Veidekke ASA: Q1 2019 results

Veidekke achieved revenue of NOK 8.5 billion in the first quarter of 2019, and a pre-tax profit of NOK -21 million. The group’s quarterly order intake was NOK 9.2 billion. Veidekke’s construction operation had an order book valued at NOK 34.9 billion as at 31 March.

“Veidekke’s first-quarter performance was marked by the customary seasonal downturn in the industrial operation, and was as expected overall,” says Veidekke group CEO Arne Giske.

“Several of the construction businesses improved their sales and profits, although the group-wide profit was impacted by reduced profitability in the Norwegian civil engineering operation. While the Norwegian property development operation achieved strong sales and satisfactory profits, lower production and falling residential property prices had a negative effect on margins and profits in Sweden,” says Giske.

“In recent quarters, we have implemented far-reaching measures at both group level and in individual operations to re-establish profitability. Today’s capital market update discusses these efforts in greater detail, as well as our plan for improving Veidekke’s profitability in the period to 2020,” says group CEO Arne Giske.

Veidekke generated revenue of NOK 8.5 billion in the first quarter, an increase of 20% on the same quarter of last year. Growth occurred primarily in the Norwegian and Swedish construction operations, although several other business areas also achieved increased revenue.

The pre-tax profit amounted to NOK -21 million, compared to NOK -11 million last year. The first quarter is normally a weak quarter for Veidekke due to seasonal fluctuations in the industrial operation and parts of the civil engineering operation. While the profits of the building construction operations were boosted by increased revenue, weak profitability in the Norwegian civil engineering operation undermined the overall performance of the construction operation. Strong residential sales during the quarter increased the profits of the Norwegian property development operation, although profits in Sweden were negatively impacted by continued low demand and falling prices in Stockholm, as well as lower residential production. High activity levels in the aggregates operation improved the results of the industrial operation compared to last year.

The financial accounts are prepared in accordance with IFRS, which among other things regulates the recognition of revenue from residential projects in Norway. In the first quarter, the pre-tax result in accordance with IFRS totalled NOK -113 million. The difference between the financial and segment accounts is attributable to high activity in ongoing projects and the fact that no residential units were completed and delivered in the first quarter.

The Q1 order intake of NOK 9.2 billion was 37% higher than during the same period last year. As at quarter-end, the construction order book amounted to NOK 34.9 billion, representing an increase of NOK 1.1 billion during the quarter. Approximately 70% of the order book will be converted into revenue over the next 12 months.

Net interest-bearing debt totalled NOK 3.4 billion at quarter-end, compared to NOK 1.5 billion at the beginning of the year. The majority of the increase is attributable to payments for previously agreed purchases of several large building plots. Cash flow is normally weak in the first quarter due to low activity in the industrial operation and parts of the civil engineering operation.

The first-quarter LTI (lost time injury) rate for the group was 5.0, compared to 4.5 in the preceding quarter and 4.6 in Q1 2018. The group’s sick leave rate was 4.6% in the first quarter, up from 4.1% in the previous quarter but on a par with the first quarter of 2018. 

For press photos, see www.flickr.com/photos/veidekke, for more information, contact:

  •  Group CEO Arne Giske, tel. +47 905 89 526, arne.giske@veidekke.no.
  •  CFO Jørgen G. Michelet, tel. +47 917 43 856, jorgen.michelet@veidekke.no.
  •  Executive Vice President Communications and Public Affairs Lars Erik Lund, tel. +47 413 31 369, lars.lund@veidekke.no

This information is subject to the disclosure requirements pursuant to section 5 -12 of the Norwegian Securities Trading Act.

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Veidekke is one of Scandinavia's largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, develops residential projects, maintains roads, and produces asphalt and aggregates. The company is known for its involvement and local knowledge. Its annual turnover is NOK 36 billion, and half of its 8,500 employees own shares in the company. Veidekke is listed on the Oslo Stock Exchange and has always posted a profit since it was founded in 1936.