Veidekke Adjusts 2001 Profit Estimates Downwards
The problems in the Regional Construction Division can be attributed to a combination of circumstances. The integration processes of the many new companies in the Veidekke group have claimed too much of the division management's attention. This has led to inadequate follow-up and control during the construction period, which in turn has led to lower margins in some of the regions.
In both divisions, measures have already been taken, which will have short and long-term effects on results. Veidekke's department in Tromsø, which has been yielding a loss for some time, will now be closed down. Veidekke's construction activities in Northern Norway will be merged and operated from our department in Harstad. The excess capacity in Veidekke's Bergen operations will be reduced. In Oslo, which is the largest unit in the Regional Construction Division, the management team has been reinforced. In this unit, we will also take a loss on the Bøhler-companies that were acquired last year.
"We will direct all the organisation's attention towards improving project results, eliminating unnecessary costs and increasing our focus on project management. We have made organisational changes which will make us a much more project-oriented organisation, and contribute to a considerable improvement in the company's competitive strength," says Mr. Venold.
The building and heavy construction activities in Norway will be joined into one division, Construction Norway, in order to capitalise on synergies, increase flexibility and enhance our competitiveness. The Heavy Construction Division will be reorganised and developed to take on major building and construction projects throughout Scandinavia. This division will now be a project organisation with broad skills and a high degree of flexibility, which will reduce the company's vulnerability to volume fluctuations in each country.
"All in all, this means a downward adjustment of profits to a level on par with last year (NOK 185 million). This is of course very disappointing for everyone who cares about Veidekke, but there is every reason to emphasise that the other divisions, Industry, Property and Construction Denmark (Hoffmann), are performing according to plans and expectations. We expect prices in Heavy Construction to level off, and tender prices to even out further," says Mr. Venold. "It is also important to emphasise that the problems we have uncovered, were found in our core business where we have the best qualifications to solve them," he adds.
For further information, please contact:
Terje R. Venold, President and CEO,
tel. +47 21 0 77 01 / 905 82 323 (mobile)
Arne Giske, Senior Vice President and CFO, tel. +47 21 05 77 80 / 905 89 526 (mobile)
Kai Krüger Henriksen, Senior Vice President, Communication,
tel. +47 21 05 77 04 / 905 19 360 (mobile)