Slide 1: Q3 2014 Investor Presentation
Q3 2014 Investor Presentation Thursday 6 November 2014
Slide 2: Contents
CONTENTS Highlights Results, Segments and Group The Infrastructure Market 2
Slide 3: A Solid Quarter
A SOLID QUARTER + Growth in revenue + Good results + Strong financial position + Reduced order backlog “Toppidrettsveka» in Trondheim 3
Slide 4: Occupational Health and Safety
OCCUPATIONAL HEALTH AND SAFETY LTI RATE (NUMBER OF LOST-TIME INJURIES PER MILLION HOURS WORKED) SICKNESS ABSENCE (PERCENT) 30 Norge Danmark Sverige 6% Norge Danmark Sverige 25 5% 20 4% 15 3% 10 2% 5 1% 0 0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q1 13
Slide 5: Key Financials
KEY FINANCIALS REVENUE PROFIT BEFORE TAX 7 400 358 370 6,0 6 5,6 350 5,2 4,6 300 271 274 5 4,4 250 225 NOK billion 4 NOK million 200 3 150 2 100 1 50 0 0 Q3 10 Q3 11 Q3 12 Q3 13 Q3 14 Q3 10 Q3 11 Q3 12 Q3 13 Q3 14 5
Slide 6: Profit Before Tax: Good Results in All Segments
PROFIT BEFORE TAX GOOD RESULTS IN ALL SEGMENTS 3RD QUARTER: CONSTRUCTION 3RD QUARTER: PROPERTY DEVELOPMENT 3RD QUARTER: INDUSTRIAL 200 70 200 193 60 178 60 57 148 150 133 150 136 136 128 50 NOK million NOK million NOK million 115 106 40 37 100 31 100 73 30 21 20 50 50 10 0 0 0 2010 2011 2012 2013 20
Slide 7: Changes in Profit Before Tax
CHANGES IN PROFIT BEFORE TAX PROFIT BEFORE TAX 385 22 -6 4 380 -31 375 15 -3 370 370 NOK million 365 360 358 11 355 350 345 3400 Construction Property development Q3 2013 Norway Sweden Denmark Norway Sweden Industrial Other Q3 2014 7
Slide 8: 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% -2% -2% -2% Q3 08 Q3 09 Q3 10 Q3 11 Q3 12 Q3 13 Q3 14 Q3 08 Q3 09 Q3 10 Q3 11 Q3 12 Q3 13 Q3 14 Q3 08 Q3 09 Q3 10 Q3 11 Q3 12 Q3 13 Q3 14 12 months rolling
Slide 9: Order Backlog
ORDER BACKLOG ORDER BACKLOG ORDERS IN REVENUE NEXT 12 MONTHS 20 Industrial Denmark Sweden Norway 20 Norway Sweden Denmark Industrial 16 16 12 12 8 8 4 4 0 0 Q3 08 Q3 09 Q3 10 Q3 11 Q3 12 Q3 13 Q3 14 As at Q3 2013 As at Q3 2014 9
Slide 10: A New Contract for Pyramiden – Stockholm
A NEW CONTRACT FOR PYRAMIDEN – STOCKHOLM PROJECT TYPE SEB’s new headquarters in Stockholm for Fabege DESCRIPTION 4,500 work-places - 90 thousand square meters. Arcona in cooperation with Building Construction Stockholm and Building Construction Norway CONTRACT VALUE SEK 1.7 billion 10
Slide 11: Industrial – High Activity
INDUSTRIAL – HIGH ACTIVITY ASPHALT PRODUCTION (THOUSAND TONNES) 600 2012 2013 2014 500 400 300 200 100 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Des 11
Slide 12: Residential Sales and Construction
RESIDENTIAL SALES AND CONSTRUCTION SALES IN THE QUARTER (NUMBER OF UNITS) UNDER CONSTRUCTION AT END OF QUARTER (NUMBER OF UNITS) 250 250 1500 1500 Norway Sweden Norway Sweden 1300 1300 200 200 1100 1100 150 150 900 900 700 700 100 100 500 500 50 50 300 300 100 100 0 0 -100 -100 Q1 13 Q2 13 Q3 13 Q4
Slide 13: Nye Lilleby – New District in Trondheim
NYE LILLEBY – NEW DISTRICT IN TRONDHEIM + Nye Lilleby – a new district in 2013 2025 Trondheim on Fesil’s old industrial site + Construction period of 10-15 year, approx. 1,000 units + Sale start in November 2014 + Veidekke to retain a 50% share after the restructuring in 2015 13
Slide 14: Business Areas
BUSINESS AREAS
Slide 15: Business Areas, Q3
BUSINESS AREAS, Q3 Q3 2014 Q3 2013 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway 2,842 110 3.9% 3,032 88 2.9% Construction Sweden 1,092 14 1.3% 801 20 2.5% Construction Denmark 468 23 5.0% 357 19 5.5% Total Construction 4,402 148 3.4% 4,190 128 3.1% Property
Slide 16: Construction Norway
CONSTRUCTION NORWAY Revenue down 6% Q3 YTD • Lower activity level in residential building and civil Amounts in NOK million 2014 2013 2014 2013 engineering Revenue 2,842 3,032 8,681 8,718 Strong profit margin improvement, 3.9% Operating profit (EBIT) 95 83 228 199 • Improvement in Building Constructi
Slide 17: Construction Sweden
CONSTRUCTION SWEDEN Revenue growth +36% Q3 YTD • Arcona accounted for 22% of growth – other growth in Amounts in NOK million 2014 2013 2014 2013 Civil Engineering Revenue 1,092 801 3,452 2,402 Profit margin 1.3% Operating profit (EBIT) 17 21 18 2 • Profitability in certain building construction oper
Slide 18: Construction Denmark
CONSTRUCTION DENMARK Strong revenue growth +31% Q3 YTD • The increase is largely due to a few large commercial Amounts in NOK million 2014 2013 2014 2013 building projects. Revenue 468 357 1,335 944 Continuing strong profitability Operating profit (EBIT) 21 18 55 34 Order backlog down 22% since year
Slide 19: Property Development Norway
PROPERTY DEVELOPMENT NORWAY Lower revenue Q3 YTD • Reduced activity, notably in eastern Norway Amounts in NOK million 2014 2013 2014 2013 • More projects in joint-venture operations Revenue 141 301 550 826 Low profit for the quarter reflects low activity Operating profit (EBIT) 23 47 93 116 Return o
Slide 20: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN Improvement in profit as a result of increased activity Q3 YTD • Strong sales in the quarter, particularly for projects not yet Amounts in NOK million 2014 2013 2014 2013 under construction Revenue 197 154 960 461 Return on invested capital 12.8%* Operating profit (EBIT)
Slide 21: Industrial
INDUSTRIAL Historically high revenue Q3 YTD • Good asphalt production in general and several new Amounts in NOK million 2014 2013 2014 2013 projects Revenue 1,500 1,238 3,014 2,425 Strong earnings for Asphalt Operating profit (EBIT) 203 184 161 90 • Good operational and cost efficiency Net financial
Slide 22: Financial Statements (IFRIC 15)
FINANCIAL STATEMENTS (IFRIC 15)
Slide 23: Income Statement
INCOME STATEMENT Q3 YTD Full year Amounts in NOK million 2014 2013 2014 2013 2013 Revenue 5,784 5,511 17,309 15,199 21,781 Operating expenses -5,394 -5,112 -16,571 -14,666 -20,833 Share of net income from associates and J/Vs 57 20 134 35 65 Depreciation/impairment -87 -83 -247 -231 -321 Operating pr
Slide 24: Statement of Financial Position – Assets
STATEMENT OF FINANCIAL POSITION – ASSETS Amounts in NOK million 30/09/2014 30/09/2013 31/12/2013 Goodwill and other intangible assets 860 712 880 Deferred tax assets 55 62 55 Land and buildings 504 520 499 Plant and machinery 1,356 1,230 1,230 Investments in associates and joint ventures 1,068 863 9
Slide 25: Statement of Financial Position – Equity and Liabilities
STATEMENT OF FINANCIAL POSITION – EQUITY AND LIABILITIES Amounts in NOK million 30/09/2014 30/09/2013 31/12/2013 Equity 2,486 2,193 2,466 Pensions and deferred tax liabilities 555 478 558 Bonds 750 750 750 Amounts due to credit institutions 1,076 923 53 Other non-current liabilities 117 25 36 Total
Slide 26: Statement of Cash Flows
STATEMENT OF CASH FLOWS YTD YTD 2013 Construction Property Amounts in NOK million Industrial Dividend Group Group and Other development Profit before tax 359 163 134 - 656 364 Depreciation/impairment 180 1 67 - 247 231 Other working capital -239 203 -192 - -229 -494 Cash flow from operating activiti
Slide 27: Infrastructure Market Norway and Sweden
INFRASTRUCTURE MARKET NORWAY AND SWEDEN
Slide 28: 4.0 bn 2.5 bn 0.4 bn
CIVIL ENGINEERING ASPHALT 4.0 bn 2.5 bn AGGREGATES ROAD MAINTENANCE - 0.4 bn 1.0 bn e 28
Slide 29: The Infrastructure Market
THE INFRASTRUCTURE MARKET INVESTMENTS IN THE NORWEGIAN INFRASTRUCTURE MARKET INVESTMENTS IN THE SWEDISH INFRASTRUCTURE MARKET 40 45 Road and railway Other Road and railway Other 35 40 35 30 30 25 25 20 20 15 15 NOK billion in 2011 prices (volume) SEK billion in 2011 prices (volume) 10 10 2000 2004 2
Slide 30: Investment in Infrastructure
INVESTMENT IN INFRASTRUCTURE NOK 55 billion to transport infrastructure NOK 50 billion to transport infrastructure • 27 billion to roads • 22 billion to 'Developing national transport infrastructure‘ • 21 billion to railways • 21 billion to 'Maintaining national transport infrastructure' 30
Slide 31: Scandinavian Infrastructure Market
SCANDINAVIAN INFRASTRUCTURE MARKET NEW CONSTRUCTION ROAD MAINTENANCE The new construction market includes annual The operation and maintenance market for road investments of 60 to 80 billion in the national road and rail amounts to 20 to 30 billion per year in networks in Norway and Sweden Norway an
Slide 32: Players in the Market
PLAYERS IN THE MARKET CUSTOMERS SUPPLIERS 32
Slide 33: A Major Maintenance Player
A MAJOR MAINTENANCE PLAYER The operation and maintenance market in Norway represents more than NOK 10 billion annually Veidekke is a large supplier in this market Leading asphalt contractor Aggregates producer Road maintenance Market share 35% Market share 10% Market share 20% 33
Slide 34: New Infrastructure Projects in Norway and Sweden
NEW INFRASTRUCTURE PROJECTS IN NORWAY AND SWEDEN Hardangerbrua Rinkeby, Stockholm E16 Gulli - Kongsvinger FP2 – E6/Dovrebanen Hällviken, Örnsköldsvik UFP 05 SKillingsmyr Väg 40 Dållebo-Hester Tunnel, Vänernbanan Norra Länken, Stockholm E18 Sky - Langangen E16 Slomarka - Fulu FV.7 Øystese - Nes Lysak
Slide 35: Large Projects Require the Right Competence and Resources
FV 17 Røytvika-Kilboghamn LARGE PROJECTS REQUIRE THE RIGHT FV 659 Nordøyvegen COMPETENCE AND RESOURCES E6 Sjømanskirka-Ornes RV 80 Hunstadmonen - Thallekrysset FV 17 Liafjell-Olvikvatnet A number of large infrastructure projects are due for billing in 2014-2015 FV 714 Laksevegen, Sæter-Bergkrysset P
Slide 36: An Infrastructure Project from A to Z
AN INFRASTRUCTURE PROJECT FROM A TO Z 1. WIN PROJECT 2. EXECUTE PROJECT Municipal Project planning Concept plan with Zoning plan Construction Operation Maintenance Rehabilitation evaluation impact Land acquisition assessment Consultant Consultant Consultant Consultant Contractor Handover Industrial
Slide 37: E16 – Sandvika - Wøyen
E16 – SANDVIKA - WØYEN June-September 2014 Project planning 2005 2007 2011 Land acquisition The parcel from Sandvika to Wøyen (3.5 km) will be built as a four-lane motorway Large differences in bidding (42%) • NCC NOK 1.12 bn. • Veidekke NOK 1.29 bn. • PORR NOK 1.33 bn. • Skanska NOK 1.42 bn. • Håka
Slide 38: Different Contract Regimes
DIFFERENT CONTRACT REGIMES «Road and rail contracts» «Building contracts» + Public customers + Repeat customers + Tender + Negotiated contracts + Principal contract + Turnkey contracts + Unit price + Round sum + Bill of quantities + Turnkey + Construction + Development and construction 38
Slide 39: Summary: The Key to a Successful Project
SUMMARY: THE KEY TO A SUCCESSFUL PROJECT WIN PROJECTS EXECUTE PROJECTS The right project Correct pricing Good production Completion and handover ■ Market strategy ■ Each project is treated ■ Highly performing team ■ Satisfied customers and good ■ Creating the right project mix uniquely ■ Good start-
Slide 40: Priorities
PRIORITIES CONSTRUCTION PROPERTY DEVELOPMENT INDUSTRIAL Succeed in the New projects to market + Market positioning infrastructure market Strengthen land bank Exploit the multilocal organisation 40
Slide 41: Good performance, strong financial position, exciting opportunities
Good performance Strong financial Exciting in the quarter position opportunities 41 Hardangerbrua
Slide 42: Appendices
APPENDICES 42
Slide 43: Residential Portfolio
RESIDENTIAL PORTFOLIO Property Under construction Completed Start-up Under construction Completed Start-up Under construction Housing portfolio - Net at 31 Dec. 2012 2013 2013 at 31 Dec. 2013 2014 2014 at 30 Sept 2014 Construction - number of homes Norway 906 -500 343 749 -387 101 462 Sweden 371 -13
Slide 44: Business Areas, Year to Date
BUSINESS AREAS, YEAR TO DATE Q3 2014 Q3 2013 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway 8,681 278 3.2 % 8,718 221 2.5 % Construction Sweden 3,452 11 0.3 % 2,402 2 0.1 % Construction Denmark 1,335 62 4.6 % 944 38 4.0 % Total Construction 13,467 350 2.6 % 12