Slide 1: Presentation 3rd quarter 2019
Presentation rd 3 quarter 2019 CEO Jimmy Bengtsson and EVP Jørgen Wiese Porsmyr 14 November 2019
Slide 2: Occupational health and safety
Occupational health and safety Number of serious injuries 12-month rolling; Veidekke employees, hired staff and sub-contractors 25 20 15 10 5 0 Q3 15 Q3 16 Q3 17 Q3 18 Q3 19 2 © Veidekke
Slide 3: Highlights 3rd quarter 2019
Highlights 3rd quarter 2019 • High activity level in Construction, but lower results • Industrial’s results strongly improved • High activity level and good results in Property development in Norway, but lower production and weak results in Sweden • Decision made to split the group into two separate
Slide 4: Veidekke's composition
Veidekke’s composition Strategic review of the company • Veidekke has undertaken a strategic review of the group's composition and an assessment of the business areas’ growth and development opportunities • A decision has been made to split the group into two separate entities and establish the prop
Slide 5: Revenue and earnings 3rd quarter
Revenue and earnings 3rd quarter 3rd quarter: Revenue 3rd quarter: Profit before tax NOK billion NOK million 700 10 600 8 90 500 6 400 9.4 8.8 300 4 7.9 7.4 507 498 494 460 5.9 200 390 2 100 0 0 2015 2016 2017 2018 2019 2015 2016* 2017 2018 2019 * Positive one-off effect of NOK 90 million from chang
Slide 6: Profit before tax 3rd quarter per business area
Profit before tax 3rd quarter per business area Construction Property development Industrial NOK million NOK million NOK million 10 250 40 4 250 250 11 2 200 200 200 -20 -6 150 150 150 248 43 218 213 208 100 195 100 195 100 183 185 141 -29 125 50 50 50 79 65 0 0 0 Q3 2016 Q3 2017 Q3 2018 Building Ci
Slide 7: 3rd quarter revenue and profit overview
3rd quarter revenue and profit overview 3rd quarter 2019 3rd quarter 2018 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Building construction Norway 3 304 112 3.4% 3 000 111 3.7% Civil engineering Norway 1 134 11 1.0% 1 095 0 0% Construction Sweden 2 417 35 1.5% 2 290 55 2.4% Co
Slide 8: Financial position
Financial position Net interest bearing debt/EBITDA (12m) ● Main reasons for debt increase in 2019 4.0 • Property development 3.5 Covenant - Settlement for land purchases and 3.0 few construction starts in Sweden Target*: <2,5x over time 2.5 - Postponed sale of large plot in Oslo 2.0 • Construction
Slide 9: Order book Construction
Order book Construction Order book* NOK billion 36 Civil Engineering Building Construction 32 28 24 Middelthunet, Oslo Himmerfjärdsverket, Grödinge 20 16 12 8 4 0 Q3 16 Q3 17 Q3 18 Q3 19 Kvarteret Lysomen, Stockholm UDK02, Drammen *Remaining revenue in projects not expected to generate profit compri
Slide 10: Veidekke at a strategic crossroads
Jimmy Bengtsson, konsernsjef og Jørgen Wise Porsmyr, konserndirektør Veidekke at a strategic crossroads CEO Jimmy Bengtsson og EVP Jørgen Wiese Porsmyr 14 November 2019
Slide 11: Different businesses
Different businesses Construction Property and Industrial development Business cycles Short business cycles Long business cycles Capital requirements Limited capital requirements High capital requirements % Profit margins Low margins High margins Number of employees Many employees Few employees Cust
Slide 12: Rationale for the split of Veidekke
Rationale for the split of Veidekke Increased value creation as two separate entities Different business models Increased flexibility Highlight value ● Different drivers for growth and ● Flexibility to explore growth ● Will help highlight value in development, input factors, risks, strategies specif
Slide 13: An important strategic change
An important strategic change Will facilitate further growth Enables two separate and strong businesses to maximise value creation for customers, society, shareholders and employees Construction and Industrial Property development Leading Scandinavian construction A platform for growth, with a l
Slide 14: Platform for growth Property development
Platform for growth Property development EVP Jørgen Wiese Porsmyr 14 November 2019
Slide 15: A unique platform for growth in Scandinavia
A unique platform for growth in Scandinavia Overview of Property development ● One of Scandinavia's largest residential developers, with the goal of becoming the leading developer of neighborhoods ● Strong market position in the metropolitan areas and the largest population centres Nyegaardskvartale
Slide 16: Results and activity in Property development
Results and activity in Property development Good value creation over time Profits and return on capital Units sold Units under construction NOK million Veidekke’s share Veidekke’s share 600 25% 1,600 3,000 1,400 500 2,500 20% 1,200 400 2,000 1,000 15% 300 ,800 1,500 10% ,600 200 1,000 ,400 5% 100 ,
Slide 17: A well-positioned land bank
A well-positioned land bank 1. Geographical location 2. Extent and number of units 3. Invested capital 18 150 Book values (NOK billion) 15 100 6.6 7 150 5 000 11 000 10 100 Including JV projects Brutto tomtebank Veidekke’s share Netto tomtebank Land Projects JV Other Short term Invested Type of acqu
Slide 18: Selected projects
Selected projects Projects in Norway Projects in Sweden Middelthunet (50%) Nye Lilleby (50%) Helsfyr Hagastaden, kv. 6 Veddestad Gemensamt Solnavägen Majorstua, Oslo Lade, Trondheim Oslo Haga, Stockholm Järfälla, Stockholm Solna, Stockholm No. of units: 329 No. of units: 624 No. of units: 401 No. of
Slide 19: Increased activity expected
Increased activity expected Several projects ready for sale, also in Stockholm Sales starts residential units, Norway Sales starts residential units, Sweden Expectation of good sales in a healthy market Expectation of increase in 2020 • Norway: Good fundamental market conditions 1 200 1 200 • High a
Slide 20: A focused industrial and construction business
A focused industrial and construction business CEO Jimmy Bengtsson 14 November 2019
Slide 21: Veidekke's operations after the split
A leading construction and industrial company Veidekke’s operations after the split Construction Industrial ● A leading Scandinavian building constr. and civil engineering contractor ● Market leader with a solid geographical footprint across Norway ● Well positioned in major cities and growth centre
Slide 22: Construction and industrial: solid platform for increased value creation
Construction and industrial Solid platform for increased value creation % Improvement Profitability goals Target of high Strengthening initiatives remain dividend pay-out of strategy and continue business model 22 © Veidekke
Slide 23: Concluding remarks
Concluding remarks • Decision made to split the group into two separate businesses and establish Property development under a new ownership structure • A good overall 3rd quarter result, but profitability varies • Improvement initiatives continue as planned; potential is still large Veidekke develop
Slide 24: Appendix
Appendix 24 © Veidekke
Slide 25: Property development operational KPIs
Property development operational KPIs Units under construction Units sold Construction starts Units completed and sales ratio No. of units 12m rolling No. of units 12m rolling No. of units 12m rolling No. of units 12m rolling,% 1 600 1 600 1 600 3 000 100% 1 400 1 400 1 400 2 500 90% 1 200 1 200 1 2
Slide 26: Property development financial KPIs
Property development financial KPIs Revenues* Profit before tax* Invested capital NOK million, 12m rolling NOK million, 12m rolling NOK billion,% 4 500 700 7 25% 4 000 600 6 20% 3 500 500 5 3 000 15% 2 500 400 4 2 000 300 3 10% 1 500 200 2 1 000 5% 100 1 500 - - 0 0% Norway Sweden Total invested cap
Slide 27: Residential portfolio
Residential portfolio Under Under Under Property Development construction Completed Building starts construction Completed Building starts construction Residential portfolio - Veidekke's share 31.12.2017 2018 2018 31.12.2018 2019 2019 30.09.2019 Construction - number of units Norway 557 -343 385 599
Slide 28: Business areas first nine months
Business areas first nine months First nine months 2019 Første nine months 2018 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Building construction Norway 10 212 352 3.5% 9 467 334 3.5% Civil engineering Norway 3 535 2 0.0% 3 033 -559 -18.4% Construction Sweden 7 588 140 1.8% 6
Slide 29: Building construction Norway
Building construction Norway 3rd QUARTER 2019 REVENUE AND MARGIN NOK billion • Stable revenues compared to previous quarters 4 7% • Result at the level of same quarter last year 3 3.6 3.4 3.5 3.3 6% 5% 3.0 • Projects in the profitable Oslo region generated the majority of profits 4% 2 • The profitab
Slide 30: Civil engineering Norway
Civil engineering Norway 3rd QUARTER 2019 REVENUE AND MARGIN NOK billion • Stable revenues compared to previous quarters 1.5 6% 1.4 • High production in major ongoing transport infrastructure projects. 1.0 1.1 1.3 1.1 4% 1.1 • Weak profitability for project portfolio 0.5 1.0 % 2% • Results were impa
Slide 31: Construction Sweden
Construction Sweden 3rd QUARTER 2019 REVENUE AND MARGIN NOK billion • Revenues decreased compared to previous quarter 4 7% • Low activity levels within residential construction in Stockholm, high in 6% 3 5% South and West 3.1 2.8 4% • Decreased result 2 2.3 2.4 2.4 3% • Lower profitability within Ci
Slide 32: Construction Denmark
Construction Denmark 3rd QUARTER 2019 REVENUE AND MARGIN NOK billion • Stable revenues 0.7 10% • Continued high activity levels in the Copenhagen region 0.6 0.6 0.6 8% 0.5 0.6 0.6 0.5 0.4 7.0 % 6.9 % 6% • Solid results and high profitability in project portfolio 0.3 5.3 % 5.4 % 6.5 % 4% 0.2 2% • Dec
Slide 33: Property Development Norway
Property Development Norway 3rd QUARTER 2019 PROFIT BEFORE TAX NOK million • Solid results 80 • Strong sales for ongoing projects 71 73 73 60 • NOK 22 million development gain from the sale of an office project in Trondheim 40 39 • Increased residential production 30 20 • Construction started on 165
Slide 34: Property Development Sweden
Property Development Sweden 3rd QUARTER 2019 PROFIT BEFORE TAX NOK million • Weak results 120 • Significant drop in residential production 90 • No residential projects initiated in Stockholm over the last 18 months 91 • Stable residential sales 60 • Majority of sales from projects in the Gothenburg
Slide 35: Industrial
Industrial 3rd QUARTER 2019 REVENUE AND 12M MARGIN* NOK million • Asphalt: considerably improved results 2 100 6% • Higher prices for some of the volume and strong capacity utilization 1 800 5% 1 701 1 841 1 500 • Continuous improvement work underway 1 200 1 379 1 499 4% 3% 900 1.9 % 2.8 % 2% • Aggr
Slide 36: Income statement (IFRS)
Income statement (IFRS) 3rd quarter First nine months Amounts in NOK million 2019 2018 2019 2018 Revenue 9 130 8 684 27 492 25 172 Operating expenses -8 506 -8 133 -26 143 -24 629 Share of net income from associates and JVs 76 70 135 145 Depreciation/impairment -230 -147 -658 -428 Operating profit 4
Slide 37: Balance sheet – Assets
Balance sheet – Assets Amounts in NOK million 30.09.2019 30.09.2018 31.12.2018 Goodwill and other intangible assets 1 941 1 831 1 957 Deferred tax assets - 25 - Land and buildings 1 296 684 646 Plant and machinery 2 682 2 541 2 694 Investments in associates and joint ventures 1 402 1 404 1 433 Finan
Slide 38: Balance sheet – Equity and liabilities
Balance sheet – Equity and liabilities Amounts in NOK million 30.09.2019 30.09.2018 31.12.2018 Equity 3 842 3 614 3 983 Pensions and deferred tax liabilities 908 927 846 Bonds 1 600 1 600 1 600 Amounts due to credit institutions 2 588 852 248 Other non-current liabilities 1 034 344 414 Total non-cur
Slide 39: Cash flow statement
Cash flow statement Per Q3 2019 Per Q3 2018 Entreprenør Eiendom Industri Annet1) Konsern Konsern Amounts in NOK million Profit before tax 594 248 154 -185 810 270 Depreciation/impairment 418 2 195 43 658 428 Other working capital -1 360 -1 790 -491 41 -3 599 94 Cash flow from operating activities -3
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