PROFITS UP FOR VEIDEKKE IN 1995

Date:Tue, 27.Feb 1996 From: Veidekke

Veidekke had a turnover of NOK 3,965 million in 1995, compared with NOK 3,162 million in 1994. This gave a profit of NOK 78.4 million as against NOK 5.2 million a year earlier. Turnover and profits rose in all the business areas. Heavy Construction posted a profit for the year of NOK 2.9 million as against a loss of NOK 35 million in 1994. Building operations showed a profit of NOK 34.5 million against NOK 13.0 million last year, while the figure for Asphalt was NOK 42.4 million, against NOK 35.7 million last year. Orders-on-hand excluding Asphalt rose from NOK 1.731 million to NOK 1.944 million.

Earnings per share were NOK 9.13 in 1995, compared with NOK -1.25 in 1994. The Board of Directors will propose a dividend of NOK 3.00 per share to the Annual General Meeting. The dividend distributed in 1994 was NOK 2.00 per share.
 

Figures in NOK million


Building operations
The total building market showed a growth of 15 % in 1995 and, like the previous year, growth was greatest in Oslo and Akershus. The steep upswing in building costs in 1994, was however less marked in 1995. The average growth in building costs for Norway as a whole was on a level with the consumer price index at the end of 1995.

Building operations achieved a turnover of NOK 1.952 million in 1995 compared with NOK 1,558 million the previous year. The profit for the year was NOK 34.5 million, as against NOK 13.0 million in 1994. There were only minor changes in orders-on-hand during 1995 and at 31 December the figure stood at NOK 1,024 million as against NOK 1,154 million a year earlier.

At the end of 1995, the building division's portfolio contained several projects prepared in cooperation with the client. This type of contract is based on mutual trust and previous, successfully completed contracts for the client. Veidekke's largest ongoing building projects are the Amanda Shopping Centre in Haugesund for Steen & Strøm Invest and OBS, a shopping centre for Steen & Strøm Invest at Vinterbro south of Oslo, and a centre for textiles and fashion at Skøyen in Oslo.

Veidekke initiated the building of 101 dwellings for its own account in 1995, as against 258 in 1994. The number of unsold dwellings at the end of the year was 33 against 39 in 1994. The decrease in house-building for Veidekke's own account is tied up with the generally higher level of activity and allocation of resources for commercial buildings and dwellings for external clients.

Veidekke's German subsidiary, Veidekke GmbH, was mainly engaged in the building of petrol stations for Statoil. Turnover was NOK 85 million compared with NOK 70 million in 1994.

Heavy construction
Heavy construction maintained a high level of activity in 1995. Competition is still sharp, and international contractors are active in the market, particularly in eastern Norway. The heavy construction division showed a turnover of NOK 1.172 million, as against NOK 951 million in 1994. Operations gave a profit of NOK 2.9 million, compared with a loss of NOK 35 million last year. The improvement is the result of continuous focus on the measures that were introduced in 1994, which include giving high priority to tenders, making better use of Veidekke's systems and routines and cost-cutting measures. Orders-on-hand rose during the year from NOK 577 million to NOK 920 million at the end of the year. A further improvement in profits is expected for 1996.

Turnover from international operations stood for about 24 % of the division's turnover last year. Included here is Noremco Construction, which is engaged in contracting operations in Tanzania and Zambia. Last year Noremco had a turnover of NOK 171 million, compared with NOK 134 million in 1994. Veidekke, which had previous held 47.5 % of Noremco, acquired total ownership as of 1 January 1995. Norwegian Construction Group, Nocon, which is owned by Veidekke and Selmer, had a turnover of NOK 156 million last year as against NOK 105 million in 1994.

Asphalt
Veidekke's asphalt operations showed a turnover of NOK 812 million, as against 687 million in 1994, and gave a profit of NOK 42.4 million, compared with NOK 35.7 million the year before. These figures included turnover and profit for Korsbrekke og Lorck AS, of which Veidekke holds a 60% ownership share. In 1995, the asphalt market developed much as expected, but surplus capacity and recently formed companies continued to put pressure on prices. Veidekke's asphalt operations achieved better figures than the year before, due primarily to more efficient manage-ment and savings in costs, but also to an increase in net gains on sales from NOK 8 million in 1994 to NOK l2 million in 1995.

Sales of crushed stone and gravel rose on both the domestic and the export markets. Veidekke's aggregate production of crushed stone and gravel materials amounted to 3.3 million tonnes in 1995, establishing Veidekke as one of the leading operators in Norway. It was agreed in January 1996 that Veidekke would take over 100 % of the shares in Molde Asfalt A/S. This acquisition will strengthen Veidekke's market position in Romsdal.

Orders-on-hand for the asphalt division stood at NOK 125 million at the end of the year (NOK 200 million including options). This includes the asphalting contract for the east runway at the new main airport at Gardermoen, the building of asphalt cores for Statkraft Anlegg A/S at Svartisen and an asphalting contract for Sola airport.

Property
At the end of the year, Veidekke owned property totalling just over 90,000 square metres. The occupancy rate for properties let to external tenants was 98 %, measured in rental value. Total rental revenues were NOK 55.8 million, of which NOK 43.0 million was from external tenants. Profit for the year was NOK 0.8 million compared to NOK 2.6 million in 1994. Included in the profit figures are interests and as costs for projects under preparation totalling NOK 6.9 million. Net gain on sales is NOK 2.1 million compared with NOK - 0,7 million in 1994.

Veidekke's largest development project for its own account is at Skøyen in Oslo, where Veidekke and partners plan to erect five buildings with a total area of 55, 000 square metres. The first phase, a textile and fashion centre totalling about 23,000 square metres, was commenced in November and will be completed in March 1997.

Financial situation
Gross investments in machinery and equipment amounted to NOK 163 million in 1995, as against NOK 87 million in 1994, while investments in buildings and sites totalled NOK 26 million against NOK 73 million in 1994. Total assets stood at NOK 2,059 million at the end of the year, compared with 1.923 million the year before.

Total equity capital increased from NOK 552 million to NOK 600 million. The equity ratio was 29,2 % compared with 28.7 % in 1994. Net interest bearing liabilities stood at NOK + 105 million compared with NOK -11 million the year before. The improvement can be ascribed to positive cash flows from operations. At the end of the year, liquid assets stood at NOK 388 million as against NOK 372 million a year earlier, to which can be added unused credit facilities amounting to NOK 372 million (NOK 350 million in 1994) of a total limit of NOK 372 million (NOK 430 million in 1994).

Shareholders and the stock market In the autumn of 1995, Veidekke made a private offer of shares to its employees. The total offer of 75,000 shares was fully subscribed and the employees now hold approximately 10 % of the shares in Veidekke. Veidekke's two largest single shareholders are Folketrygdfondet with 11.1% and Avansefondene with 8.5 % of the shares.

Prospects
In view of the general outlook for the Norwegian economy, we expect growth to continue in the building and construction market in 1996. However, there is reason to anticipate a somewhat slower growth rate than in 1995. The number of commenced dwellings will remain on a par with last year. A high level of activity is expected in commercial building in 1996, although the number of new buildings started on will remain unchanged. Heavy construction activities will increase slightly in 1996. The Gardermo development and investments in roads and railways will contribute to a large degree to this growth. Preliminary forecasts indicate the same overall market level in 1997.

Veidekke's figures for 1995 showed a positive development in each of its business areas. Seen as a whole, this corresponded to the targets for the year, which included a return to the level of earnings the Group had before its setback in 1994. A wide-ranging improvement and development process initiated by Veidekke will be continued and is expected to lead to further improvements in 1996.

Contact persons:
Terje R. Venold, President and CEO
phone + 47. 66 98 54 05 or + 47 67 58 12 25 (home)

Jørgen G. Michelet, Senior Vice President, Finance
phone +47 66 98 54 40 or + 47 22 49 30 36 (home)