NCC-Group: Interim Report January-June 2001

NCC-GROUP: Interim Report January-June 2001 April- Jan- 12 June June months 2001 2000 2001 2000 July Jan- (pro (pro 00- Dec forma forma June 2000 ) ) 01 (pro (pro forma) forma) 1) Orders received, SEK M 12 644 13 25 22 48 833 46 316 130 243 726 Net sales, SEK M 11 471 10 20 18 42 577 40 808 809 478 709 Operating profit, SEK M excl. items affecting 535 494 366 282 1 593 1 509 comparability Profit after financial items, SEK M 458 439 128 125 1 154 1 151 excl. items affecting comparability Earnings per share, SEK excl. items 3,00 2,75 0,80 0,75 7,50 7,45 affecting comparability Return on equity, % excl. items affecting 8,7 8,4 comparability 1 For information about pro forma figures, see "Business areas" on page 3. Comments on the trend during April-June 2001: * Improved operating profit after depreciation (EBIT) * Profit after financial items in line with year-earlier period * Contract tendering costs within NCC Telecom continue to adversely affect earnings * Improved earnings for NCC Property Development Comments by the Chief Executive Officer: "The measures implemented to enhance NCC Contracting's profitability have started to generate effects, but the recovery process has been slower than expected. Sweden and Denmark have shown the most distinct upswing in earnings, while the trend in Norway remains weak. Earnings from international operations deteriorated during the second quarter, compared with the year-earlier period. The measures previously announced are expected to have an increased impact on earnings during the second half of the year," says Jan Sjöqvist. "The market for asphalt and aggregate products continued to stabilize during the second quarter, which had a favorable effect on NCC Industry. Price levels have risen but volumes have declined slightly. "The earnings trend shown by NCC Property Development remains favorable. The leasing rate for projects in progress has also increased, from 34 to 45 percent," says Jan Sjöqvist. GROUP Orders received and order backlog Orders received by the NCC Group during the April - June 2001 period amounted to SEK 12,644 M (13,130), down 4 percent compared with the corresponding period of 2000. The decline was due to a decrease in the number of initiated property and housing development projects. Proprietary property-development projects accounted for SEK 609 M (1,093) of total orders received during the quarter. Orders received during the January - June period amounted to SEK 25,243 M, an increase of 11 percent compared with the corresponding period of 2000. The order backlog on June 30 amounted to approximately SEK 31 billion, an increase of 19 percent compared with year-end 2000. Net sales and earning Consolidated net sales during April - June 2001 amounted to SEK 11,471 M (10,809), up 6 percent compared with the year-earlier period. The sales increase was attributable to NCC Contracting, with rises noted in both the Nordic and the international market. Sales during January - June 2001 amounted to SEK 20,478 M, a rise of 9 percent compared with the year-earlier period. For seasonal reasons, NCC's earnings during the second quarter are generally better than during the first quarter. The seasonal variations were accentuated by the acquisition of Rieber Roads during 2000. The Group's operating profit (EBIT) for April - June 2001 amounted to SEK 535 M, an improvement of 8 percent compared with the year-earlier period, when operating profit totaled SEK 494 M, excluding items affecting comparability. The reasons for the improved earnings were that NCC Property Development continued to show a favorable trend and that NCC Industry reported stronger results. Earnings continued to be adversely affected by initial investments costs, mainly tendering expenses, in the NCC Telecom business area. The Group's operating profit (EBIT) for the first half of 2001 improved by 30 percent to SEK 366 M (282), excluding items affecting comparability. Profit after financial items for April - June 2001, excluding items affecting comparability, amounted to SEK 458 M (439). Net financial items deteriorated amounted to an expense of SEK 77 M (expense: 55) and were mainly affected by exchange-rate effects of approximately SEK 20 M. The term exchange-rate effects refers to the impact that changes in various currencies have on ongoing financial reporting within the NCC Group. To a minor extent, net financial items were also affected by an increase in capital tied up in land and projects in progress compared with the year-earlier period. In total, exchange-rate effects had a negative impact of SEK 30 M on profit after financial items during the second quarter. Profit after financial items during the first half of the year amounted to SEK 128 M (125). Investments and financing Cash flow, before investments, during April - June 2001 was negative in an amount of SEK 1,237 M. The negative cash flow during the period was due mainly to seasonal variations in the industry business. Cash flow during the year-earlier period was negative in an amount of SEK 178 M, although this figure cannot be compared with the current year's figure because no pro forma accounts had been prepared. The Group's gross investments in real estate amounted to SEK 1,015 M (1,469), of which property development projects accounted for SEK 901 M (1,092) and housing projects for SEK 266 M (378). The Group's gross investments in other fixed assets amounted to SEK 503 M (514). Cash flow after investments was negative in an amount of SEK 1,289 M. The figure for the corresponding period in the preceding year, which was not based on pro forma accounts, was negative in an amount of SEK 1,502 M. On June 30, 2001, NCC's net indebtedness (interest-bearing liabilities less liquid assets less interest-bearing receivables) amounted to SEK 10,350 M (9,511). The increase was due mainly to investments in housing and property-development projects and to the fact that the proceeds from major property sales during the quarter were not received until after the end of the report period. At year-end 2000, net indebtedness totaled SEK 8,118 M. On June 30, 2001, the equity/assets ratio was 24 percent, compared with 27 percent at year-end 2000. The lower equity/assets ratio was mainly due to the application of the RR10 accounting principle, since seasonal variations have their greatest impact on the six-month accounts, (see page 9), as well as to investments in projects and to the fact that the proceeds from property sales were not received until after the end of the report period. CASH FLOW ANALYSIS * SEK M Apr-June Apr- Jan.- Jan.- July Jan.- June June June 00- Dec. 2001 2000 2001 2000 June 2000 01 Funds provided from -96 370 -740 301 -257 784 operations Change in -1 141 -548 -1 005 -616 -894 -505 working capital Operating -1 237 -178 -1 745 -315 -1 151 279 capital Investm -52 -1 324 -254 -1 301 -1 588 -2 635 ents Cash flow -1 289 -1 502 -1 999 -1 616 -2 739 -2 356 before financing Funds 1 297 687 1 684 883 2 962 2 161 generated externally Net change in 8 -815 -315 -733 223 -195 liquid assets Liquid assets 1 925 2 453 2 207 2 371 2 207 2 371 opening balance Exchange-rate 14 55 86 31 difference in liquid assets Liquid assets at 1 947 1 638 1 947 1 638 2 516 2 207 the end of the period * Cash flow analysis is not pro forma prepared. BUSINESS AREAS As of January 1, 2001, NCC is divided into six business areas: NCC Contracting, NCC Housing, NCC Property Development, NCC Industry, NCC Telecom and NCC Service. As a result of this change, a larger proportion of what were previously Group-wide costs are now allocated to the various business areas. The acquisition of Rieber Roads, which became effective on November 1, 2000, is included pro forma for the whole of 2000. This mainly has an impact on the Industry business area. In order to facilitate comparisons with previous years, comparative figures (pro forma) are presented for each business area as if the changes had been implemented during 2000. No pro forma calculations of cash flow have been made. NCC Contracting The market for construction investments in the Nordic and Baltic Sea region has shown stable, albeit modest, growth during recent years. According to the Swedish Construction Federation, investments in the region are expected to remain unchanged in 2001 and rise by about 4 percent in 2002. The reason for the stable trend is that changes in the various Nordic countries are offsetting each other. The market trends within the countries concerned and within different segments vary. Generally speaking, demand is favorable in growth regions such as the Nordic capitals, although there are signs of a slight slackening in several markets. Orders received by NCC Contracting during April-June 2001 amounted to SEK 9,376 M (9,872), a decrease of 5 percent compared with the year- earlier period. Orders received during the first half of the year rose 6 percent to SEK 18,232 M. The order backlog on June 30, 2001 was SEK 25 billion, 25 percent higher than the year-end figure of SEK 20 billion. Net sales rose by 14 percent to SEK 8,242 M (7,208), with the main increases noted in Norway, Denmark and Sweden. Operating profit (EBIT) of SEK 20 M was reported for April-June. For comparable units, profit for the second quarter of 2000 amounted to SEK 39 M. The measures taken in 2000 to boost profitability have started to generate effects. The most tangible earnings improvements were noticeable in Sweden and Denmark. The earnings trend in Norway remained weak during the second quarter, particularly in the civil engineering segment, while building operations stabilized. On the whole, the business area's earnings from contracting operations improved by approximately SEK 60 M compared with the second quarter of 2000. With respect to the specialist and other operations conducted in the business area, second-quarter earnings were mainly affected by a favorable trend for the associated company A-Train, with NCC's share of this company's results amounting to a loss of SEK 4 M (loss: 17). Results from interna tional operations declined to loss of SEK 39 M (profit: 18). These results can fluctuate sharply from quarter to quarter due to the date of completion of major projects. The principle is that income recognition of major projects does not begin until 50 percent of a project has been invoiced. NCC Contracting Quartal values 12- months Q2:01 Q2:0 Q3:0 Q4:0 Q1:01 July 00- Jan.- 0 0 0 June 01 Dec. 2000 Orders received, SEK M 9 376 9 6 10 8 856 35 518 33 999 872 294 992 Order backlog, 24 677 18 17 20 22 733 24 677 20 195 remaining to be earned, 422 879 195 SEK M Net sales, SEK M 8 242 7 6 9 6 508 30 862 28 921 208 966 147 Operating profit 20 39 91 -59 -110 -58 -68 (EBIT), SEK M Operating margin (EBIT) 0,2 0,5 1,3 -0,6 -1,7 -0,2 -0,2 (%) Net margin (%) 0,6 0,8 1,6 -0,3 -1,5 0,1 0,1 Operating profit 26 59 109 -30 -96 10 39 (EBIT), excl. BOT, SEK M Operating margin 0,3 0,8 1,6 -0,3 -1,5 0,0 0,1 (EBIT), excl. BOT, (%) Net margin, excl. BOT, 0,7 1,1 1,9 0,0 -1,3 0,3 0,4 (%) Return on capital 5,7 4,8 employed (%) . ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/08/24/20010824BIT00050/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/24/20010824BIT00050/bit0001.pdf The full report