Slide 1: 2nd Quarter 2016 Investor presentation
2ND QUARTER 2016 Investor presentation Thursday 11 August 2016
Slide 2: Contents
CONTENTS Highlights CEO Arne Giske Results – segments and Group CFO Terje Larsen Status and outlook CEO Arne Giske Veidekke builds hospital building close to Karolinska in Stockholm 2
Slide 3: A good quarter
A GOOD QUARTER + Revenue growth + Improved results + High level of activity + Good outlook 3
Slide 4: Revenue and earnings – 2nd quarter
REVENUE AND EARNINGS – 2ND QUARTER REVENUE PROFIT BEFORE TAX 8 500 400 6 NOK bill. NOK bill. 300 4 8,1 450 6,2 200 6,0 318 5,4 5,4 2 225 100 166 145 0 0 Q2 12 Q2 13 Q2 14 Q2 15 Q2 16 Q2 12 Q2 13 Q2 14 Q2 15 Q2 16 4
Slide 5: Profit before tax – 2nd quarter
PROFIT BEFORE TAX – 2ND QUARTER 2ND QUARTER: CONSTRUCTION 2ND QUARTER: PROPERTY DEVELOPMENT 2ND QUARTER: INDUSTRIAL 250 250 250 200 200 200 NOK mill. NOK mill. NOK mill. 150 150 150 228 100 100 100 159 161 50 116 50 100 50 100 87 82 81 84 40 50 46 36 26 0 0 0 2012 2013 2014 2015 2016 2012 2013 2014
Slide 6: Changes in profit before tax
CHANGES IN PROFIT BEFORE TAX PROFIT BEFORE TAX 500 57 3 450 450 3 -1 400 9 7 55 NOK mill. 350 318 300 250 200 150 Construction Property Development Q2 2015 Norway Sweden Denmark Norway Sweden Industrial Other Q2 2016 6
Slide 7: Good order backlog
GOOD ORDER BACKLOG ORDER BACKLOG CONSTRUCTION AND INDUSTRIAL ORDERS IN REVENUE NEXT 12 MONTHS 32 28 Road Maintenance Denmark Sweden Norway 28 24 24 20 17.7 20 NOK bill. NOK bill. 16 13.8 16 12 12 8 8 4 4 - 0 Q2 12 Q2 13 Q2 14 Q2 15 Q2 16 Per 2Q 2015 Per 2Q 2016 Order backlog for Industrial is presen
Slide 8: Increase in residential sales and production
INCREASE IN RESIDENTIAL SALES AND PRODUCTION NO. OF UNITS SOLD* – NORWAY AND SWEDEN NO. OF UNITS UNDER CONSTRUCTION – NORWAY AND SWEDEN 3 000 3 000 2 500 2 500 2 000 2 000 1 500 1 500 1 000 1 000 500 500 0 0 Veidekke’s share Joint venture *12-month rolling 8
Slide 9: High level of activity in Industrial
HIGH LEVEL OF ACTIVITY IN INDUSTRIAL QUARTERLY REVENUE, INDUSTRIAL (NOK MILL.) ACCUMULATED ASPHALT PRODUCTION (MILLION TONNES) 1 600 2013 2014 2015 2016 3,0 2013 2014 2015 2016 1 400 2,5 1 200 2,0 1 000 800 1,5 600 1,0 400 0,5 200 0 0,0 Q1 Q2 Q3 Q4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 9
Slide 10: Occupational health and safety
OCCUPATIONAL HEALTH AND SAFETY INJURIES* LTI RATE** SICKNESS ABSENCE** 120 All injuries Lost-time injuries 10 6% 100 5% 8 80 4% 6 60 3% 4 40 2% 20 2 1% - 0 0% * Veidekke employees, hired staff and sub-contractors **12-month rolling (LTI = Number of lost-time injuries per million hours worked for Vei
Slide 11: Business areas
Ongoing work in tunnel at RV80 by Bodø, Norway BUSINESS AREAS
Slide 12: Business areas, 2nd quarter
BUSINESS AREAS, 2ND QUARTER 2nd quarter 2016 2nd quarter 2015 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway 4 010 170 4.2% 2 940 115 3.9% Construction Sweden 2 090 35 1.7% 1 482 26 1.8% Construction Denmark 390 24 6.0% 377 17 4.6% Total Construction 6 490 228
Slide 13: Construction Norway
CONSTRUCTION NORWAY 2nd quarter YTD Significantly increased revenues Amounts in NOK million 2016 2015 2016 2015 • 41 % increase in Building Construction, regional variations Revenue 4 010 2 940 7 218 5 664 • 26 % increase in Civil Engineering Operating profit (EBIT) 163 102 245 163 Solid improvement
Slide 14: Construction Sweden
CONSTRUCTION SWEDEN 2nd quarter YTD Significantly increased revenues Amounts in NOK million 2016 2015 2016 2015 • The increase mainly in Building Construction Revenue 2 090 1 482 3 863 2 662 Increased result attributed to growth Operating profit (EBIT) 34 26 38 32 • Still low profitability Net finan
Slide 15: Construction Denmark
CONSTRUCTION DENMARK 2nd quarter YTD Stable revenues Amounts in NOK million 2016 2015 2016 2015 • Fewer large ongoing projects Revenue 390 377 740 832 Profit- and margin improvement Operating profit (EBIT) 22 16 35 36 • High profitability in the project portfolio Net financial items 1 1 2 3 Stable o
Slide 16: Property Development in Norway
PROPERTY DEVELOPMENT IN NORWAY 2nd quarter YTD Continued high residential sales Amounts in NOK million 2016 2015 2016 2015 • Oslo area and Trondheim Revenue 101 138 135 284 Ongoing projects mostly in joint ventures Operating profit (EBIT) 76 67 79 89 • Joint venture projects do not generate accounti
Slide 17: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN 2nd quarter YTD Very high activity Amounts in NOK million 2016 2015 2016 2015 Strong improvement in results Revenue 762 473 1 279 788 • Increased production Operating profit (EBIT) 94 37 140 54 • Property development gain of NOK 24 million Net financial items 0 0 1 1 Pers
Slide 18: Industrial
INDUSTRIAL 2nd quarter YTD High level of activity and revenue increase Amounts in NOK million 2016 2015 2016 2015 Stable result Revenue 1 221 1 132 1 661 1 564 Asphalt Operating profit (EBIT) 91 87 -85 -56 • Improved profit as a result of increased volume, good Net financial items -6 -6 -10 -11 oper
Slide 19: Financial statements
FINANCIAL STATEMENTS IFRS
Slide 20: Income statement
INCOME STATEMENT 2nd quarter YTD Amounts in NOK million 2016 2015 2016 2015 Revenue 7 955 6 339 13 444 11 307 Operating expenses -7 494 -5 992 -13 048 -10 942 Share of net income from associates and JVs 71 21 95 71 Depreciation/impairment -111 -89 -219 -175 Operating profit 420 280 272 261 Net finan
Slide 21: Balance sheet – assets
BALANCE SHEET – ASSETS Amounts in NOK million 30.06.2016 30.06.2015 31.12.2015 Goodwill and other intangible assets 1 348 910 1 255 Deferred tax assets 65 54 65 Land and buildings 555 540 556 Plant and machinery 1 889 1 400 1 689 Investments in associates and joint ventures 1 216 1 044 1 134 Financi
Slide 22: Balance sheet – equity and liabilities
BALANCE SHEET – EQUITY AND LIABILITIES Amounts in NOK million 30.06.2016 30.06.2015 31.12.2015 Equity 2 827 2 454 3 218 Pensions and deferred tax liabilities 928 732 939 Bonds 750 750 750 Amounts due to credit institutions 1 379 76 517 Other non-current liabilities 117 89 103 Total non-current liabi
Slide 23: Statement of cash flows
STATEMENT OF CASH FLOWS YTD 2016 YTD 2015 Property Amounts in NOK million Construction Industrial Other1) Group Group Development Profit before tax 336 216 -96 -153 302 276 Depreciation/impairment 138 79 1 219 175 Other working capital -284 -164 -245 191 -501 -945 Cash flow from operating activities
Slide 24: Status and outlook
Hagastaden, Stockholm STATUS AND OUTLOOK
Slide 25: Global and local influences
GLOBAL AND LOCAL INFLUENCES 25
Slide 26: Construction market forecasts
CONSTRUCTION MARKET FORECASTS 2015 2016 2017 2015 2016 2017 2015 2016 2017 NOK bill. growth growth NOK bill. growth growth NOK bill. growth growth Residential 120 5% -1% 137 15% 2% 60 5% 10% Private comm. 51 -2% -2% 100 4% 4% 19 3% 7% buildings Public comm. 33 3% 3% 41 5% 5% 18 5% 5% buildings Civil
Slide 27: Good development for Industrial
GOOD DEVELOPMET FOR INDUSTRIAL Q2 16 4 100 Q1 13 3 200 *12-month rolling revenues, Industrial, NOK million 27
Slide 28: Strong positions and profit at a high level
STRONG POSITIONS AND PROFIT AT A HIGH LEVEL PROFIT BEFORE TAX INDUSTRIAL (NOK MILL.)* Good market and strong positions 250 Asphalt and Aggregates 200 • High level of activity and good operations 150 • Profit at a historically high level 100 Road Maintenance 50 • Low profitability and restructuring 0
Slide 29: Order backlog at a historically high level
ORDER BACKLOG AT A HISTORICALLY HIGH LEVEL CONSTRUCTION Q2 16 26 200 Q1 13 15 200 * Construction, NOK million 29
Slide 30: High growth for Construction
HIGH GROWTH FOR CONTRUCTION REVENUE AND PROFIT BEFORE TAX 7 Strong growth in revenue 6 5 719 NOK billion 649 Increased profit 4 608 624 644 550 566 3 516 535 486 2 Strengthened positions 1 0 Norway Sweden Denmark 12m profit before tax (NOK mill.) 30
Slide 31: High order intake and revenue growth
HIGH ORDER INTAKE AND REVENUE GROWTH REVENUE AND ORDER INTAKE (“BOOK-TO-BILL” 1.17), 12M ORDER INTAKE PER QUARTER 35 12m Revenue 12m Order intake 12 10 30 8 25 NOK bill. NOK bill. 6 20 4 15 2 10 0 31
Slide 32: New contracts – diversity and variation
NEW CONTRACTS – DIVERSITY AND VARIATION 400 400 390 320 290 270 Finansparken, Svea Symfoni, Transmission lines, St Erik’s eye clinic, E20 Vårgårda-Ribbingsberg, First stage, Stavanger Stockholm Borås Energi Stockholm Västre Götaland Gartnerkvartalet , Oslo 270 210 200 190 190 180 First stage, Renova
Slide 33: A balanced project portfolio
A BALANCED PROJECT PORTFOLIO 1 250 1 000 750 NOK mill. 500 250 Average size NOK 100 mill. 0 1 50 100 150 200 250 300 350 400 No. of new projects last 24 months above NOK 10 million 33
Slide 34: Profit margin Construction
PROFIT MARGIN CONSTRUCTION CONSTRUCTION NORWAY* CONSTRUCTION SWEDEN* CONSTRUCTION DENMARK (HOFFMANN)* 8% 8% 8% 6% 6% 6% 4% 4% 4% 2% 2% 2% 0% 0% 0% *12-month rolling EBT-margin 34
Slide 35: High profitability in a large part of Construction Norway
HIGH PROFITABILITY IN A LARGE PART OF CONSTRUCTION NORWAY SHARE OF REVENUES AND EBT-MARGIN LAST 12 MONTHS 60% 6% 13% 31% 50% Half of the revenue is above the 50% profitability target 40% 30% Region- and segment variations 20% 10% Growth in the most profitable areas 0% <0% 0-2% 2-5% +5-10% 35
Slide 36: Success criterias
SUCCESS CRITERIAS OBTAINING PROJECTS CARRYING OUT PROJECTS Selectivity Good production Right tender and solution for customers Completion and handover 36
Slide 37: Historically high residential sales
HISTORICALLY HIGH RESIDENTIAL SALES Q2 16 1 852 Q1 13 799 *12-month rolling, Veidekke’s share 37
Slide 38: Strong positions in the right areas
STRONG POSITIONS IN THE RIGHT AREAS Focus on Stockholm- and Oslo regions and selected growth areas Land bank with above 12 500 units 2 200 units under construction Invested capital of NOK 3.2 billion Solid return on capital Focus on risk management 38
Slide 39: Substantial value creation
SUBSTANTIAL VALUE CREATION PROPERTY CONSTRUCTION Develop projects DEVELOPMENT UTILIZE EXPERTISE AND CAPITAL Building assignments 2015: Revenue NOK 5 100 mill. Profit before tax NOK 400 mill. 39
Slide 40: Cooperation from idea to delivery
COOPERATION FROM IDEA TO DELIVERY Land purchase Construction start 3-7 years 1-3 years LAND DEVELOPMENT STRATEGY SALES CONSTRUCTION DELIVERY PURCHASE AND ZONING PROPERTY Portfolio- and Location Exploitation Market- and Quality Flawless delivery product strategy Concept Flexibility cu
Slide 41: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN NO. OF UNITS SOLD* NO. OF UNITS UNDER CONSTRUCTION PROFIT AND RETURN 1 600 97% 97% 1 600 300 NOK mill. 30% 94% 95% 1 400 1 400 88% 250 25% 1 200 83% 1 200 80% 200 20% 1 000 1 000 74% 72% 800 800 150 15% 600 600 100 10% 400 400 50 5% 200 200 - - 0 0% Profit Return (%) Veid
Slide 42: Residential market Sweden
RECIDENTIAL MARKET SWEDEN APARTMENT PRICES IN THE LARGEST MARKETS Normalisation of the price growth 100 000 Stockholm, suburbs Stockholm, central Gothenburg Malmö • Instalment requirement on mortgages 80 000 introduced in June SEK per m2 60 000 Strong residential market • Demand exceeds housing cons
Slide 43: Sale starts Sweden
SALE STARTS SWEDEN 1 200 1 000 No. of units, Veidekke’s share 800 500 2nd half 600 1 000 400 690 470 480 200 1st half - - 2014 2015 2016 2017 No. of units, incl. JV share 470 760 1 100 1 200 43
Slide 44: Property Development Norway
PROPERTY DEVELOPMENT NORWAY NO. OF UNITS SOLD* NO. OF UNITS UNDER CONSTRUCTION PROFIT AND RETURN 1 600 1 600 300 NOK mill. 30% 81% 81% 82% 1 400 78% 1 400 250 25% 1 200 71% 70% 1 200 67% 65% 200 20% 1 000 63% 1 000 800 800 150 15% 600 600 100 10% 400 400 50 5% 200 200 - - 0 0% Profit Return (%) Veid
Slide 45: Residential market Norway
RECIDENTIAL MARKET NORWAY APARTMENT PRICES IN THE LARGEST MARKETS Good market, but regional differences 80 000 Oslo Stavanger Bergen Trondheim • Low interest rates • Stabilisation of the unemployment rate NOK per m2 60 000 Oslo area • High demand and price growth 40 000 • Insufficient supply High de
Slide 46: Sale starts Norway
SALE STARTS NORWAY 700 600 No. of units, Veidekke’s share 500 400 300 600 530 130 200 2nd half 100 180 160 1st half - - 2014 2015 2016 2017 No. of units, incl. JV share 320 1 000 470 850 46
Slide 47: Property development at Veidekke
PROPERTY DEVELOPMENT AT VEIDEKKE Leading company with good positions Substantial part of Veidekke’s value creation Large portfolio under construction – large portfolio will come for sale Positive outlook Construction start at Svea Symfoni in Stockholm this autumn 47
Slide 48: Strengthening our positions
STRENGTHENING OUR POSITIONS INCREASED ORDER BACKLOG, ACQUISITIONS IN 2016 RESIDENTIAL SALES, VEIDEKKE'S SHARE CONSTRUCTION (NOK billion) (No. of units, 12m) 1 600 26,2 1 400 1 200 1 000 16,5 800 600 400 200 - Q2 2014 Q2 2016 Q2 13 Q2 14 Q2 15 Q2 16 48
Slide 49: A good quarter
A GOOD QUARTER + Revenue growth + Improved results + High level of activity + Good outlook 49
Slide 50: Veidekke's upcoming reports
VEIDEKKE’S UPCOMING REPORTS Economic outlook: 14 September 2016 3rd quarter: 3 November 2016 50
Slide 51: Appendix
APPENDIX
Slide 52: Business areas, year to date
BUSINESS AREAS, YEAR TO DATE First 6 months 2016 First 6 months 2015 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway 7 218 263 3.6% 5 664 186 3.3% Construction Sweden 3 863 36 0.9% 2 662 36 1.4% Construction Denmark 740 37 5,.% 832 39 4.7% Total Construction 11
Slide 53: Solid land bank
200 SOLID LAND BANK A total of 15 250 units 1 550 • Veidekke’s share 12 550 200 In Norway • 7 250 units 900 3 050 • Veidekke’s share 4 950 1 100 In Sweden • 8 000 units 4 600 • Veidekke’s share 7 600 250 2 150 • 60% options 1 250 53
Slide 54: Housing portfolio
HOUSING PORTFOLIO Property Development Under construction Completed Start-up Under construction Completed Start-up Under construction Housing portfolio - Veidekke's share at 31 Dec. 2014 2015 2015 at 31 Dec. 2015 2016 2016 at 30 June 2016 Construction - number of units Norway 399 -248 390 541 -158 2