Veidekke's prospects for 1999 point towards further growth
The most pessimistic predictions for the building and construction market do not appear to be coming true. At Veidekke's annual general meeting on Wednesday, 28 April, President and CEO Terje R. Venold was able to present a further upswing for the Group. We see an increase in both turnover and orders-on-hand, says Mr. Venold, and, by combining all our asphalt, crushed stone and gravel operations and ready-mix concrete, recycling and plant hire in one division, we have increased the competitive strength of this entity. We expect our Industry Division to achieve a total turnover of about NOK 1.6 bn in 1999, he adds.
During the first quarter, Veidekke acquired the operations of Norske Stålbygg A/S in Sandefjord and on 1 May 1999, the Group will also take over the operations of Block Berge Bygg A/S. Norske Stålbygg designs and erects commercial and industrial buildings using steel as the structural basis, while the purchase of Block Berge Bygg A/S will give Veidekke a leading position as a local contractor in the county of Rogaland as well as a modern plant producing concrete elements for sale all over Norway. The synergy created by these two acquisitions in combination with our existing building and heavy construction operations and between each other in the field of design, production and marketing of steel and concrete elements will be very productive, Mr. Venold continues. Together, these two companies will give Veidekke a turnover of more than NOK 400 million, and we will have access to a part of Norway where we have previously had no position.
The downtrend in the building market, which began in the second half of last year, continued into 1999. Fewer new residential and non-residential buildings were started in the first quarter than in the same period last year. It has been estimated that the decline in the building and construction industry from 1998 to 1999 will be about 8%, but there are marked regional differences and the decline has been most noticeable so far in the Oslo and Akershus region. How far the market will fall and how long the decline will last will depend to a large extent on the interest rates, says Mr. Venold, but we must remember that the activity level still is high.
It is encouraging that Veidekke has increased its orders-on-hand, without relaxing its requirements regarding earnings. Although the market prospects are still uncertain, our order books indicate a high level of activity for Veidekke this year, too. This is also underpinned by the spread of our activities. We have operations in every county in Norway and in this way the regional differences in the building and heavy construction industry can be evened out, and our Industry Division contributes to both stability and growth. However, we are fully prepared in the event of changes in the market situation and we are continuing our efforts to reduce costs.
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