OFF TO A GOOD START
| · Increased profits in the Building and Heavy Construction Divisions Veidekke`s turnover in the first quarter of 1998 showed an increase of 15% on the figure for last year`s first quarter, and amounted to NOK 1,073 million (NOK 930 million). Pre-tax profits were NOK 35.9 million, compared with NOK 100.3 million in the first quarter of 1997. The main reason for this difference is that, during the first quarter of 1997, Veidekke made a substantial profit from the sale of a major property development project. The profits and profit margins for the Building and Heavy Construction Divisions have shown a positive trend during the first months of this year, and the Industry Division has developed steadily. Earnings per share were NOK 4.58, compared with NOK 12.43 for the same period last year. During the course of the first quarter, the Building and Heavy Construction Division`s order books increased from NOK 2,710 million at the end of last year to NOK 3,165 million. At the end of the first quarter of last year, the order book was worth NOK 2,583 million. Building During the first months of this year, the Building Division has secured two major building projects for the Olav Thon Gruppen. In the period, two major projects have been completed and handed over. One of these was the Cato Zahl Pedersen Senter in Son, a training and rehabilitation centre for the chronically ill and people injured in road accidents. This was a successfully completed development contract which required a high level of cooperation between client and contractor. Heavy Construction The order book has also shown a positive trend and was worth NOK 1,571 million, compared with NOK 1,258 million at the same time last year and NOK 1,507 million at the end of last year. During recent months, the Heavy Construction Division has signed two major contracts for industrial development. In December last year, Veidekke secured a contract with Norsk Hydro in connection with the development at Sture (NOK 185 million), and in March 1998 a contract was signed with Statoil for building and plant construction in connection with the Kårstø development (NOK 420 million). Turnover for international operations in the first quarter amounted to NOK 98 million. There continue to be difficulties with Nocon`s tunnel project in Italy, where there is an unresolved dispute with the project owner regarding the amount of compensation to be paid for extra costs incurred by extremely difficult and unpredictable rock conditions. During this first quarter of 1998, nothing has happened to alter the company`s assessment of the legal circumstances, and the Board of Directors regards the allocations made as sufficient. Industry The contract with the Municipality of Oslo for winter maintenance and spring refurbishment of parts of the municipal road network has led to a more efficient utilisation of the company`s plant and machinery capacity during the winter months. Property Veidekke is now concluding the negotiations for the sale of its properties at Olav Brunborgs vei 4-6 in Asker. Veidekke`s property developments on its own account, both residential and non-residential, are now all incorporated in the Property Division. 213 residential properties were under construction at the end of the first quarter. Financial situation Health, safety and environment Statements from the Norwegian Contractors` Association indicate that last year the average lost-time injury rate in the construction industry was 25.5, while the corresponding figure for Veidekke was 12.5. The rate of absenteeism within Veidekke is much the same as for the industry as a whole. Prospects For further information, please contact: Terje R. Venold, President and CEO Jørgen G. Michelet, Senior Vice President, Finance and Investor Relations
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