Veidekke ASA: Revenue growth in a more challenging market
Veidekke reported revenue of NOK 7.1 billion for the first quarter of the year, which
is an increase of 9% over the first quarter of 2017. The result before tax was a loss of NOK 11 million, compared with a profit of NOK 47 million for the same quarter last year. The order backlog at the end of the quarter was NOK 31.9 billion, after a total order intake of NOK 6.7 billion. The earnings per share was NOK -0.1 (0.3) in accordance
with the segment accounts.
Veidekke's construction operations reported revenue of NOK 6.5 (5.8) billion for the first quarter, an increase of 11% over the first quarter last year. The main increase came in Norway. Profit before tax was NOK 158 million, up from NOK 112 million in the corresponding period in 2017. The profit margin for the quarter increased to 2.4% from 1.9% one year ago.
"Revenue and the profit from the Norwegian construction operations have improved, primarily due to a high level of activity in the building construction operations in Eastern Norway. The Swedish construction operations have improved both earnings and margins from last year,
and the Danish operations maintained good profitability and increased their order backlog. All three countries had substantial order intakes for the quarter, and the Group's total order backlog is solid. In both Norway and Sweden the project portfolio is shifting towards non-residential buildings," says Giske.
Profit before tax from the property development operations was NOK 72 million, compared with NOK 135 million for the same quarter last year. The greatest decline in profit was in
the Swedish operations. Veidekke sold 152 residential units in the first quarter, of which the company's share was 125 residential units. This was a decline from 213 sold residential units in the fourth quarter of 2017 and from 397 residential units one year ago.
At the end of the quarter, the number of residential units under construction was 2,514, compared with 2,620 at the end of the year. The sales ratio of the portfolio is still high at 84%.
"While the Swedish property development market is still cautious, the residential market in Norway is showing signs of improvement. Nevertheless, we see that residential buyers are spending more time on the buying process than before. This is contributing to lower sales
and a later start-up of new projects, which will in turn provide a lower residential production and impact revenue and earnings," says Giske.
The industrial operations is in low season and reported revenue of NOK 475 million for the first quarter of the year, which is on par with last year. The result before tax was a loss of NOK 217 (loss of 183) million. The decline in profit is mainly attributed to higher capacity costs related
to expansion of the operations over the past few years. Veidekke was awarded 46% of the asphalt contracts for the Norwegian Public Roads Administration after the annual tendering round.
Veidekke has ambitious OHS goals and works systematically with awareness campaigns and risk prevention to make the projects and sites safer. The overall LTI rate (number of injuries per million hours worked) for the Group was 4.6 for the first quarter, compared with 4.2 for both the previous quarter and the first quarter of 2017. Sickness absence increased to 4.5%, from 4.0% for the previous quarter and is on par with the first quarter of 2017.
During the quarter, Veidekke Entreprenør (Construction) acquired 80% of the shares of Grande Entreprenør AS in Trøndelag, while Veidekke Sweden has entered into an agreement to acquire 90.1% of the shares of Billström Riemer Andersson AB (BRA) in Gothenburg. With the acquisitions, the Group's position in important markets has been consolidated.
Note: The profit in the segment accounts for 2017 has been restated in accordance with the new revenue recognition standard IFRS 15.
For press photos, see www.flickr.com/photos/veidekke, for more information, contact:
President and CEO Arne Giske, (+47) 905 89 526, arne.giske@veidekke.no
SVP Finance Jørgen G. Michelet, (+47) 917 43 856, jorgen.michelet@veidekke.no
EVP Communications and Public Affairs Lars Erik Lund, +47 413 31 369, lars.lund@veidekke.no
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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. Annual revenue is approximately NOK 32 billion, and half of the 8,000 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.