Slide 1: 1st Quarter 2017 Investor Presentation
1ST QUARTER 2017 Investor Presentation Thursday 11 May 2017
Slide 2: Contents
CONTENTS Highlights CEO Arne Giske Results – segments and Group CFO Terje Larsen Status and outlook CEO Arne Giske Strong sales in the quarter on “Maskinparken TRE” in Trondheim 2
Slide 3: A good start to the year
A GOOD START TO THE YEAR + Revenue growth + Strong results in Property Development + High residential sales + High order intake Veidekke shall build ”Trafikplats Hjulsta Södra”, a part of Förbifart Stockholm together with Implenia 3
Slide 4: Revenue and earnings for 1st quarter
REVENUE AND EARNINGS FOR 1ST QUARTER 1ST QUARTER: REVENUE 1ST QUARTER: PROFIT BEFORE TAX 7,0 100 6,0 50 5,0 60 NOK bill. NOK mill. 4,0 0 4 6.5 -15 3,0 5.9 5.2 -42 5.0 -63 2,0 4.0 -50 1,0 0,0 -100 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 4
Slide 5: Profit before tax per business area
PROFIT BEFORE TAX PER BUSINESS AREA 1ST QUARTER: CONSTRUCTION 1ST QUARTER: PROPERTY DEVELOPMENT 1ST QUARTER: INDUSTRIAL 140 150 0 120 125 -50 100 100 -140 -141 -149 NOK mill. NOK mill. NOK mill. 80 -180 -183 75 -100 60 125 135 103 107 50 40 87 77 -150 25 45 55 20 46 37 0 0 -200 2013 2014 2015 2016 2
Slide 6: Changes in profit before tax
CHANGES IN PROFIT BEFORE TAX PROFIT BEFORE TAX 100 50 80 -3 60 60 -21 NOK mill. 40 30 20 -15 12 0 18 -13 -20 -40 Construction Property development Q1 2016 Norway Sweden Denmark Norway Sweden Industrial Other Q1 2017 6
Slide 7: Revenue and earnings – Construction
REVENUE AND EARNINGS – CONSTRUCTION REVENUE (NOK BILL.)* PROFIT BEFORE TAX (NOK MILL.)* 30 800 25 600 20 15 400 10 200 5 0 0 Q1 14 Q1 15 Q1 16 Q1 17 Q1 14 Q1 15 Q1 16 Q1 17 Norway Sweden Denmark *12 month rolling 7
Slide 8: Increased order backlog
INCREASED ORDER BACKLOG CONSTRUCTION ORDERS IN REVENUE NEXT ORDER BACKLOG CONSTRUCTION AND INDUSTRIAL 12 MONTHS* 30 30 Road Maintenance Denmark Sweden Norway 25 25 20 20 18.5 16.9 NOK bill. NOK bill. 15 15 10 10 5 5 - 0 Q1 14 Q1 15 Q1 16 Q1 17 Per Q1 2016 Per Q1 2017 Order backlog for Industrial is
Slide 9: Residential production and earnings
RESIDENTIAL PRODUCTION AND EARNINGS NO. OF UNITS UNDER CONSTRUCTION* PROFIT BEFORE TAX (NOK MILL.)** 2 500 700 600 2 000 500 1 500 400 300 1 000 200 500 100 - - Sweden Norway *Veidekke’s share **12-months rolling 9
Slide 10: Residential sales
RESIDENTIAL SALES NO. OF UNITS SOLD* – NORWAY AND SWEDEN SALES VALUE * (NOK BILL.) 1 600 7 1 400 6 1 200 5 1 000 4 800 3 600 2 400 200 1 - - Sweden Norway *12-month rolling, Veidekke’s share 10
Slide 11: Good outcome on asphalt tenders
GOOD OUTCOME ON ASPHALT TENDERS ASPHALT : TENDERS WON NPRA* QUARTERLY REVENUE, (NOK MILL.) 2016 2017 1 600 2014 2015 2016 2017 1 400 6% 3% 7% 1 200 5% 5% 9% 1 000 15% Volume Veidekke 49% Volume Veidekke 47% 800 1.0 mill. tonnes 1.25 mill. tonnes 16% 600 22% 400 16% 200 0 Veidekke’s share Q1 Q2 Q3 Q4
Slide 12: Annual general meeting held on 10 May 2017
ANNUAL GENERAL MEETING HELD ON 10 MAY 2017 Dividend of NOK 4.50 per share adopted DIVIDEND • To be paid on 24 May 5 100% Dividend Pay-out-ratio % 3-yrs average 4.5 Authorisation to repurchase of shares and 4 NOK per share 4.0 75% share issue renewed 3 3.0 3.5 2.75 50% 2.5 2.5 2.5 Dividend policy: 2
Slide 13: Occupational health and safety
OCCUPATIONAL HEALTH AND SAFETY SERIOUS INJURIES* # LTI RATE* Subcontractor employee 40 10 died during assembly work 8 30 at Karmøy in April 6 20 Main priority 4 • Improve safety conditions 10 2 • Prevent serious incidents and injuries 0 0 # Veidekke employees, hired staff and sub-contractors *12-mon
Slide 14: Business areas
i BUSINESS AREAS
Slide 15: Business areas, 1st quarter
BUSINESS AREAS, 1ST QUARTER 1st quarter 2017 1st quarter 2016 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway 3 469 80 2.3% 3 208 93 2.9% Construction Sweden 1 877 19 1.0% 1 773 1 0.1% Construction Denmark 500 26 5.3% 350 14 3.9% Total Construction 5 846 125 2.
Slide 16: Construction Norway
CONSTRUCTION NORWAY 1st quarter Full year Increased revenues Amounts in NOK million 2017 2016 2016 • 2/3 of increase from Building Construction, 1/3 of increase from Civil Engineering Revenue 3 469 3 208 15 096 Operating profit (EBIT) 70 82 570 Decreased results in the quarter • Building C.: Good pr
Slide 17: Construction Sweden
CONSTRUCTION SWEDEN 1st quarter Full year Increased revenues Amounts in NOK million 2017 2016 2016 • Increase in both Building Construction and Civil Engineering Revenue 1 877 1 773 7 819 Improved profitability Operating profit (EBIT) 20 4 105 • Result and margin improvement in Building Construction
Slide 18: Construction Denmark
CONSTRUCTION DENMARK 1st quarter Full year Significantly increased revenues Amounts in NOK million 2017 2016 2016 • Higher level of activity in several parts of the business Revenue 500 350 1 713 • Acquisitions in 2016 Operating profit (EBIT) 25 12 102 A strong result Net financial items 1 1 4 • Hig
Slide 19: Property Development in Norway
PROPERTY DEVELOPMENT IN NORWAY 1st quarter Full year High level of activity and high sales ratio Amounts in NOK million 2017 2016 2016 Good results Revenue 96 34 338 • The results reflect the current residential production Operating profit (EBIT) 44 3 174 • Tax-adjusted EBT at NOK 55 mill. (NOK 18 m
Slide 20: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN 1st quarter Full year Strong increase in results Amounts in NOK million 2017 2016 2016 • High residential production Revenue 629 517 2 864 High residential sales and high sales ratio Operating profit (EBIT) 96 47 416 High number of units under construction Net financial i
Slide 21: Industrial
INDUSTRIAL 1st quarter Full year Result at par with last year Amounts in NOK million 2017 2016 2016 Low season within Asphalt and Aggregates Revenue 477 439 4 162 • Maintenance and preparations for the high season Operating profit (EBIT) -179 -176 151 • Somewhat higher capacity cost Net financial it
Slide 22: Financial statements
Barkarby Metropol, Stockholm area FINANCIAL STATEMENTS IFRS
Slide 23: Income statement
INCOME STATEMENT 1st quarter Full year Amounts in NOK million 2017 2016 2016 Revenue 6 275 5 489 28 613 Operating expenses -6 243 -5 554 -27 284 Share of net income from associates and JVs 34 25 190 Depreciation/impairment -123 -107 -466 Operating profit -57 -148 1 053 Net financial income 1 34 38 P
Slide 24: Balance sheet – Assets
BALANCE SHEET – ASSETS Beløp i mill. NOK 31.03.2017 31.03.2016 31.12.2016 Goodwill and other intangible assets 1 386 1 297 1 385 Deferred tax assets 65 65 65 Land and buildings 561 555 560 Plant and machinery 1 971 1 780 1 954 Investments in associates and joint ventures 1 452 1 197 1 363 Financial
Slide 25: Balance sheet – Equity and liabilities
BALANCE SHEET – EQUITY AND LIABILITIES Amounts in NOK million 31.03.2017 31.03.2016 31.12.2016 Equity 3 438 3 092 3 465 Pensions and deferred tax liabilities 877 925 877 Bonds 750 750 750 Amounts due to credit institutions 680 1 038 212 Other non-current liabilities 134 115 136 Total non-current lia
Slide 26: Statement of cash flows
STATEMENT OF CASH FLOWS Q1 2017 Q1 2016 Property Beløp i mill. NOK Construction Industrial Other1) Group Group Development Profit before tax 125 135 -183 -134 -56 -114 Depreciation/impairment 76 44 3 123 107 Other working capital -236 -617 -50 52 -852 -524 Cash flow from operating activities -35 -48
Slide 27: Status and outlook
Tivoli Hjørnet in Copenhagen STATUS AND OUTLOOK
Slide 28: Urban development and cooperation at Ulven
URBAN DEVELOPMENT AND COOPERATION AT ULVEN Team Veidekke is chosen to develop and build the Ulven residential project in Oslo OBOS is planning to build a total of 3 000 homes over the next 20 years Preparations for the first sub-area for sale Develop affordable homes in good residential communities
Slide 29: Large residential development projects
LILLEBY IN TRONDHEIM VEDDESTA IN STOCKHOLM • Acquired in 2008 • Acquired in 2015 • 1 200 residential units • 1 200 residential units in several phases to in several phases to 2023 2025 SVEA IN STOCKHOLM VERKET IN MOSS • Acquired in 2005 • Contract in 2017 • >300 residential units in • Possibly sever
Slide 30: The housing market in Scandinavia
THE HOUSING MARKET IN SKANDINAVIA Today’s housing market • Normalisation • Longer sales lead-times • Increased customer selectivity Our position • High sales ratio • Minimum 50% pre-sale • Solid landbank • Good projects for sale in 2nd half-year 30
Slide 31: Residential sale starts, Sweden
RESIDENTIAL SALE STARTS, SWEDEN 1 200 No. of residential units, Veidekke’s share 1 000 950 800 Stockholm area 550 600 ~10 projects in the Stockholm area 1 100 Oslo- 400 området 690 Gothenburg 200 470 area Scania County 0 2014 2015 2016 2017 plan No. of units ~10 projects in the Gothenburg area incl.
Slide 32: Residential sale starts, Norway
RESIDENTIAL SALE STARTS, NORWAY 1 200 No. of residential units, Veidekke’s share 1 000 800 600 550 Middelthunet, Majorstua Nyegaardskvartalet, Storo Grenselunden, Ås Oslo 400 area 530 200 270 160 0 2014 2015 2016 2017 plan No. of units Trondheim area Western Norway incl. JV share 320 1 000 Aksetitte
Slide 33: Solid land bank
200 SOLID LAND BANK A total of 16 900 units 1 950 • Veidekke’s share 13 650 200 In Norway: 8 200 units • Veidekke’s share 5 500 1 100 3 500 • Average price: NOK 8 600 per m2 1 000 In Sweden: 8 700 units • Veidekke’s share 8 150 5 200 • 60% options 250 2 200 • Average price: NOK 8 600 per m2 1 300 33
Slide 34: A strong Scandinavian market
A STRONG SCANDINAVIAN MARKET INVESTMENTS IN THE CONSTRUCTION SECTOR TOTAL MARKET EXCEEDING NOK 900 BILL. 500 450 +5% p.a. 400 350 +5% p.a. NOK billion 300 250 200 +7% 150 p.a. 100 50 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018p Norway Sweden Denmark Sources: Veidekke, SCB, DST and SSB. 34 Pe
Slide 35: Solid order intake
SOLID ORDER INTAKE REVENUE AND ORDER INTAKE CONSTR. (“BOOK-TO-BILL RATIO” 1.02) ORDER INTAKE PER QUARTER, CONSTRUCTION 12 30 10 25 8 20 NOK bill. NOK bill. 15 6 10 4 5 2 12m Revenue 12m Order intake 0 0 Q1 14 Q1 15 Q1 16 Q1 17 Q1 14 Q1 15 Q1 16 Q1 17 35
Slide 36: A balanced project portfolio
A BALANCED PROJECT PORTFOLIO 25% 26-50% 51-75% 76-100% 1 250 1 000 NOK mill. 750 500 250 The average project NOK 95 million 0 1-14 15-52 53-131 132-450 No. of new projects last 24 months above NOK 10 million 36
Slide 37: Diversity and variation in new contracts
DIVERSITY AND VARIATION IN NEW CONTRACTS 520 430 400 400 350 270 Støperiet and Ankers hus, Felt E - Tiedemannsfabrikken, Svea Serenad, Storheia Wind park, Hjulsta Södra, Sörredsmotet road 155, Moss Oslo Stockholm Fosen Stockholm Gothenburg 260 240 240 230 220 200 Tivoli corner, New Tverlandet school
Slide 38: 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. Adjusted for positive one-off effects from changes in the pension scheme in Norway in 2016 38
Slide 39: Building construction in Norway
BUILDING CONSTRUCTION IN NORWAY High level of activity and good profitability in majority of the business Low activity and weak profitability in southwestern regions of Norway Improvement measures in > 5% southwestern regions NOK 7.5 bill. • Strengthened organisation and management • Product- and ma
Slide 40: Civil engineering in Norway
CIVIL ENGINEERING IN NORWAY Large variation in profitability Improvement measures • New management and organisation • Reinforced focus on project organisation • Selectivity and uncertainty management Veidekke builds the new E 39 between Os and Bergen 40
Slide 41: Summing up: Good outlook
SUMMING UP: GOOD OUTLOOK CONSTRUCTION PROPERTY DEVELOPMENT INDUSTRIAL Measures for profitability + High residential production Solid market position improvements and sales ratio A good basis for the High order backlog in + Good projects for sale this season Construction provides year visibility in a
Slide 42: Appendix
APPENDIX
Slide 43: 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 31/03/2017 Construction - number of units Norway 541 -293 352 600 -57 58 601 Sweden 1 1