NRC Group ASA – Second quarter and first half 2021 results
Today, 19 August 2021, NRC Group has released its financial results for the second quarter and first half of 2021.
The presentation is available on the following webcast link:
https://channel.royalcast.com/landingpage/nrcgroup/20210818_1/
A Q&A session will be held at 09.00 AM (CET). Participants can ask questions via the moderator.
To join the Q&A session, please dial in 5-10 minutes prior to the scheduled start time to register. You will be asked to provide a confirmation code. The event confirmation code is: 5101893.
Participants dial-in numbers:
NO: +47 23 50 20 07
SE: +46 (0)8 5033 6574
FI: +358 (0)9 7479 0361
DK: +45 35 15 80 49
UK/ International: +44 (0)330 336 9125
Below you will find highlights and a summary from the report.
REVENUE
- NOK 1.5 billion (NOK 1.7 billion)
EBITA*
- NOK 47 million (NOK 27 million)
ORDERS
- Order intake of NOK 2.2 billion (NOK 1.3 billion)
- Order backlog of NOK 6.7 billion (NOK 7.5 billion)
LIQUIDITY
- Operating cash flow of NOK -45 million (NOK 31 million)
- Cash position of NOK 441 million (NOK 691 million)
KEY FIGURES 1ST HALF 2021
- Revenue of NOK 2.7 billion (NOK 2.9 billion)
- EBITA* of NOK -12 million (NOK -27 million)
- Operating cash flow of NOK -29 (NOK 73 million)
- Order intake of NOK 3 billion (NOK 2.7 billion)
*Before other income and expenses (M&A expenses)
Improved results and strong order intake
Second quarter revenue was NOK 1,529 million compared to NOK 1,661 million for the same period of 2020. The revenue declined with 8% in the quarter due to currency effects and lower revenue in Sweden and Norway. Group EBITA* was NOK 47 million compared to NOK 27 million for the same period last year. The EBITA* margin was 3.0%. The order intake in the quarter was solid with NOK 2,166 million.
Revenue for the first six months of 2021 was NOK 2,658 million, a decrease of 9% from the first half of 2020 mainly explained by currency effects and lower revenue in Sweden. EBITA* amounted to NOK -12 million compared with NOK -27 million in first half of 2020.
Finland had revenue of NOK 695 million compared to NOK 700 million in the second quarter of 2020. The organic growth was however +8% in local currency. The profitability was solid with an EBITA of NOK 65 million compared to NOK 19 million in the same period of 2020, leading to an EBITA* margin of 9.4% for the quarter, up from 2.7% last year. The improvement is mainly explained by solid performance in Rail construction, reduced production overhead due to implemented measures in second half of 2020 and positive results from sale of machinery.
Revenue from the Swedish operation amounted to NOK 400 million for the quarter compared to NOK 487 million in the same period of 2020. The organic growth in the quarter was -15% in local currency. The revenue was significantly lower than last year due to low order book going into 2021. This is explained by fierce price competition the last year. The low hit rate in rail construction has continued the first half of 2021. The EBITA* was NOK -12 million compared to NOK -13 million in the same period of 2020, with an EBITA* margin of -3.1% for the quarter, compared to -2.7% last year. Low revenue impacted profitability negatively, while reduced overhead mitigated some of the effects.
Revenue in Norway was NOK 433 million compared to NOK 476 million in the second quarter of 2020. The organic growth was -9% in the quarter mainly explained by the low order book in civil construction in the beginning of 2021. EBITA* was NOK 2 million compared to NOK 27 million in the same period of 2020, which lead to an EBITA* margin of 0.5% this quarter, down from 5.7% for the same period last year. The lower profitability is mainly explained by lower revenue in civil construction and low profitability in the demolition and recycling business (NSS). Rail construction continues to improve the profitability. During first half year, the orderbook in civil construction has strengthen significantly which will increase the revenue going forward. The improvement program in NSS shows good progress, however it will take some time to get back to normal profitability.
Group operating profit (EBIT) for the quarter was NOK 20 million, an increase from NOK 12 million last year. Net financial items amounted to NOK -15 million for the quarter, compared to NOK -18 million for the same period last year.
Second-quarter order intake was NOK 2,166 million, split on announced contracts of NOK 1,244 million and unannounced order intake of NOK 921 million. Additionally, FTIA appointed NRC Group Finland to a frame agreement for procurement, logistics and warehousing of railway materials. The contract has an estimated value of EUR 200 million over the next five years, with a 2+2- year option period. The value of the contract is not included in the orderbook.
The order backlog amounted to NOK 6,693 million at end of June. The order backlog increased by NOK 94 million due to currency adjustments caused by NOK weakening vs SEK and EUR in the quarter.
In Norway, new orders included an appointed contract by Drammen Havn of NOK 213 million for ground, foundation and construction work in connection with a new quay. The work will commence in August 2021 and is scheduled for completion in second quarter 2023. NRC Group Norway was appointed to additional announced contracts valued at NOK 101 million during Q2. In Sweden, The Swedish Transport Administration appointed NRC Group Sweden a contract for track related work on the railway connection Sundsvall-Birsta-Timrå and Tunadal. The contract is valued at approximately SEK 95 million and will involve rail services such as signal/telecom, electro, track and groundwork. The work commenced in July 2021 and is scheduled for completion in July 2024. NRC Group Sweden was also appointed a contract valued at NOK 35 million during Q2. New orders in Finland included a contract of EUR 42 million appointed by FTIA for rehabilitation of the Joensuu railway yard. The work commenced in May and is scheduled for completion in December 2023. During Q2, NRC Group Finland announced additional contracts valued at NOK 381 million.
The Group has identified an addressable tender pipeline of approximately NOK 20 billion for the next nine months. This compares to a NOK 22 billion tender pipeline three months ago and NOK 19 billion at the same time in 2020, where the main reduction is for maintenance tenders in Sweden.
The tender pipeline in Finland is approximately NOK 2.8 billion, a decrease of approximately NOK 1.1 billion compared to the tender pipeline three months ago. The tender pipeline is approximately NOK 1 billion higher than the same period last year.
In Sweden, the tender pipeline is approximately NOK 9.0 billion, in line with the level three months ago. The tender pipeline is NOK 0.8 billion lower than the same period last year, which is mainly related to maintenance. In April, the Government in Sweden presented their proposal for the National Transportation Plan (NTP) for the period 2022-2031, totalling SEK 799 billion, an increase of SEK 176 billion from the existing NTP. The NTP is expected to be approved in first half of 2022.
The tender pipeline in Norway is approximately NOK 8.3 billion, a decrease of NOK 1 billion compared to the tender pipeline three months ago and an increase of approximately NOK 0.7 billion at the same time last year. A new National Transportation Plan (NTP) for the period 2022-2033 was approved by the parliament in June. Total investment proposal to railway infrastructure was NOK 400 billion, an increase of NOK 72 billion from existing NTP.
Outlook
NRC Group is strongly positioned in a growing market with a substantial tender pipeline. Approved national budgets and updated proposals of the National Transportation Plans with increasing long-term investments, confirm a positive market outlook.
NRC Group continues focus on execution of improvement measures to restore profitability. For 2021, the Group expects an EBITA margin between 1.75% and 2.5%.
The second quarter and first half 2021 result report and result presentation can be found attached and will be available on the company’s homepage: www.nrcgroup.com.
For further information, please contact Dag Fladby, Chief Financial Officer, NRC Group ASA on tel: +47 90 89 19 35.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to Section 5-12 of the Norwegian Securities Trading Act. This stock exchange announcement was published by Cecilie Blaauw Cock, Marketing & Communication at NRC Group ASA, on 19 August 2021.