WEAK THIRD QUARTER FOR VEIDEKKE
No-one could be more disappointed than we are to be presenting these figures, says Veidekke's President and CEO Terje Venold. However, we have taken the necessary steps to rectify the situation, and are looking forward to a fourth quarter on a par with last year's.
Rainbow Hotel Opera
We've written down the value of the Rainbow Hotel Opera in Oslo by NOK 25 million, says Mr Venold. We were too optimistic in our estimate of the building time and costs. We also came up against a water penetration problem which resulted in higher acceleration costs than we anticipated, he explains.
It's a rare thing for Veidekke to write down the value of a project, but we have so many projects in progress that there's always the chance of something like this happening, he says. The Building Division's other operations are progressing satisfactorily, and its order books have never been so full, but we naturally have to draw a lesson from what happened here.
We had to invest in a new finance and plant hire system for Bautas, says Mr Venold. The old one couldn't cope with the Year 2000 problem. The new system has given us trouble we would never have expected, in the form of incorrect reports of both costs and utilisation of machinery. These problems didn't emerge until now, just as we were about to submit our results for the third quarter. The necessary steps have been taken, and Bautas will be back on track again next year, he adds.
I would like to emphasise that it is the original Bautas that is having these problems, he stresses. Both the plant hire part and the weather-proof coverings division from the former Stavdal are doing well in Norway and in Sweden, where last year's loss of NOK 25 million has now been turned into a profit of NOK 12 million, Mr Venold explains.
The heavy construction market in Norway is still weak, says Mr Venold. There has been no improvement in the course of the third quarter and we are expecting none until the second half of 2001 at the earliest.
After acquiring H. Hoffman & Sønner in Denmark and setting up new construction and property development companies in Stockholm, Veidekke is now the fourth largest contractor in Scandinavia. This gives us plenty of opportunity for further growth and development, and will also contribute to further improvements in profitability, Mr Venold concludes.
For further details, please see the enclosed Board of Directors' Report: