Veidekke reports NOK 80 million Profit for third Quarter
Generally speaking, activity remained stable in the Norwegian and Swedish building and construction markets during the third quarter, while the market in Denmark showed a somewhat weaker tendency.
Construction Norway continues to show progress. The results of the Property Division are also in line with expectations, despite the fact that sales of dwellings are still slow and the market for office buildings is weak. In Construction Denmark, volume of work and therefore also profits have been affected by the postponement of several negotiated contracts.
Operations in Sweden are being built up in accordance with the adopted strategy. In Stockholm, capacity costs have been too high in relation to sales volume. A gradual increase in turnover will help to close this gap towards the end of the year. Operations in Gothenburg, however, continue its stable and positive development.
"This shows that our core business in Scandinavia is generally speaking in line with our plans," says Terje R. Venold. "In some areas market development is somewhat weaker than expected and we had to make some organisational adjustments. But, after we have finished the ongoing adjustments in the Special Projects division, we will have an organisation that is better suited to the market situation that will prevail in the time ahead," Venold adds.
The write-down of the Bujagali project is linked with Veidekke’s share of claims relating to preparatory work carried out under contract for the US energy corporation, AES. Notice was given of this risk in the report for the second quarter. However, the above-mentioned NOK 25 million also includes a provision for the work of safeguarding Veidekke’s interests and resetting this project at zero.
Veidekke has also decided not to undertake any new large-scale projects outside Scandinavia. The Special Projects Division will cease to exist as a separate division and its remaining operations will become part of Construction Norway. In this connection, NOK 10 million has been set aside for reorganisation and workforce reductions and for the work of creating a better customer and project-driven organisation that focuses on the Scandinavian market.
In the Industry Division the sale of Bautas to Ramirent in Finland was completed and final settlement was made by 30 September as planned. This sale gave Veidekke an accounting gain of NOK 30 million and released about NOK 630 million in capital for the Group. Veidekke has purchased 33% of the shares in Ramirent OY.
Reference is also made to the Board of Directors’ report for the third quarter, 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