter 2007 amounted to NOK 444 million, an increase of 15.0 percent compared to the 2nd quarter 2006. Operating profit was NOK 45 million, on a par with the figure for the 2nd quarter 2006. The EBIT margin was 10.1 percent, an increase by 0.8 percentage points on the 1st quarter 2007 (9.3%).
There has been a pressure on margins in the 1st half year 2007. The production facilities were closed intermittently during the 1st quarter to allow work on the planned conversion to a new technical platform. This resulted in lower volumes in the factories during the first six months of the year, with considerably higher overheads than in a normal operating situation. In addition the new Sundsvall factory that was started up ultimo 2006 has had a limited operation till now. The ongoing process regards increasing the production volume in the Sundsvall factory will continue through 2008.
There has been strong growth in order intake. New orders in the 2nd quarter totalled NOK 637 million and increased by 41 percent. At the end of the 2nd quarter, the order backlog was NOK 1 170 million, an increase of 21.1 percent on the same period in 2006.
A strong order backlog combined with increased production capacity provides positive expectations for 2008.
Future prospects
There continues to be a high level of activity both in the Norwegian and Swedish housing markets. Demand for new homes continues to be good, and macro-economic factors such as employment, interest rates and the economy are expected to support a reasonable future development.
The group has doubled the size of its operations with the acquisition of the Swedish company with the brands Myresjö and SmålandsVillan. Both the Norwegian and Swedish parts of the group strengthened their capacity and staffing levels in the first six months of the year in order to respond to achieve a higher rate of production.
- Block Watne Gruppen ended the first six months of the year with a solid order backlog, which will ensure a satisfactory turnover for the year. Increased top-line growth is expected in the second half of the year, although there will still be a strong focus on profitability in projects and production. Strong sales and a solid order backlog form the basis for a positive development in 2008, comments Lars Nilsen, CEO in Block Watne Gruppen.
Key figures 2nd quarter 2007
- Operating revenues pro forma NOK 856 million, 13.1 percent growth
- Operating profit (EBIT) pro forma NOK 103 million, 2.0 percent growth
- EBIT margin pro forma 12 percent
- New orders pro forma NOK 992 million, 6.6 percent growth
- Order backlog NOK 2 104 million, 9.1 percent growth
For more details, see the attached interim report.
Further information from:
Lars Nilsen, president and CEO, Block Watne Gruppen ASA, tel: +47 23 24 60 00
Ketil Kvalvik, chief financial officer, Block Watne Gruppen ASA, tel: +47 23 24 60 42, +47 90 77 13 15