Veidekke: A satisfactory second quarter - Profit growth continues at Veidekke

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Veidekke achieved a turnover for the second quarter of NOK 3,018.7 million (NOK 2,647.6 million) and earnings before interest, tax, depreciation and amortisation (EBITDA) of NOK 216.8 million (NOK 168.2 million). Cash flow per share was NOK 5.70 (NOK 4.58). Pre-tax profit was NOK 77.7 million (NOK 14.9 million), giving earnings per share of NOK 1.66 (NOK 0.22).
“Looking at the situation as a whole, I see our profit performance, as well as the sale of Bautas and a number of new contracts on the heavy construction side as a powerful incentive to further development in the Group,” says President and CEO Terje R. Venold. “Our financial position has been strengthened considerably; we have very healthy order books throughout the Group, and I think we can claim that our acquisitions in Skåne and the new road contract north of Stockholm represent a breakthrough in the Swedish market,” he adds. “Of course, we still have some challenges to deal with and the unrest on the financial market is affecting us too, but we can allow ourselves to breathe more easily now.”
The level of activity in the Scandinavian building markets was largely as expected in the first half of the year: high in Norway, better in Sweden and stable in Denmark. The heavy construction market, however, showed a weaker development than anticipated.

The figures for Construction Norway show an upward trend for the division throughout the first six months, evidence that the improvement measures are taking effect. The good quarterly results achieved by Property Scandinavia can be ascribed to a gain on the sale of the Berskau residential and day care centre in Drammen, but they are also a result of Veidekke’s rules for entering income from housing projects in relation to sales and progress.

Construction Denmark shows a lower profit than anticipated as a result of the delay in starting up several major projects. However, the division has very healthy order books and a number of major projects under clarification. Construction Sweden posted weaker profit figures in Stockholm than expected owing, among other things, to overcapacity in relation to turnover volume. “An increasing volume of orders will improve the balance between capacity and turnover in the course of the autumn. The major contract we were awarded this month for the construction of 34 km of motorway on the E4 highway north of Stockholm will help to do this,” says Venold. The contract sum is just over SEK 1.3 billion and the work will be carried out in close cooperation with one of Sweden’s leading contractors, Vägverket Produktion.

In the second quarter, Veidekke expanded its operations in Sweden by taking over Lennart Knutsson AB’s subsidiaries, Tractatus AB (Harald Johnssons Byggnads), Byggsmederna AB, Göte Bengtsson Stål AB and Tullberg Entreprenad AB. These four construction companies have a total turnover of approximately SEK 270 million and 230 employees. They have been included in the accounts for the first six months of the year. Veidekke is now present in its three main priority areas, the regions around Stockholm and Gothenburg and in Skåne.

The Special Projects division showed favourable progress in Scandinavia in the first half of the year, but the overall figures for the division are still affected by a general overcapacity and the further postponement of the hydropower project in Bujagali in Uganda. “We have decided to demobilise the site in Uganda for the time being and transfer these resources to other projects. Special Projects has recently won a number of major heavy construction contracts in Norway, and the new motorway contract in Sweden is also an example of how this reallocation of resources has opened up new opportunities,” says President and CEO Venold.

The Group has a solid volume of orders-on-hand. At the end of the second quarter, order books stood at NOK 7,255 million, compared with NOK 6,097 million at the same time last year and NOK 7,177 at the end of last year. The contract for the construction of the motorway in Sweden is not included.

Reference is also made to the Board of Directors’ Report for the Second Quarter 2002, which is enclosed with this press release.

For further information, please contact:

Terje R. Venold, President and CEO,
phone (+47) 21 05 77 01 or 905 82 323

Arne Giske, Senior Vice President and CFO,
phone (+47) 21 05 77 80 or 905 89 526

Jørgen G. Michelet, Director, Finance and Investor Relations,
phone (+47) 21 05 77 22 or 917 43 856

Kai Krüger Henriksen, Senior Vice President Communication,
phone (+47) 21 05 77 04 or 905 19 360


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