Veidekke ASA: Continued growth and profitability improvement
The Veidekke Group showed a revenue growth of 14% to 5.2 BNOK in the third quarter of 2012 as the Group's total order backlog increased by 21% to 16.1 BNOK. Profit before tax rose 22% to 274 MNOK, representing an operating margin of 5.2%.
"The third quarter results show that Veidekke is continuing a positive trend of strong growth in both turnover and new orders. Housing sales in Norway are good and margins in our Construction operations are gradually improving. Construction operations in Sweden also show some improvement, although home buyers there remain hesitant," says Veidekke's President and CEO, Terje R. Venold.
Veidekke's turnover in the third quarter totalled 5.2 BNOK (4.6 BNOK in 2011). Growth was largely organic, supplemented by smaller acquisitions. Profit before tax was 273.9 MNOK (225.1). The order backlog at the end of the third quarter was 16.1 BNOK (13.4). The figures are taken from the segment accounts for the third quarter, with the corresponding figures for the third quarter of last year in parentheses.
"The economic turmoil in Europe as well as European contractors' focus on the Norwegian market have intensified competition and put added pressure on margins. We are well prepared to face the competition and are strengthening our skills base with more employees and a growing pool of trainees and apprentices. An increased focus on HSE and the development of our models for participative partnerships put us in a position to capitalise on market opportunities and generate profitable growth going forward," says Terje R. Venold.
With a turnover of 3.9 BNOK in the third quarter (3.5) for Construction operations, and a profit margin improvement to 2.7% (2.1%), Construction earned a profit before tax of 105.8 MNOK (72.9). The Norwegian operations accounted for 71% of the revenue, while Sweden accounted for 21% and Denmark for the remaining 8%.
Revenue in the Norwegian construction operations increased by 20% from the third quarter last year, and better margins on newer projects resulted in a profit margin increase to 2.5% (2.3%). Turnover for construction operations in Sweden increased by 4%. The profit margin improved significantly to 2.6% (0.6%). Revenue in the smaller Danish business fell 27%, but a strong focus on profitability resulted in a profit margin increase to 4.6% (3.6%) and a virtually unchanged profit before tax.
The order backlog for construction operations increased to 14.6 BNOK at the end of the quarter (13.4), reflecting growth in Norway, flat growth in Sweden and a fall in orders from a difficult construction market in Denmark.
Veidekke Property operations had a turnover of 444.3 MNOK in the third quarter (314.4) with a profit before tax of 59.8 MNOK (31). A total of 191 units were sold in the quarter, including Veidekke's share of jointly owned projects.
Both sales growth and profit improvement relate primarily to the Norwegian operations, which accounted for 73% of sales in the third quarter. The housing market in Norway showed continued strong demand and brisk sales, especially in and around the major cities. Property activities in Sweden accounted for 26% of total property sales, and showed a moderate growth from the third quarter last year. The Swedish market is significantly more affected by the global economic turmoil, and the reluctance of Swedish banks to finance both projects and private market mortgages.
The number of housing units under production was 1 314 (our share) at the end of the quarter (1 205).
Industry operations had a turnover of 1 093.0 MNOK in the third quarter (918.6), with an increase in sales for both asphalt operations and road maintenance. Pre-tax profit fell to 115.1 MNOK (136.1), mainly due to increased margin pressure in the asphalt business.
The number of injuries declined in the third quarter, and the injury rate for the last 12 months fell to 8.3 from 8.9 in the previous quarter. Sick leave for employees in Norway increased slightly to 5.2%, but fell to 3.6% in Sweden and 2.3% in Denmark.
We also refer to the company's earnings report for the third quarter of 2012, which is attached to this press release.
For more information, please contact:
Chief Executive Officer Terje R. Venold, tel. (+47) 21 05 77 01 / (+47) 90 58 23 23 m, email@example.com
Executive Vice President, Communication, Kai Krüger Henriksen, tel. (+47) 21 05 77 04 / (+47) 90 51 93 60 m, firstname.lastname@example.org
Communications Manager Helge Dieset of Veidekke, tel. + 47 21 05 77 91 /+47 90 55 33 22, email@example.com