Veidekke Asa · OSL:VEI
Veidekke Asa — Investor Presentation (September 2014)
42 slides from Veidekke Asa's investor presentation, Sep 15, 2014
Slide 1: Economic Activity Report
ECONOMIC ACTIVITY REPORT Skøyen, 15 September Rolf Albriktsen Kristoffer Eide Hoen
Slide 2: Highlights
HIGHLIGHTS Norway: residential market is recovering but uncertainty about petroleum investments Sweden: weaker economic growth than expected, but construction/civil engineering shows positive tempo Denmark: we are still awaiting an upturn 2
Slide 3: International Economy: Positive Effects
INTERNATIONAL ECONOMY POSITIVE EFFECTS
Slide 4: Positive Effect of International Economy
POSITIVE EFFECT OF INTERNATIONAL ECONOMY GDP GROWTH 2013–2015 HIGHLIGHTS 2013 2014 2015 Increased global growth • But Eurozone growth is slow Eurozone -0.4 1.1 1.5 Conflicts are getting closer Germany 0.5 1.9 1.7 • Increased uncertainty about energy prices in Europe United Kingdom 1.7 3.2 2.7 Strong
Slide 5: Conflicts Getting Closer?
POSITIVE EFFECT OF INTERNATIONAL ECONOMY CONFLICTS GETTING CLOSER? HIGHLIGHTS Increased global growth • But Eurozone growth is slow Conflicts are getting closer • Increased uncertainty about energy prices in Europe Strong construction/civil engineering growth in Poland and parts of the Baltics • Con
Slide 6: Production in Construction/Civil Engineering – Growth and Level
POSITIVE EFFECT OF INTERNATIONAL ECONOMY PRODUCTION IN CONSTRUCTION/CIVIL ENGINEERING – HIGHLIGHTS GROWTH AND LEVEL First 6 months 2014* Level as % of peak Increased global growth years 2007/2008 • But Eurozone growth is slow Latvia +20% 73% Conflicts are getting closer Lithuania +14% 72% • Increase
Slide 7: Norwegian Economy: High Activity, Slowdown in Growth
NORWEGIAN ECONOMY HIGH ACTIVITY, SLOWDOWN IN GROWTH
Slide 8: High Activity, Slowdown in Growth
HIGH ACTIVITY, SLOWDOWN IN GROWTH FACSIMILE FROM NRK, 12 JUNE ECONOMIC GROWTH PROJECTIONS, SEPTEMBER 2014 Average annual growth, % 2011–2013 2014–2016* Investments in extraction 14.3 -0.7 Residential investments 9.9 2.6 Public investments 3.9 6.8 GDP Mainland Norway 2.7 2.4 Employment 1.7 0.9 Unempl
Slide 9: GDP Growth 2010–2014 (Year-to-Date)
HIGH ACTIVITY, SLOWDOWN IN GROWTH GDP GROWTH 2010–2014 (YEAR-TO-DATE) HIGHLIGHTS High growth in first half of year • Strong figures for consumption and traditional exports • Weak investment growth in business and industry Industrial production surprisingly positive • When are the investments coming?
Slide 10: Industrial Production
HIGH ACTIVITY, SLOWDOWN IN GROWTH INDUSTRIAL PRODUCTION HIGHLIGHTS High growth in first half of year • Strong figures for consumption and traditional exports • Weak investment growth in business and industry Industrial production surprisingly positive • When are the investments coming? Strong househ
Slide 11: Labour Market
HIGH ACTIVITY, SLOWDOWN IN GROWTH LABOUR MARKET HIGHLIGHTS High growth in first half of year • Strong figures for consumption and traditional exports • Weak investment growth in business and industry Industrial production surprisingly positive • When are the investments coming? Strong household sect
Slide 12: Norwegian Construction/Civil Engineering Market: New Growth with Regional Differences
NORWEGIAN CONSTRUCTION/CIVIL ENGINEERING MARKET: NEW GROWTH WITH REGIONAL DIFFERENCES
Slide 13: Stable Order Development
STABLE ORDER DEVELOPMENT NEW ORDERS, CONTRACTORS HIGHLIGHTS Slightly weaker order intake • New orders for Q2 -4 percent down from same quarter in 2013 • Reserves increasing Civil engineering: Decline in new orders, high activity level • New orders down -21 percent from Q2 2013 • Reserves increased b
Slide 14: Residential Market: Housing Prices Stronger Than Expected
RESIDENTIAL MARKET: HOUSING PRICES STRONGER THAN EXPECTED HOUSING PRICES HIGHLIGHTS Somewhat stronger growth in housing prices in August than our forecasts • 2.1 percent growth from August 2013 • 4.5 percent growth from the bottom figure at year-end The drivers – revenue growth, low interest rates a
Slide 15: Residential Market: Regional Differences
RESIDENTIAL MARKET: REGIONAL DIFFERENCES HOUSING PRICES AND TREND HIGHLIGHTS Price level Change Aug Price trend Trend development: Apartments August 2014 13/Aug 14 last 3 months NOK/m2 Recovery in most urban areas Oslo 50,200 0.5% Development in petroleum sector affecting Bergen 41,300 4.3% growth i
Slide 16: Residential Market: Housing Starts
RESIDENTIAL MARKET: HOUSING STARTS REGISTERED RESIDENTIAL BUILDING PERMISSIONS HIGHLIGHTS Large number of building permissions so far this year • Annual rate of 30,000 dwellings as of July Improved sales of new homes this year appears likely to drive new housing starts May reach 30,000 starts this y
Slide 17: Growth Also in Commercial Buildings
GROWTH ALSO IN COMMERCIAL BUILDINGS REGISTERED COMMERCIAL BUILDING PERMITS HIGHLIGHTS Forecasts followed Growth in both private and public commercial buildings • Education and health • Trade and logistics 17
Slide 18: Civil Engineering Investments
CIVIL ENGINEERING INVESTMENTS CIVIL ENGINEERING INVESTMENTS (VOLUME 2011 PRICES) HIGHLIGHTS NOK bn. 6 percent growth in civil engineering market this 30 +5%* year and next year 25 • Capacity challenges dampening growth 20 15 Highest growth is in railway projects +5-7%* 10 +2%* Proportion of foreign
Slide 19: Civil Engineering Investments: Examples of Major Projects
CIVIL ENGINEERING INVESTMENTS: EXAMPLES OF MAJOR PROJECTS EXAMPLES OF MAJOR PROJECTS UP FOR TENDER IN NEXT 6 MONTHS. HIGHLIGHTS Project Client Many projects over NOK 1 billion E16 Sandvika - Wøyen NPRA Total sum of tenders in the civil engineering sector NPRA is approx. NOK 14 billion in the next si
Slide 20: Construction/Civil Engineering Markets in Norway
CONSTRUCTION/CIVIL ENGINEERING MARKETS IN NORWAY CONSTRUCTION/CIVIL ENGINEERING INVESTMENTS HIGHLIGHTS (VOLUME 2011 PRICES) NOK bn. New growth from 2015 120 -2%* • 2 percent decline in 2014 100 • 3 percent growth in both 2015 and 2016 80 +5%* 60 +4%* Residential investments will make a positive 40 c
Slide 21: Swedish Economy: Upturn at a Slower Pace
SWEDISH ECONOMY UPTURN AT A SLOWER PACE
Slide 22: Swedish Economy: Stable Indicators
SWEDISH ECONOMY STABLE INDICATORS NATIONAL INSTITUTE OF ECONOMIC RESEARCH HIGHLIGHTS "ECONOMIC TENDENCY SURVEY" Hovering around the historical average Upswing for industry in August 22
Slide 23: Swedish Economy: Slight Decline in Unemployment
SWEDISH ECONOMY SLIGHT DECLINE IN UNEMPLOYMENT LABOUR MARKET HIGHLIGHTS Higher growth in employment • +60,000 in Q2 compared with same quarter in 2013 (+1.3 percent) Supply of labour high • Labour force participation has recovered after the financial crisis 23
Slide 24: Swedish Economy: Inflation Low = Continuing Low Interest Rates
SWEDISH ECONOMY INFLATION LOW = CONTINUING LOW INTEREST RATES INFLATION DEVELOPMENT HIGHLIGHTS Inflation is approaching zero Energy and food prices have pushed inflation down Low labour costs and low cost pressure Weaker krona since March last year What will the Riksbank do next? 24
Slide 25: Swedish Economy: GDP Growth Picking Up
SWEDISH ECONOMY GDP GROWTH PICKING UP GDP GROWTH 2010–2014 (YEAR-TO-DATE) HIGHLIGHTS Growth weaker than expected so far this year Exports and business investments down Household investments and consumption up The assumption of GDP growth of 2.5-3 percent in 2015 remains unchanged 25
Slide 26: Swedish Construction/Civil Engineering Market: Good Momentum into 2015
SWEDISH CONSTRUCTION/CIVIL ENGINEERING MARKET GOOD MOMENTUM INTO 2015
Slide 27: Residential Market: Building Permits for New Homes
RESIDENTIAL MARKET BUILDING PERMITS FOR NEW HOMES HIGHLIGHTS Sharp increase in building permissions • Increase of 20 percent at Q2 Underlying drivers of the residential market are positive • Demographics and financing Housing prices continue to rise High level of new construction also in 2015 and 20
Slide 28: Residential Market: Population Growth
RESIDENTIAL MARKET POPULATION GROWTH AS A PERCENTAGE HIGHLIGHTS 2,0 % Sharp increase in building permissions 1,7 % • Increase of 20 percent at Q2 1,5 % 1,2 % Underlying drivers of the residential market are 1,0 % positive 0,5 % 0,6 % • Demographics and financing 0,0 % Housing prices continue to rise
Slide 29: Residential Market: Housing Prices and Forecasts
RESIDENTIAL MARKET HOUSING PRICES AND FORECASTS HIGHLIGHTS Sharp increase in building permissions • Increase of 20 percent at Q2 Underlying drivers of the residential market are positive • Demographics and financing Housing prices continue to rise High level of new construction also in 2015 and 2016
Slide 30: Commercial Buildings
COMMERCIAL BUILDINGS COMMERCIAL BUILDING PERMITS HIGHLIGHTS Private commercial buildings down in the first half of the year • Underlying drivers are positive: • Employment growth is increasing • Interest rates remain low Public sector increased in the first half of 2014 • Will tightening from 2015 h
Slide 31: Civil Engineering Market
CIVIL ENGINEERING MARKET CIVIL ENGINEERING INVESTMENTS (VOLUME 2011 PRICES) HIGHLIGHTS SEK bn. Positive market in the first half of 2014 30 High activity in private segments expected to 25 +7%* continue 20 +4%* • Energy +7%* 15 • Industry 10 +1%* Transport: We have used Swedish Transport 5 Administr
Slide 32: Construction/Civil Engineering Markets in Sweden, Summary
CONSTRUCTION/CIVIL ENGINEERING MARKETS IN SWEDEN, SUMMARY CONSTRUCTION/CIVIL ENGINEERING INVESTMENTS (VOLUME 2011 HIGHLIGHTS PRICES) SEK bn. 140 Strong growth in 2014 driven by homes and civil +7%* 120 engineering 100 • Towards growth of 10 percent 80 +5%* Prospects 60 +4%* • Residental: Continuing
Slide 33: Danish Economy: Growth a Long Time Coming
DANISH ECONOMY GROWTH A LONG TIME COMING
Slide 34: Growth a Long Time Coming: GDP Growth
GROWTH A LONG TIME COMING GDP GROWTH 2010–2014, YEAR-TO-DATE HIGHLIGHTS Weak GDP figures for the first half of the year • Consumers continue to disappoint (only +0.3 percent in the first half of the year) • Expectation: 1 percent GDP growth this year, rising to around 2 percent next year • Copenhage
Slide 35: Growth a Long Time Coming: Consumer Confidence
GROWTH A LONG TIME COMING CONSUMER CONFIDENCE HIGHLIGHTS Weak GDP figures for the first half of the year • Consumers continue to disappoint (+0.3 percent in the first half of the year) • Expectation: 1 percent GDP growth this year, rising to around 2 percent next year • Copenhagen region leads the w
Slide 36: Danish Construction/Civil Engineering Market: Modest Expectations in the Short Term
DANISH CONSTRUCTION/ CIVIL ENGINEERING MARKET MODEST EXPECTATIONS IN THE SHORT TERM
Slide 37: Cautious Danish Construction/Civil Engineering Companies
CAUTIOUS DANISH CONSTRUCTION/ CIVIL ENGINEERING COMPANIES CONFIDENCE INDICATOR NEXT 3 MONTHS, DANISH HIGHLIGHTS CONSTRUCTION/CIVIL ENGINEERING COMPANIES More reserved mood among construction/civil engineering companies, but trend is still positive • Weaker economic growth than expected may be the ex
Slide 38: Construction/Civil Engineering Markets in Denmark, Summary
CONSTRUCTION/CIVIL ENGINEERING MARKETS IN DENMARK, SUMMARY CONSTRUCTION/CIVIL ENGINEERING INVESTMENTS (VOLUME 2011 HIGHLIGHTS PRICES) DKK bn. 2 percent growth in construction/civil engineering 60 investments this year, rising to 5-6 percent in 50 +8%* 2015 and 2016 40 +2%* • Level remains low 30 20
Slide 39: Construction/Civil Engineering Markets in Denmark, Summary
CONSTRUCTION/CIVIL ENGINEERING MARKETS IN DENMARK, SUMMARY CONSTRUCTION/CIVIL ENGINEERING INVESTMENTS (VOLUME 2011 HIGHLIGHTS PRICES) DKK bn. Positive growth for civil engineering – major 60 development projects contribute positively 50 +8%* • Road and rail projects have shown strong growth into 40
Slide 40: Denmark: Public Sector Investment Plans to 2020
CONSTRUCTION/CIVIL ENGINEERING MARKETS IN DENMARK, SUMMARY PUBLIC SECTOR, INVESTMENT PLANS TO 2020 HIGHLIGHTS Direct public sector investments being reduced, but mostly a "technicality": • The Fehmarnbelt fixed link, and railway and metro projects will raise the level from 2016 • Strong power sector
Slide 41: Summary
SUMMARY Norway: Positive construction and civil engineering growth in the first half of the year, but uncertainty associated with petroleum investments Sweden: Good construction and civil engineering progress despite lower economic growth than expected Denmark: Optimism only so far, when is growth c
Slide 42: Scandinavian Construction/Civil Engineering Market to 2016
SCANDINAVIAN CONSTRUCTION/CIVIL ENGINEERING MARKET TO 2016 Investments in construction/civil engineering NOK billion* 2011 prices. Percentage growth for 2014-2016 300 +2%** 250 +5%** 200 150 100 +5%** 50 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2015f 2016f 2014e Source: