NCC’s CEO comments on the beginning of the year

NCC expects another challenging year in 2010, with lower volumes and intense competition. The long and cold winter in the Nordic region resulted in increased costs. Orders received recovered from low levels and amounted to SEK 14 billion in the first three months of the year, according to preliminary figures. This news will be presented in CEO Olle Ehrlén’s address to the Annual General Meeting today, April 14.

In his address, Olle Ehrlén will give an account of operations in 2009, but will also present the following comments regarding the market scenario in 2010 and the early part of the year. “We successfully managed the financial crisis and adapted our operations to lower demand. We must now deal with the recession. The construction sector is late cyclical, which means that it will take time before we notice any change, and I believe that it will take time before we experience any sustainable growth. “However, there are some rays of light, by which I am primarily referring to the recovery in orders received in late 2009 and early 2010. According to preliminary figures, orders received amounted to SEK 14 billion in the first three months of the year, which was significantly higher than a year earlier. This may appear to be a strong rebound, but it is based on extremely low levels. In our assessment, sales will be lower in 2010 compared with 2009, since orders received include a number of large projects that will be implemented over several years and the order backlog was lower at the beginning of the year. “When it comes to the earnings trend, we will experience increased costs due to the long and cold winter that prevailed in the Nordic region.” Olle Ehrlén will also comment on housing sales and housing starts in early 2010. “According to preliminary figures, sales of proprietary housing units amounted to 530 in the first quarter and 1.000 housing units were started. In other words, we sold approximately as many housing units as in the year-earlier period, although there were more housing starts this year. Despite this, we have relatively few housing units under construction. “The effect of having relatively few projects for sale, combined with NCC’s adaptation to international accounting policies for profit recognition will have an impact on earnings in 2010. The rules that NCC has chosen to comply with regarding housing sales entail that earnings will be deferred by between one and two years compared with the previous percentage-of-completion policy. As of 2010, earnings from housing sales will not be recognized until the buyer has taken over the property.” The complete address will be available on NCC’s website, www.ncc.se after the close of the Annual General Meeting. NCC’s interim report for the first quarter of 2010 will be published on May 10.