Veidekke ASA: Strong growth, solid order backlog and good earnings for Veidekke
Veidekke continued its strong performance through the fourth quarter 2012. The combined turnover for the year came to more than NOK 20 billion, up 14%, and earnings in the last quarter of last year further increased the Group's profit margins. Consolidated earnings before tax amounted to NOK 680 million.
"We are very satisfied with the developments in the Group," says President and CEO Terje R. Venold. "The market conditions vary enormously between the three countries we operate in, and most of the growth is in the Norwegian operations, primarily Construction and Property Development. The interaction between the different companies is essential to Veidekke's growth and development. Good interaction yields synergy effects in terms of profits as well as increased competencies and a competitive edge on the market," Venold adds.
Veidekke had a turnover of NOK 20.5 billion in 2012, compared with NOK 17.9 billion in 2011. The pre-tax result was a profit of NOK 680 million (NOK 751 million). Construction operations had an order backlog of NOK 15 billion (NOK 13.9 billion). The figures are taken from the segment accounts. Earnings per share was NOK 3.40 (NOK 4.80), and the board proposes a dividend of NOK 2.50 per share (NOK 2.75).
The combined turnover from construction operations in the fourth quarter came to NOK 4,390 million (NOK 4,152 million), resulting in a profit of NOK 226 million (NOK 110 million). For 2012 as a whole, turnover in this business area amounted to NOK 16.3 billion (NOK 14.4 billion) and the profit was NOK 497 million (NOK 301 million).
Construction operations in Norway increased by 21% compared with 2011. Profit margins are not on target, but the development is going in the right direction. In terms of earnings, housing and non-residential building projects are on a good level, but heavy construction operations are not achieving the results we know they could. The order backlog continued to grow and amounted to NOK 11.2 billion at year-end, compared with NOK 10.3 billion in 2011.
Construction operations in Sweden saw the positive trend continue, even though some parts of the Swedish market are slightly weaker than expected. The improvements are largely linked to operations in the Stockholm area, but can also be attributed to the acquisition of Brinkab AB with its focus on industrial customers. In Denmark, Hoffmann has decided to focus on developing its expertise aimed at directly negotiated contracts with customers, which has resulted in reduced volumes, but a significant increase in the profit margin of 7.2%, compared with 6.3% in Q4. These margins are almost unparalleled in Denmark in 2012. Both Sweden and Denmark have a satisfactory order backlog.
Turnover increased by 53% from the fourth quarter last year, while profit before tax increased by 74% to NOK 49 million. The improvement is primarily linked to developments in the Norwegian property operations. In Norway, the housing market is characterised by high demand and strong sales in and around the major cities. The market in Sweden is significantly more affected by the turmoil in the world markets. A total of 124 units were sold in the fourth quarter (including Veidekke's share of jointly-owned projects). This is slightly lower than in previous quarters, primarily due to the fact that several projects are being built in joint ventures with other companies and that many projects are already fully sold.
There were 1,277 dwellings under construction at the close of the quarter (Veidekke's share), compared with 1,104 at the end of 2011. The sales rate in the portfolio was 80%.
Turnover for Veidekke's Property Development division in Q4 ended at NOK 697 million (NOK 457 million), yielding a profit of NOK 49 million (NOK 28 million). For 2012 as a whole, turnover came to NOK 2,110 million (NOK 1,525 million) and the profit was NOK 173 million (NOK 281 million, including a net profit of NOK 133 million from the acquisition of the remaining shares in Bouwfonds Veidekke AB).
The combined turnover for Veidekke Industri in the fourth quarter came to NOK 886 million (NOK 985 million), resulting in a quarterly profit of NOK 20 million (NOK 60 million). For 2012 as a whole, turnover amounted to NOK 3,192 million (NOK 3,041 million) and a profit of NOK 38 million (NOK 215 million).
The decline in turnover is due to slightly lower production volumes in Asphalt, which has impacted the profit for the period too. Industry's total volume of asphalt for the year was 5% higher than in 2011, due to better performance in the competitive tendering for the Norwegian Public Roads Administration. As a result of strong pressure on prices combined with increased operating expenses, Asphalt's overall result for 2012 is negative. The introduction and testing of a new pay system for craftsmen have been challenging and have entailed a substantial overall increase in payroll costs.
Health, safety and working environment (HSE)
In November 2012, one person lost their life while working for one of Veidekke's subcontractors. This was the third fatal accident in 2012. Veidekke works continuously on preventing adverse events and accidents. Sickness absence for all employees in Norway for the past 12-month period was 4.9% (5.6%) in Q4, compared with 3.6% (3.7%) in Sweden and 2.0% (2.4%) in Denmark. The LTI rate for the Group as a whole (the number of lost-time injuries per million working hours as a 12 month rolling average) was 8.4 (6.1) in the fourth quarter.
Please refer to the Board of Director's report for fourth quarter 2012, which is attached to this press release.
For more information please contact:
CEO Terje R. Venold, tel. +47 21 05 77 01 / +47 905 82 323, firstname.lastname@example.org
CFO Jørgen Wiese Porsmyr, tel. +47 21 05 76 44 / 907 59 058, email@example.com
Communications Director Kai Krüger Henriksen, tel. +47 21 05 77 04 / +47 905 19 360, firstname.lastname@example.org
Veidekke is one of Scandinavia's leading contractors and property developers with a turnover of NOK 20 billion (2012) and 6,300 employees. Activities include building and construction projects, residential developments, asphalt plants, gravel and aggregates and road maintenance. Our values are professional, honest, enthusiastic and pioneering. Our goals for health, safety and the environment, HSE, have equal status with our financial goals. Veidekke is characterised by a strong corporate culture with employee involvement and co-ownership as important cornerstones. More than half of the employees are co-owners, holding around 20% of the Group's shares between them. The company is listed on the Oslo Stock Exchange and has never declared a loss since it was founded in 1936.
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Source: Veidekke ASA via Thomson Reuters ONE