| · Marked rise in profits - from 3.0% to 5.5% profit margin
· 20% growth in turnover
· Strengthened order-book
· Proposal to increase dividend from NOK 5.50 to NOK 9.50
· Proposal to split shares in ratio 1:2
Veidekke showed a turnover of NOK 4,961 million in 1997, as against NOK 4,129 million in 1996 - an increase of 20%. Profit before taxation rose from NOK 123.0 million in 1996 to NOK 270.4 million, giving a profit margin of 5.5%. The company`s financial standing is very sound. Its equity-to-assets ratio has increased to 31.9% in 1997, from 30.9% in 1996. Return on equity after taxation was 26.5% in 1997 as compared with 13.7% in 1996. Orders-on-hand for the Building and Heavy Construction rose by 20%, from NOK 2,261 million to NOK 2,710 million.
Earnings per share were NOK 32.26 compared with NOK 13.83 in 1996. The Board of Directors will propose to the Annual General Meeting in April a dividend of NOK 9.50 per share and a share split in the ratio of 1:2.
Building
The Building Division continued to focus on customer orientation and profitability in 1997 and showed a considerable increase in turnover and a noticeable rise in profit. Turnover was
NOK 2,230 million, which gives a growth of 22% compared with 1996 (NOK 1,823 million).
The Building Division posted a profit for the year of NOK 98.3 million (NOK 53.6 million). Orders-on-hand stood at NOK 1,203 million at the end of the year (NOK 1,125 million). Veidekke also has a considerably larger development portfolio comprising just over 80,000 sq.m. of non-residential properties and about 1,200 residential units.
Heavy Construction
The Heavy Construction Division continued its strategy of selectivity in choice of projects, its work on organisational development and improvements in productivity. Turnover amounted to NOK 1,717 million, which is an increase of 24% compared with 1996. Turnover from international operations represented NOK 336 million (207). Heavy Construction showed a profit of NOK 46.3 million (NOK 28.3). Operations in Norway showed very good results, while the figures for international operations (Noremco and Nocon) were weaker than anticipated. Orders-on-hand stood at the very satisfactory level of NOK 1,507 million (NOK 1,136 million) at the end of the year.
Industry
`Industry` comprises Veidekke`s asphalt, crushed stone and gravel operations and its new business area, ready-mix concrete. From 1998 onwards, this division will also include `Environment and Building Waste`.
Industry achieved a turnover of NOK 911 million in 1997 (NOK 869 million), giving a profit of NOK 37 million (NOK 36.1 million).
The asphalt market was tight in 1997. One reason for this was the reduction in the number of contracts awarded to private contractors by the Public Roads Administration. There was also less demand than expected from municipal authorities and the private market. As far as Veidekke is concerned, its asphalt contract at the Gardermoen Main Airport compensated for the decline in this market.
In November 1997, Veidekke purchased a 43% share of HF-Gruppen, a ready-mix concrete producer. Ready-mix concrete is a strategically important factor input for Veidekke and this acquisition enables Veidekke to exploit effects of synergy in combination with its own crushed stone and gravel operations. Veidekke`s focus on this area continued in 1997. The company acquired three new crushed stone and gravel plants during the year.
Property
Total rental revenues were NOK 37.6 million (NOK 45.8 million), of which NOK 22.7 million (NOK 31.1 million) derived from external tenants. Total operating revenues of NOK 126.2 million include gains on sales of non-residential properties, including Sjølyst Allé at Skøyen, which gave a profit of NOK 86 million. Profit before taxation was NOK 90.5 million (NOK 6.3 million).
With a view to cultivating the development of residential and non-residential property for Veidekke`s account, all property development will come under the Property Division with effect from 1998.
Financial situation
The Veidekke Group had a positive net interest-bearing position of NOK 214.8 million (NOK 44.7 million) at the end of the year. Gross investments in machinery were NOK 198 million (NOK 171 million), while NOK 57 million was invested in the machinery hire company BAUTAS. NOK 158 million was invested in buildings and sites. In addition, there were investments in sites for dwellings for Veidekke`s own account and company acquisition. The goodwill acquired through company acquisitions has been capitalised at NOK 62 million.
Veidekke`s total assets were NOK 2,501 million (NOK 2,145 million) at the end of the year. Shareholders` equity increased from NOK 662 million to NOK 798 million, giving an equity ratio of 31.9% (30.9%).
Health, safety, environment
The work of making Veidekke a better and safer workplace was intensified during the year by increasing the focus on injury prevention. There was a positive development in the injury rate (number of lost-time injuries per million hours worked). The injury rate fell during the year from 16.3 to 12.5, which is close to Veidekke`s target of 12. Absence for all employees was 4.6% (4.3%). For hourly paid employees, the figure was 6.0% (5.4%), which is a negative development in relation to the company`s target of 5%. A number of preventive measures have been implemented and employees with frequent or lengthy absence are being followed up.
Veidekke focuses on the re-use of building waste and on limiting emissions from its operations. The establishment of `Environment and Building Waste` as a separate business area is an important part of this focus.
Shareholders and the stock market
At the end of 1997, Veidekke had 2,592 shareholders. The largest shareholders were Storebrand (12.3%) and Folketrygdfondet (10.2%). Foreign investors held 9.7% (11.1) of the shares. 1,240 Veidekke employees held altogether 10.9% of the shares. A total of 2.8 million Veidekke shares were traded on the Oslo Stock Exchange in 1997.
Prospects
`We are anticipating growth in house-building and we expect the level of activity in non-residential building to remain high. The heavy construction market is expected to decrease slightly, while the asphalt market will level off in 1998. Although moderate growth is expected in prices and wages, the high level of activity in parts of the market may result in some pressure on prices and costs,` says President and CEO Terje R. Venold.
`In the opening months of 1998, Veidekke has a good financial position, a competent organisation and substantial orders-on-hand. We can see business opportunities in existing and related markets. This gives us a good basis for further growth and development, while maintaining a strong focus on profitability,` says Mr. Venold.
For further information, please contact:
Terje R. Venold, president and CEO
phone + 47 66 98 54 05 or + 47 905 82 323 (mobile).
Jørgen G. Michelet, Senior Vice President, Finance and Investor Relations
phone +47 66 98 54 40 or + 47 917 43 856 (mobile).
Billingstad, 19 February 1998
VEIDEKKE ASA
The full press release including tables is ready for download on http://www.huginonline.no/VEI/DR/vei97k4_e.pdf |
