PROFITS CONTINUE TO RISE

At the end of the first three quarters of the year Veidekke's turnover was NOK 3,721 million, as against NOK 3,019 million at the same time last year. Its pre-tax profit was NOK 225.8 million, which is an increase of NOK 133.4 million compared with last year. The profit for the third quarter alone was NOK 79.5 million, or NOK 15.2 million higher than the same period last year. Earnings per share were NOK 26.70, as against NOK 10.40 for the same period last year.

The growth in turnover so far this year has primarily been achieved in the Building and Heavy Construction Divisions. The Asphalt Division's turnover was on a par with last year. In the Property Division, both turnover and profit have been influenced by the sale of the Sjølyst Allé project at Skøyen in Oslo earlier this year, which resulted in a gain of NOK 90 million.

Orders-on-hand for Building and Heavy Construction totalled NOK 2,610 million at the end of the third quarter, compared with NOK 2,191 million at the same time last year and NOK 2,261 million at the beginning of the year.

Building
Veidekke's Building Division showed a turnover for the first three quarters of NOK 1,617 million (NOK 1,357 million) and a profit of NOK 63.5 million, which is an increase of NOK 28.4 million compared with the same period last year. The profit for the third quarter was NOK 28.4 million (NOK 14.8 million). Orders-on-hand amounted to NOK 1,206 million, compared with NOK 1,094 million at the same time last year and NOK 1,125 million at the beginning of the year.

Veidekkes largest ongoing contracts include the development of the Strømmen Park Shopping Centre for Olav Thon, the extension of the Sandvika Shopping Centre for Olav Thon Eiendomsselskap, two commercial buildings in Sjølyst Allé at Skøyen for Samvirke Forsikring, and the Halden Shopping Centre for the Profier Group. Veidekke owns building sites for almost 1,000 residential units with an estimated sales value of NOK 1.2 billion. Three quarters of these are in Oslo and Akershus. These projects will be realised and sold primarily in 1998 and 1999 and are not included in orders-on-hand. At the end of the third quarter, 128 dwellings (101), spread over 4 (3) projects, were in progress for Veidekke's own account.

Heavy Construction
At the end of the third quarter, the Heavy Construction Division had a turnover of NOK 1,287 million (NOK 996 million), giving a profit of NOK 36.2 million (NOK 17.6 million). The profit for the third quarter was NOK 12.1 million (NOK 10.2 million) and takes into account the provision made for the uncertainty of a tunnelling project in Italy under the direction of NOCON. A dispute has arisen here with the client regarding the amount of compensation for an increase in costs resulting from difficult rock conditions.

The VS-Group's projects on the western runway for the new airport at Gardermoen (50-50 Veidekke and Selmer) has not progressed as originally anticipated. Provision for the uncertainty relating to this project has already been made.

Otherwise, the level of activity remained high in the third quarter. Other major ongoing projects include the North Cape Tunnel, the multi-storey car park at the Oslo Central Station for the Gardermoen Line, and the stretches of road between Løkenåsen and Saueråsen on the E18 and between Smørbekk and Hølen on E6.

Orders-on-hand showed an upward trend in the third quarter and stand at NOK 1,404 million, compared with NOK 1,097 million at the same time last year and NOK 1,136 at the beginning of the year.

Veidekke's international operations are mainly carried out through its subsidiary Noremco Construction and the Norwegian Construction Group NOCON. Turnover was NOK 240 million (NOK 165 million) giving weaker profit figures than expected.

Asphalt
The Asphalt Division showed a turnover at the end of the third quarter of NOK 712 million (NOK 694 million) giving a profit of NOK 38.2 million (NOK 38.7 million). The profit for the third quarter alone was NOK 40.2 million (NOK 38.1 million).

The volume of work contracted out to private asphalt contractors by the Public Roads Administration has been reduced this year, one of the reasons being a cutback in grants for the maintenance of the road network. There has also been less demand than expected from local authorities and from the private market. In Veidekke's case, however, the asphalt contract at Gardermoen Airport has compensated for the reduction in the rest of the market.

Crushed stone and gravel activities have shown positive results throughout the year. This applies to both volume and profits.

Property
Total rental revenue so far this year are NOK 27.3 million (NOK 37.3 million). The fall in rental revenues is due to the sale of completed properties. Total operating revenues amounted to NOK 117 million, which includes a gain of NOK 90 million on the sale of Sjølyst Allé in the first quarter, giving the Property Division a profit of NOK 91.2 million (NOK 2.0 million).

At Lysaker, a commercial building with a total area of 5,400 sq.m. is under construction for Veidekke's own account. These premises have now been fully let and the building will be completed in 1998. The Property Division has a number of development projects on hand in Oslo and surrounding areas, including a project with a development potential of 37,000 sq.m. in the east of Oslo.

Financial standing
At the end of the third quarter, gross investments in machinery and equipment totalled NOK 138 million (NOK 114 million). Sales of machinery and equipment amounted to NOK 23 million (NOK 5 million). The Group's total assets at 30 September were NOK 2,530 million (NOK 2,133 million), giving an equity ratio of 32.5% (31.2%).

Veidekke's net interest-bearing position was NOK 55 million (NOK -9 million). Veidekke has unused credit facilities amounting to NOK 301 million (NOK 307 million) of a total of limit of NOK 351 million (NOK 372 million).

Shareholders
For the sixth year running, Veidekke made an offer of shares to all the employees in the Group, as part of its aim to involve its employees in the ownership of the company. A total of 100,000 shares were set aside for this purpose and employees could subscribe for between 10 and 200 shares at a 20% discount on the market price. All in all, 773 employees subscribed for 98,345 shares. 320 of these employees did not already hold shares in the company. Following this year's issue, a total of 1,244 employees hold about 11% of the shares in the company.

Prospects
'The growth in the building and construction market will fall off somewhat towards the end of the year, but the level of activity in the market will remain high', says President and CEO Terje R. Venold. 'At Veidekke, we have stressed the importance of being selective in our choice of new contracts, and the quality of our orders-on-hand is therefore good. Our internal improvement process is still an important priority, and this has also helped to put us in a position where we should be able to achieve our profit targets', says Mr. Venold.


Temporary report for third quarter is available for download from http://www.huginonline.no/VEI/DR/vei97k3_e.pdf

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).