As expected, Veidekke's first quarter results are marked by the weak economy and financial crisis. 

 

 

- There is no doubt that times are tough, and that the effect of this is also being felt in our industry. The various economic stimulus packages offered by the authorities are a boon to us all, but in terms of both scope and progress, they only partly compensate for the decline in the private sector, says President and CEO of Veidekke ASA, Terje R. Venold. 

- At the same time, several of our customers are having problems financing new projects, causing projects to be delayed or even stopped altogether. Nevertheless, construction operations are still the main driver of our Group, and in this area, we are maintaining focus on margins, on retaining skills and on creating stability in the organisation. The Industry Division showed the weakest results this quarter, due to necessary and comprehensive write-downs performed within the asphalt operations in Mid-Norway, and a decrease in volumes within recycling, crushed stone and gravel. However, it seems as if the prolonged decline in the order situation is now flattening out, and property operations are also showing signs of improvement, Mr Venold adds.

 

The Norwegian construction operations still have both the largest volumes and the highest profitability, but Sweden and Denmark are also achieving profit growth compared with the same quarter last year. The heavy construction market is generally good, and offers many opportunities in the times ahead. However, the building market is all the more challenging, even though the public sector is now taking the opportunity to carry out a number of much-needed projects.

The markets for our Scandinavian property operations are still characterised by a low level of activity, with the Swedish market as the best of the three. Lower interest rates help to some extent, but due to uncertainty about the prospect of increased unemployment in the near future, it will still take some time before the situation really improves.

For our industry operations, the year started off with a weak first quarter. This was mainly due to necessary provisions made for ongoing contracts and stocks in the asphalt operations in Mid-Norway, but also to a considerable drop of almost 30 per cent in demand from private customers within the areas of recycling and crushed stone and gravel, which reflects the general decrease in volume within the entire building and construction industry.

 

 

Sickness absence for all employees in Norway was 5.4 per cent (5.2 per cent). For all employees in Sweden, sickness absence was 2.7 per cent (3.0 per cent), and in Denmark, the equivalent numbers were 2.2 per cent (3.1 per cent). The injury rate (lost-time injuries per million hours worked) for the whole Group ended up at 4.5 (6.9) for the first quarter.

We also refer to the Board of Directors' report for the first quarter 2009, which is enclosed with this press release.

Terje R. Venold, President and CEO, Tel. 21 05 77 01 / 90 58 23 23, terje.venold@veidekke.no

Jørgen W. Porsmyr, Executive Vice President/CFO, Tel. 21 05 76 44 / 90 75 90 58, jorgen.wiese-porsmyr@veidekke.no

Kai Krüger Henriksen, Executive Vice President Communication, Tel. 21 05 77 04 / 90 51 93 60, kai.henriksen@veidekke.no