Succeeding as a leader in sustainable infrastructure

Today, NRC Group provides an update on strategy, operations, markets, financial development and outlook, including new financial targets and ambitions.

NRC Group’s updated strategic priorities are:

• Capitalise on a leading Nordic position
• Continue to improve core processes to increase profitability
• Drive profitable growth through increased revenue from large projects and potential bolt-on M&A
• Implement best practice across the Nordics to increase competitiveness
• Leverage sustainability as a competitive edge

Updated targets and ambitions:

• Medium-term target of 4-5% EBITA* margin in 2024-2025 period, above 5% growth p.a. over the cycle plus bolt-on M&A
• Long-term ambition of 5-7% EBITA* margin, above 5% growth p.a. over the cycle plus bolt-on M&A
• Resume dividend distribution
• 30% CO₂ emission reduction in 2025 vs. 2021 (scope 1+2)

NRC Group was created to capitalise on strong Nordic infrastructure markets. Following a consolidation phase with strong organic and M&A driven growth, which culminated with reduced profitability, the company entered a transformation phase focused on the integration of acquired companies and operational improvements. This has led to more robust processes for project selection, tendering and execution and a strengthened organisation which position NRC Group for future profitable growth.

“It is time to shift focus from transformation to profitable growth and to harvest the benefits of our unique Nordic position to succeed as a leader in sustainable infrastructure. The second quarter was the fifth consecutive quarter with improved financial performance, showing that our turnaround program is yielding results “, said Henning Olsen, the CEO of NRC Group. “We will continue to focus on profitability and core processes in tendering and project execution. Going forward, we will also capitalise on our leading position in the Nordics, by utilising competence and capacity across borders.”

NRC Group has over the past two years focused on attracting and retaining the right leadership, project managers and a skilled workforce. The Group has strengthened project selection and tender processes, the execution model and portfolio governance. This is reflected in a 2.8% EBITA* margin measured over the last 12 months (LTM) per second quarter of 2022, compared to 0.9% in 2019. Order intake and order backlog are at record levels, supporting future revenue growth. For 2022, we expect a continued positive operational and financial development with moderate to strong revenue growth and moderate increase in EBITA* margin compared to 2021.

Long-term outlook

Based on the updated strategy, NRC Group targets an EBITA* margin of 4-5% in the 2024-2025 period. The long-term ambition is to increase the EBITA* margin to 5-7%. Growth is expected to exceed 5% per year over the cycle in addition to bolt-on M&A. These targets and ambitions compare to the previously communicated 2024 ambition of NOK 10 billion of revenue at 7% EBITA margin.

“Going forward, our strategic focus will be margin improvement, profitable growth and increased competitiveness, which all are tightly connected. It is the same direction we pointed towards back in 2020, but we are shifting more of our focus towards profitable growth. Growth is important to develop the organisation, to enable us to take on bigger and more complex projects and to attain economies of scale.  However, we will not sacrifice margins to growth,” Henning Olsen continues. 

In addition to continuous improvement of core processes, NRC Group targets increased revenue from larger and more complex projects by leveraging cross-country resources and capabilities and by sharing and implementing best practice across the Nordic region. This includes further strengthening the Group’s sustainability position and performance as a builder of sustainable infrastructure. In the first half of 2022, 88% of the Group’s activities were defined as eligible and 69% aligned according to the EU Taxonomy. The Group is also considering bolt-on M&A to optimise the value chain.    

A combination of improved profitability, working capital management and focus on a lean asset base has contributed to strengthen NRC Group’s financial position. The goal is to return free cash to equity owners through the resumption of dividends in line with the policy distributing a minimum 30% of net profit.

Capital markets update and second quarter 2022 presentation today at 10:00 am (CEST) 

CEO Henning Olsen, CFO Ole Anton Gulsvik and the Managing Directors for Norway, Sweden and Finland will host the combined second quarter 2022 and the CMU presentation at House of Oslo, Ruseløkkveien 34, Oslo. The event is expected to last approximately two hours, including Q&A. The presentations will be given in English.

The presentation will also be broadcasted as a webcast on the following link:

https://channel.royalcast.com/landingpage/hegnarmedia/20220818_8/

The financial report and presentation are available under the company's ticker "NRC" on www.newsweb.no and on the company's homepage: www.nrcgroup.com

For further information, please contact:

Henning Olsen, CEO of NRC Group, + 47 91 74 15 92.
Ole Anton Gulsvik, CFO of NRC Group, +47 99 56 85 20

This information 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 18 August 2022.

*Before other income and expenses (M&A expenses)