Slide 1: 4th Quarter 2017 Investor presentation
4TH QUARTER 2017 Investor presentation 8 February 2018 1
Slide 2: Contents
CONTENTS Highlights 2017 Results – segments and Group Focus and opportunities Veidekke to build Patienten in Stockholm 2
Slide 3: Highlights 2017
HIGHLIGHTS 2017 DEVELOPMENTS MARKETS RESULTS High level of activity and A correction in the housing Total result at a good level strengthened order market during 2017 backlog Variation in profitability Solid outlook for building Improvement measures construction and civil Dividend proposal of NOK in
Slide 4: Revenue and earnings
REVENUE AND EARNINGS REVENUE PROFIT BEFORE TAX 32 1 600 28 1 400 108 24 1 200 20 1 000 NOK mill. NOK bill. 16 30.1 31.5 800 1 352 1 441 12 23.9 24.5 600 21.2 967 1 043 8 400 776 4 200 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016* 2017 *NOK 108 mill. in positive one-off effect from changes to the
Slide 5: Profit before tax per business area
PROFIT BEFORE TAX PER BUSINESS AREA CONSTRUCTION PROPERTY DEVELOPMENT INDUSTRIAL 800 800 800 600 600 600 NOK mill. NOK mill. NOK mill. 400 759 400 400 723 644 549 563 549 200 446 200 200 280 306 220 210 190 206 158 117 0 0 0 2013 2014 2015 2016* 2017 2013 2014 2015 2016* 2017 2013 2014 2015 2016* 20
Slide 6: Solid order intake construction
SOLID ORDER INTAKE CONSTRUCTION REVENUE AND ORDER INTAKE CONSTR. (“BOOK-TO-BILL RATIO” 1.32) QUARTERLY ORDER INTAKE CONSTRUCTION 12 40 35 10 30 8 8.5 NOK bill. 25 NOK bill. 20 6 15 4 10 2 5 12m revenue 12m order intake 0 0 Q4 14 Q4 15 Q4 16 Q4 17 Q4 14 Q4 15 Q4 16 Q4 17 6
Slide 7: Considerable increase in order backlog
CONSIDERABLE INCREASE IN ORDER BACKLOG ORDER BACKLOG CONSTRUCTION AND INDUSTRIAL ORDERS IN REVENUE NEXT 12 MONTHS 35 35 +94% +33% 30 30 25 25 20.3 NOK bill. 20 NOK bill. 20 16.8 15 15 10 10 5 5 - 2013 2014 2015 2016 2017 0 Norway Sweden Denmark Road Maintenance Per Q4 2016 Per Q4 2017 Order backlog
Slide 8: Construction revenue and margin
CONSTRUCTION REVENUE AND MARGIN NORWAY* SWEDEN* DENMARK (HOFFMANN)* 16 7% 16 7% 16 7% 14 6% 14 6% 14 6% 12 12 12 5% 5% 5% NOK bill. NOK bill. NOK bill. 10 10 10 4% 4% 4% 8 8 8 3% 3% 3% 6 6 6 2% 2% 2% 4 4 4 2 1% 2 1% 2 1% 0 0% 0 0% 0 0% Revenue Margin (%) *12 months rolling. 2016 margins in Norway ex
Slide 9: Residential sales and production
RESIDENTIAL SALES AND PRODUCTION NO. OF UNITS SOLD* NO. OF UNITS UNDER CONSTRUCTION 600 1 600 3 000 1 400 500 2 500 1 200 Quarterly sales 400 2 000 12m rolling 1 000 300 800 1 500 600 200 1 000 400 100 500 200 - 0 - Sweden Norway Sales 12m rolling * Veidekke’s share 9
Slide 10: Results and return property development
RESULTS AND RETURN PROPERTY DEVELOPMENT OMSETNING PROFIT BEFORE TAX – 12M ROLLING OG MARGIN* RETURN ON INVESTED CAPITAL Norge Sverige 25% 250 200 20% NOK mill. 150 15% 100 10% 50 5% 0 0% 2012 2013 2014 2015 2016 2017 10
Slide 11: High activity within Industrial
HIGH ACTIVITY WITHIN INDUSTRIAL REVENUE INDUSTRIAL ASPHALT PRODUCTION AGGREGATES PRODUCTION 5 3,5 10 3,0 4 8 +17% +32% 2,5 Million tonnes Million tonnes 3 2,0 6 NOK bill. 1,5 4 2 1,0 1 2 0,5 0 0,0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013
Slide 12: Results and margins Industrial
RESULTS AND MARGINS INDUSTRIAL PROFIT BEFORE TAX (NOK MILL.) MARGIN DEVELOPMENT* SOLID NOK 70 MILL. DEVELOPMENT GAIN 300 15% 70 200 10% 100 5% 0 0% -100 -5% -200 -10% 2012 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Asphalt Road Maintenance Road Maintenance Asphalt Aggregates Aggregates Total
Slide 13: Strong financial position
STRONG FINANCIAL POSITION NET INTEREST-BEARING POSITION AT YEAR-END (NOK MILL.) Capital spending 2017 • Aquisitions and PP&E NOK 1.1 billion 274 Invested capital 0 • Property Development NOK 4.2 billion Solid lang-term financing -396 • Undrawn bank facility NOK 3.1 billion -606 -764 2013 2014 2015 2
Slide 14: Proposed dividend of NOK 5.0 per share
PROPOSED DIVIDEND OF NOK 5.0 PER SHARE DIVIDEND (NOK PER SHARE) Proposed dividend: NOK 5.0 (4.5) 5.00 (IFRS) 4.50 4.00 Earnings per share: NOK 8.2 (6.6) 3.50 3.00 2.75 2.50 2.50 Pay-out-ratio: 61% (68%) Earnings per share segment accounts: NOK 9.4 (9.3) 2010 2011 2012 2013 2014 2015 2016 2017* * Pro
Slide 15: Occupational health and safety
OCCUPATIONAL HEALTH AND SAFETY SERIOUS INJURIES* # LTI-RATE* SICKNESS ABSENCE 40 10 6% 5% 8 30 4% 6 20 3% 4 2% 10 2 1% 0 0 0% # Veidekke employees, hired staff and sub-contractors * 12-month rolling (LTI = Number of lost-time injuries per million hours worked for Veidekke employees) 15
Slide 16: Results segments and Group
Veidekke to build energy and environmentally friendly apartments in solid wood at Grünerløkka, Oslo RESULTS SEGMENTS AND GROUP
Slide 17: Revenue and profit for 4th quarter
REVENUE AND PROFIT FOR 4TH QUARTER REVENUE PROFIT BEFORE TAX 10 500 18 8 400 NOK bill. NOK mill. 6 300 8.7 8.8 411 437 4 200 376 7.3 336 368 6.1 6.6 2 100 0 0 Q4 13 Q4 14 Q4 15 Q4 16 Q4 17 Q4 13 Q4 14 Q4 15 Q4 16* Q4 17** *NOK 18 mill. one-off effect from changes to the disability pension scheme in
Slide 18: Profit before tax for 4th quarter
PROFIT BEFORE TAX FOR 4TH QUARTER 4TH QUARTER: CONSTRUCTION 4TH QUARTER: PROPERTY DEVELOPMENT 4TH QUARTER : INDUSTRIAL NOK mill. NOK mill. NOK mill. 300 300 300 11 29 250 250 250 36 200 200 200 -15 150 150 150 254 221 100 -95 100 70 100 178 50 114 50 86 50 2 3 31 0 0 -18 0 Q4 2016 Norway Sweden Q4 2
Slide 19: Construction Norway
CONSTRUCTION NORWAY 4th QUARTER 2017 REVENUE AND MARGIN* NOK bill. Stable revenue 5 7% • Increase in building construction in the Eastern region 4 6% 4.2 4.1 5% 3.8 Results increase 3 3.5 3.5 4% • Building C.: Good profitability in East- and Mid-Norway, but low in 2 3% 3.5% 3.2% 3.1% the Southern an
Slide 20: Construction Sweden
CONSTRUCTION SWEDEN 4th QUARTER 2017 REVENUE AND MARGIN NOK bill. Revenue increase 3 7% • Increase in civil engineering, decrease in building construction 2.7 6% 5% 2 Results increase 2.2 2.2 2.0 4% 1.9 • Increased activity, improved profitability in civil engineering 3% 1 and positive outcome of a
Slide 21: Construction Denmark
CONSTRUCTION DENMARK 4th QUARTER 2017 REVENUE AND MARGIN NOK bill. Revenue increase 0,7 10% • Increased activity within building construction in the 0,6 8% 0.6 Copenhagen area and within technical installations 0,5 0.5 0.6 8.3% 0.5 0.5 6% 0,4 7.5% 0,3 6.1% 5.7% Results increase as a consequence of h
Slide 22: Property Development Norway
PROPERTY DEVELOPMENT NORWAY 4th QUARTER 2017 PROFIT BEFORE TAX* NOK bill. Results decrease 50 Increased residential sales 40 46 • Two projects with in total 146 units were released for sale in 41 38 36 30 the quarter (Trondheim and Oslo) 20 26 Decrease in number of units under construction 10 Return
Slide 23: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN 4th QUARTER 2017 PROFIT BEFORE TAX NOK bill. Significant decrease in results 200 • 4th Q 2016: property development gain of NOK 40 mill., in 160 184 addition to large contribution from project startup 120 Lower residential sales 112 80 105 • Two projects with a total of 1
Slide 24: Industrial
INDUSTRIAL 4th QUARTER 2017 REVENUE AND MARGIN* NOK bill. Development gain at Gardermoen of NOK 70 mill. 2 000 6% 4.4% 5% Asphalt: Lower results due to higher cost related to the tail-end of 1 500 1 694 the asphalt season 2.8% 2.7% 4% 1 247 1 274 1 000 3% Road Maintenance: The restructuring is on tr
Slide 25: Financial statements IFRS
FINANCIAL STATEMENTS IFRS
Slide 26: Income statement (IFRS)
INCOME STATEMENT (IFRS) 4th quarter Full year Amounts in NOK million 2017 2016 2017 2016 Revenue 8 618 8 125 30 281 28 613 Operating expenses -8 133 -7 769 -28 839 -27 284 Share of net income from associates and JVs 173 56 334 190 Depreciation/impairment -144 -129 -524 -466 Operating profit 513 282
Slide 27: Balance sheet – assets
BALANCE SHEET – ASSETS Amounts in NOK million 31.12.2017 31.12.2016 Goodwill and other intangible assets 1 530 1 385 Deferred tax assets 55 65 Land and buildings 615 560 Plant and machinery 2 286 1 954 Investments in associates and joint ventures 1 430 1 363 Financial assets 508 649 Total non-curren
Slide 28: Balance sheet – equity and liabilities
BALANCE SHEET – EQUITY AND LIABILITIES Amounts in NOK million 31.12.2017 31.12.2016 Equity 3 848 3 465 Pensions and deferred tax liabilities 981 877 Bonds 0 750 Amounts due to credit institutions 613 212 Other non-current liabilities 173 136 Total non-current liabilities 1 768 1 975 Debt to credit i
Slide 29: Cash flow statement
CASH FLOW STATEMENT 2017 2016 Property Amounts in NOK million Construction Industrial Other1) Group Group Development Profit before tax 759 549 206 -254 1 259 1 092 Depreciation/impairment 316 4 192 12 524 466 Other working capital -98 -988 -109 114 -1 081 322 Cash flow from operating activities 976
Slide 30: Focus and opportunities
Veidekke to build Skaun lower secondary school FOCUS AND OPPORTUNITIES
Slide 31: Our focus
OUR FOCUS LIFTING PROFITABILITY WITHIN ADJUSTING TO A SOFTER REAL CONSTRUCTION ESTATE MARKET 31
Slide 32: Lifting profitability within construction
LIFTING PROFITABILITY WITHIN CONSTRUCTION 800 6% 700 5% SOLID PROFITABILITY LOW PROFITABILTIY 600 4% 500 Building C. Southern and NOK mill. Building C. Eastern Norway 400 3% Western Norway 300 2% Residential building Building C. Mid-Norway 200 Stockholm 1% 100 Denmark Civil Engineering Norway 0 0% C
Slide 33: Building construction – measures initiated
BUILDING CONSTRUCTION – VARIATION IN PROFITABILITY, MEASURES INITIATED REVENUE BUILDING CONSTR. MARGIN BUILDING CONSTR. Several units with good results NOK mill. 8% 20 000 • Reorganization Construction Rogaland MEASURES 6% • Separate production of concrete concept solutions 16 000 and construction 1
Slide 34: Civil engineering – focus on improvements in Norway
CIVIL ENG. – FOCUS ON IMPROVEMENTS IN NORWAY REVENUE CIVIL ENGINEERING MARGIN CIVIL ENGINEERING Good development in Sweden NOK mill. 8% 20 000 • Reorganization Civil Engineering Norway MEASURES 16 000 6% • Project organization • Handling of large projects 4% 12 000 • New management 2% 8 000 0% 4 000
Slide 35: Good opportunities in the Scandinavian market
GOOD OPPORTUNITIES IN THE SCANDINAVIAN MARKET CONSTRUCTION AND CIVIL ENGINEERING INVESTMENTS 950 billion 500 450 +4% -4% 400 350 NOK bill. 300 +7% 250 +5% +8% +3% 200 150 +4% +7% 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Residential Commercial buildings Public buildings Civil engine
Slide 36: Veidekke is well positioned
VEIDEKKE IS WELL POSITIONED OMSETNING SOLID ORDER OGBACKLOG MARGIN* BALANCED ORDER BACKLOG ON SECTORS 32 Other 28 infrastructure 10% Commercial 24 buildings 25% Public 20 infrastructure NOK bill. 20% Building Construction NOK 16 32 bill. 12 Public buildings 18% 8 Residential construction 4 Civil Eng
Slide 37: Real estate market correction
REAL ESTATE MARKET CORRECTION APARTMENTS & TOWN HOUSES STARTED IN NORWAY AND SWEDEN Price drop, but high activity in the second- 60 000 hand home market 50 000 40 000 30 - 40% decrease in the sale of new apartments & town houses 30 000 20 000 Continued strong outlook for the Norwegian 10 000 and Swe
Slide 38: Units under construction
UNITS UNDER CONSTRUCTION 91% 100% 90% 3 000 82% 83% 74% 2 500 75% Units for 2 000 delivery in 2018 50% 1 500 1 000 Units for 25% delivery in 500 2019 and beyond 0 0% 2013 2014 2015 2016 2017 Units under construction Sales ratio (%) *Veidekke’s share, sum Norway and Sweden 38
Slide 39: Stronger market positions
STRONGER MARKET POSITIONS The land bank provides flexibility A total of 17 450 residential units • Veidekke’s share: 14 050 • 20% available for sale in 2018 Selective commercial building development A robust portfolio • High sales ratio • Minimum 50% pre-sale ahead of construction start 39
Slide 40: Development project in Stockholm
DEVELOPMENT PROJECT IN STOCKHOLM Purchase agreement signed for land at Solna • Attractive location • Favourable payment schedule The project comprises 80 000 m2 • Residential housing (~600 units) • Offices/commercial (27 000 m2) Location of Veidekke’s Stockholm office Office section completed by 202
Slide 41: Adjusting to a softer real estate market
ADJUSTING TO A SOFTER REAL ESTATE MARKET Lower residential sales – fewer construction starts Opportunities and flexibility from good project portfolio and land bank Our focus: manage the business in a demanding housing market 41
Slide 42: Solid result, improvement initiatives continue
Solid result The improvement initiatives continue Strong order backlog Good overall market, but uncertainty in the housing market 42
Slide 43: Appendix
APPENDIX
Slide 44: Business areas 4th quarter
BUSINESS AREAS 4TH QUARTER 4th quarter 2017 4th quarter 2016* Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway* 4 122 143 3.5 % 4 193 118 2.8 % Construction Sweden 2 692 61 2.3 % 2 242 32 1.4 % Construction Denmark 604 50 8.3 % 514 36 7.0 % Total Construction* 7
Slide 45: Business areas
BUSINESS AREAS 2017 2016* Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway* 14 850 452 3.0 % 15 096 596 4.0 % Construction Sweden 8 810 170 1.9 % 7 819 102 1.3 % Construction Denmark 2 144 137 6.4 % 1 713 105 6.2 % Total Construction* 25 804 759 2.9 % 24 629 804
Slide 46: Housing portfolio
HOUSING PORTFOLIO Under Under Under Property Development construction Completed Start-up construction Completed Start-up construction Housing portfolio - Veidekke's share 31.12.2015 2016 2016 31.12.2016 2017 2017 30.09.2017 Construction - number of units Norway 541 -293 352 600 -363 320 557 Sweden 1