NCC-Group Year-End Report 2000

NCC-GROUP: Year-End Report 2000 · The Group's profit after net financial items for 2000 amounted to SEK 2,153 M (1,251). This includes SEK 912 M deriving from the surplus pension funds repaid by SPP. Excluding items affecting comparability, earnings amounted to SEK 1,241 M (1,050). · Earnings per share amounted to SEK 14,00 (7.70). Excluding items affecting comparability, earnings per share amounted to SEK 8.00 (6.40). · The Group's return on equity, excluding items affecting comparability, rose to 9 percent (7). · During 2000, NCC sold managed properties for a total of SEK 2,173 M (1,862), which yielded gains of SEK 405 M (98). Sales of real estate development projects totaled SEK 3,028 M (712), generating gains of SEK 432 M (164). The return on investments in sold projects exceeded 20 percent. The surplus value in the real estate portfolio was SEK 1.1 billion at year-end, according to an independent appraisal conducted at year-end. · The Board of Directors proposes a divided of SEK 4.50 (4.00) per share. Comments by the CEO: "The year-end report for 2000 shows that NCC is on the right track. Increases were achieved in both sales and earnings, despite such factors as costs for adapting to the weaker civil engineering market, particularly in Norway and Denmark, and relatively large investments in housing and real estate projects, increases were achieved in both sales and earnings, after adjustments for items affecting comparability. The return on equity improved to 9 percent, compared with 7 percent in 1999," says Jan Sjöqvist, President and Chief Executive Officer of the NCC Group. "The improved earnings were mainly attributable to favorable gains within real estate operations. The earnings trend in certain segments of our civil engineering and building operations was weaker," says Jan Sjöqvist. "During 2000, operations were adjusted to align them with the new market conditions and we launched a new organization that is reducing our costs and increasing our focus on profitability. During 2001, the balance between investments in projects and sales of projects will improve, which will have a positive impact on our return on capital. In total, this means that a solid foundation has been laid for continued profitability improvements during 2001, the first stage of which will be to achieve a return on equity of 12 percent." Orders received Orders received by the NCC Group's construction operations (the Civil Engineering, Housing, Building and Industry business areas) during full- year 2000 amounted to SEK 43,738 M. of which orders received from NCC Real Estate accounted for SEK 1.1 billion. In total, orders received rose by 21 percent, compared with SEK 36,160 M in 1999. The rise was mainly attributable to increased demand for commercial premises in the Nordic region, particularly in Sweden. An order for the A2 highway project in Poland was received during the fourth quarter, which increased the orders received by NCC's international project operations. Net sales Consolidated net sales amounted to SEK 38,728 M (37,460), up 3 percent compared with 1999. The increase was mainly attributable to growth in the building and housing markets in the Nordic region. Earnings Profit after net financial items amounted to SEK 2,153 M (1,251), which includes repayments of surplus funds from SPP in an amount of SEK 912 M. The comparative figure for 1999 includes combined capital gains of SEK 201 M from the sale of Neptun Maritime and the BPA shareholding. Excluding items affecting comparability, profit amounted to SEK 1,241 M (1,050). The main reason for the improved earnings was high sales activity in real estate operations, particularly during the fourth quarter. Earnings per share Earnings after full tax amounted to SEK 1,498 (838), which corresponds to SEK 14.00 (7.70) per share. Excluding items affecting comparability, earnings after full tax amounted to SEK 860 M (694), or SEK 8.00(6.40) per share. Profitability The return on capital employed was 14 percent, compared with 10 percent for 1999. Excluding items affecting comparability, the return on capital employed was 9 percent (8). The return on shareholders' equity was 16 percent (9). Excluding items affecting comparability, the return on shareholders' equity was 9 percent (7). Including appreciation in the value of managed properties, the corresponding figures were 12 percent (9). Investments The Group's gross investments in real estate amounted to SEK 5,819 M (3,798), of which real estate development projects accounted for SEK 2,738 M (2,031) and housing projects for SEK 2,276 M (1,678). The Group's other gross investments in fixed assets amounted to SEK 3,493 M (2,365), which pertained mainly to the acquisition of Rieber Roads. Cash flow Cash flow, before financing, amounted to SEK -2,325 M (-605). In addition to the acquisition of Rieber Roads, cash flow was affected by increased investments in proprietary housing projects and real estate development. During January 2001, proceeds corresponding to SEK 1.3 billion were received from properties sold in December 2000, which will affect liquidity during 2001. Financing and liquidity On December 31, 2000, NCC's net indebtedness (interest-bearing liabilities less liquid assets less interest-bearing receivables) amounted to SEK 8,118 M (5,296). The increase was mainly due to the acquisition of Rieber Roads and higher investments in proprietary housing projects. At year-end, the average interest rate for the borrowing portfolio was 5.5 percent (5.3), excluding pension liabilities. On the same date, the average period of fixed interest was 1.6 years (2.3). Equity/assets and debt/equity ratios The equity/assets ratio was 27 percent (34). The decrease was mainly attributable to the acquisition of Rieber Roads. The equity/assets target over a business cycle is 30 percent. The debt/equity multiple (net indebtedness divided by shareholders' equity including minority interests) on December 31, 2000 was 0.8 (0.5). Personnel The average number of employees in the NCC Group during 2000 was 25,192 (24,122). The increase was due mainly to the acquisition of new operations. CONSTRUCTION MARKET The Nordic construction market is expected to grow slightly in the next few years, although the trend will vary from country to country and sector to sector. The Swedish and Finnish markets are expected to grow by 4 - 5 percent this year, while Norway is expected to stagnate and Denmark will decline by approximately 5 percent. Although the estimate for civil engineering operations in Denmark has been upgraded, this segment remains depressed after the sharp decline in 1999. A slight recovery has occurred in Norway, although increased interest rates are expected to have an adverse effect on the construction market. The largest upswing is expected in the housing market, particularly in Sweden and Finland, where demand is strong. However, a slight slackening was noted in Finland during the autumn. In Norway, the growth forecast for residential construction has been downgraded due to supply-side restrictions. Some growth is expected in the "Other buildings" segment (offices, retail premises, hospitals) this year, followed by a leveling- off next year, while the roadwork and civil engineering market is stag nating or declining in most Nordic markets. The Danish civil engineering market has declined by nearly 21 percent since 1998 and the Norwegian market by 18 percent. In Sweden, NCC's largest individual market, demand for residential construction is expected to remain strong, particularly in the Stockholm region. However, the growth rate is being inhibited somewhat by a shortage of land approved for development and by Sweden's utility value principle, which makes it unprofitable for private real estate companies to build and manage residential properties. In the Swedish civil engineering market, a continued decline is expected in public sector investments in infrastructure, at the same time as no decisions regarding private funding of major projects have currently been made. On the other hand, private investments in the energy and telecom sectors are increasing, a trend that could generate considerable construction volumes. In November 2000, the Sweden's National Economic Research Council´s report on the economic situation included a projection that construction investments in postal services and telecommunications will rise by 20 percent in 2000 and by 12 percent in 2001. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/02/13/20010213BIT00050/bit0002.doc The full year-end report http://www.bit.se/bitonline/2001/02/13/20010213BIT00050/bit0002.pdf The full year-end report