Slide 1: 4th Quarter 2016 Investor presentation
4TH QUARTER 2016 Investor presentation 9 February 2017 1
Slide 2: Contents
CONTENTS Highlights 2016 CEO Arne Giske Results – segments and Group CFO Terje Larsen The way forward CEO Arne Giske Veidekke has been awarded to build a new university building for the Faculty of Law in Oslo 2
Slide 3: A good year for Veidekke
A GOOD YEAR FOR VEIDEKKE Revenue growth and improved results Strong results in Property Development Unsatisfactory profitability in parts of the business Proposed dividend NOK 4.50 Veidekke builds 1 100 housing units at Nye Lilleby in Trondheim, of which several are in environmentally friendly solid
Slide 4: Revenue and earnings
REVENUE AND EARNINGS REVENUE PROFIT BEFORE TAX 30 1 600 1 400 108 25 1 200 20 1 000 NOK mill. NOK bill. 15 30.1 800 23.9 24.5 1 352 600 113 10 20.5 21.2 1 043 967 400 776 5 567 200 0 0 2012 2013 2014 2015 2016 2012* 2013 2014 2015 2016** *Positive one-off effect from changes to the pension scheme in
Slide 5: Profit before tax per business area
PROFIT BEFORE TAX PER BUSINESS AREA CONSTRUCTION PROPERTY DEVELOPMENT INDUSTRIAL 800 800 800 81 600 600 4 600 NOK mill. NOK mill. NOK mill. 94 400 400 400 723 644 549 563 200 403 446 200 200 306 19 280 173 221 210 190 158 117 0 0 0 2012* 2013 2014 2015 2016** 2012* 2013 2014 2015 2016** 2012* 2013 2
Slide 6: Changes in profit before tax
CHANGES IN PROFIT BEFORE TAX PROFIT BEFORE TAX* 1 600 1 460 259 50 1 400 1 200 46 9 -73 1 352 1 043 22 -1 NOK mill. 1 000 800 600 400 200 Construction Property development 0 2015 Norway Sweden Denmark Norway Sweden Industrial Other 2016 * One-off effect from changes to the disability pension scheme
Slide 7: A strong year for Property Development
A STRONG YEAR FOR PROPERTY DEVELOPMENT Sold residential units exciding 8 billion Result of 560 million Maskinparken, Lilleby, Trondheim Hagaterrassen, Stockholm Gartnerkvartalet 2, Oslo Solid landbank in Sweden and Norway Plans to sale start around 1 700* units in 2017 Hildedal stage 3, Gothenburg B
Slide 8: Residential sales and production
RESIDENTIAL SALES AND PRODUCTION NO. OF UNITS SOLD* AND SALES VALUE – NORWAY AND SWEDEN NO. OF UNITS UNDER CONSTRUCTION – NORWAY AND SWEDEN 3 000 10 3 000 Total sales value, NOK bill. 2 500 2 500 8 2 000 2 000 No. of units 6 1 500 1 500 4 1 000 1 000 500 2 500 0 0 0 2012 2013 2014 2015 2016 2012 201
Slide 9: Good results for Property Development
GOOD RESULTS FOR PROPERTY DEVELOPMENT OMSETNING PROFIT BEFORE OG MARGIN* TAX* RETURN ON INVESTED CAPITAL Norway Sweden 25% 600 500 20% 400 15% NOK mill. 300 10% 200 5% 100 0 0% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 *Adjusted for positive one-off effects from changes in the pension scheme
Slide 10: Residential sale starts
RESIDENTIAL SALE STARTS 1 200 1 200 No. of residential units, Veidekke’s share 1 000 1 000 800 800 600 600 1 100 950 400 400 690 530 550 200 470 200 270 160 - - - - 2014 2015 2016 2017 2014 2015 2016 2017 No. of units incl. JV share 470 760 1 250 1 050 320 1 000 470 650 10
Slide 11: Good progress in Construction
GOOD PROGRESS IN CONSTRUCTION High growth and good result development High order intake at Hotel, commercial and residential units, Oslo par with revenue Svea Symfoni, Stockholm Central House, Copenhagen, Denmark Improve the profitability in parts of the business E20, Västre Götaland Factory for Nor
Slide 12: Revenue growth and high order backlog
REVENUE GROWTH AND HIGH ORDER BACKLOG OMSETNING OG MARGIN* REVENUE CONSTRUCTION ORDER BACKLOG BY BUSINESS AREA 30 Rev. Civil Eng. Rev. Building Constr. 30 25 25 20 20 30 % NOK bill. NOK bill. Building Construction 15 15 70 % 10 10 5 5 Civil Engineering 0 0 2012 2013 2014 2015 2016 Q4 13 Q4 14 Q4 15
Slide 13: Good order intake at par with revenue
GOOD ORDER INTAKE AT PAR WITH REVENUE CONSTRUCTION ORDERS IN REVENUE NEXT REVENUE AND ORDER INTAKE CONSTRUCTION (“BOOK-TO-BILL RATIO” 0.99) 12 MONTHS* 30 30 25 25 20 20 NOK bill. 16.1 NOK bill. 16.0 15 15 10 10 5 5 12m Revenue 12m Order intake 0 0 Q4 13 Q4 14 Q4 15 Q4 16 Per Q4 2015 Per Q4 2016 Norw
Slide 14: Margin development Construction
MARGIN DEVELOPMENT CONSTRUCTION NORWAY* SWEDEN DENMARK (HOFFMANN) 15 8% 15 8% 15 8% 12 12 12 6% 6% 6% NOK bill. NOK bill. NOK bill. 9 9 9 4% 4% 4% 6 6 6 2% 2% 2% 3 3 3 0 0% 0 0% 0 0% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 *Adjusted for positive one-off effects fro
Slide 15: Construction Norway
CONSTRUCTION NORWAY REVENUE (NOK MILL.) MARGIN DEVELOPMENT* 18 000 Building Construction 5% • Significant growth 15 000 4% • Result growth and good profitability 12 000 • Stabile order backlog at a high level 3% 9 000 2% Civil Engineering 6 000 • Variation in project profitability 1% 3 000 • Project
Slide 16: Strong positions within Industrial
STRONG POSITIONS WITHIN INDUSTRIAL Solid marked position Good development and results in Asphalt and in Aggregates We will turn around the Road Maintenance business We produced 2.6 million tonnes asphalt in 2016 We sold 8.1 million tonnes aggregates Maintenance of 11 300 km Norwegian roads 16
Slide 17: Increased revenue and volume
INCREASED REVENUE AND VOLUME REVENUE INDUSTRIAL ASPHALT PRODUCTION AGGREGATES PRODUCTION 5 3,0 10 2,5 4 +14 % 8 +10 % 2,0 NOK bill. Million tonnes Million tonnes 3 6 1,5 2 4 1,0 1 2 0,5 0 0,0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013
Slide 18: Good results in Asphalt and Aggregates
GOOD RESULTS IN ASPHALT AND AGGREGATES PROFIT BEFORE TAX* (NOK MILL.) MARGIN DEVELOPMENT* Asphalt and Aggregates 300 15% • Good results 200 • Good operations and continuous 10% improvements 100 5% 0 0% Road Maintenance • Turnaround -5% -100 • Selectivity -200 -10% 2012 2013 2014 2015 2016 2012 2013
Slide 19: Occupational health and safety
OCCUPATIONAL HEALTH AND SAFETY SERIOUS INJURIES* LTI RATE** SICKNESS ABSENCE** 40 10 6% 5% 8 30 4% 6 20 3% 4 2% 10 2 1% 0 0 0% * Veidekke employees, hired staff and sub-contractors **12-month rolling (LTI = Number of lost-time injuries per million hours worked for Veidekke employees) 19
Slide 20: Good financial position
GOOD FINANCIAL POSITION NET INTEREST-BEARING POSITION AT YEAR-END (NOK MILL.) Capital spending 2016 274 • Acquisitions NOK 0.2 bill. • Equipment (PPE) NOK 0.7 bill. 0 Invested capital -396 -606 • Property Development NOK 3.1 bill. Solid long-term financing -1 506 • Undrawn bank facility NOK 3.6 bill
Slide 21: Proposed dividend of NOK 4.50 per share
PROPOSED DIVIDEND OF NOK 4.50 PER SHARE DIVIDEND Earnings per share: NOK 6.6 (5.7) 4,50 4,00 3,50 Proposed dividend: NOK 4.5 (4.0) NOK per share 3,00 2,75 2,50 2,50 Dividend pay-out ratio: 68% (70%) Earnings per share the segment accounts: NOK 9.3 (6.5) 2010 2011 2012 2013 2014 2015 2016* * Proposal
Slide 22: Results segments and Group
Sjödalsterrassen, Brandstegen, Huddinge RESULTS SEGMENTS AND GROUP
Slide 23: Revenue and profit for 4th quarter
REVENUE AND PROFIT FOR 4TH QUARTER REVENUE PROFIT BEFORE TAX 10 500 18 8 400 NOK bill. NOK mill. 6 300 113 8.7 411 4 200 376 7.3 336 368 6.1 6.6 5.6 2 100 179 0 0 Q4 12 Q4 13 Q4 14 Q4 15 Q4 16 Q4 12* Q4 13 Q4 14 Q4 15 Q4 16** *Positive one-off effect from changes to the pension scheme in Norway of N
Slide 24: Profit before tax for 4th quarter
PROFIT BEFORE TAX FOR 4TH QUARTER CONSTRUCTION PROPERTY DEVELOPMENT INDUSTRIAL 250 250 250 2 200 200 200 94 11 NOK mill. NOK mill. 150 150 NOK mill. 150 219 224 100 199 100 100 185 174 132 117 117 50 50 50 4 79 85 76 64 49 30 0 0 0 2012* 2013 2014 2015 2016** 2012 2013 2014 2015 2016** 2012* 2013 20
Slide 25: Business areas, 4th quarter
BUSINESS AREAS, 4TH QUARTER 4th quarter 2016* 4th quarter 2015 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway 4 193 118 2.8% 3 624 180 5.0% Construction Sweden 2 242 32 1.4% 2 089 7 0.3% Construction Denmark 514 36 7.0% 422 33 7.8% Total Construction 6 949 185
Slide 26: Construction Norway
CONSTRUCTION NORWAY Significantly increased revenues 4th quarter Full year • 1/3 of increase from Building Construction Amounts in NOK million 2016 2015 2016 2015 • 2/3 of increase from Civil Engineering Revenue 4 193 3 624 15 096 12 031 Operating profit (EBIT) 110 176 570 454 Weak result in the qua
Slide 27: Construction Sweden
CONSTRUCTION SWEDEN Increased revenues 4th quarter Full year • 3/4 of increase from Building Construction Amounts in NOK million 2016 2015 2016 2015 • 1/4 of increase from Civil Engineering Revenue 2 242 2 089 7 819 6 156 Improved profitability Operating profit (EBIT) 32 17 105 66 • Volume- and marg
Slide 28: Construction Denmark
CONSTRUCTION DENMARK Increased revenues 4th quarter Full year Strong results Amounts in NOK million 2016 2015 2016 2015 • Good profitability in the project portfolio Revenue 514 422 1 713 1 608 Own residential project in Copenhagen has started Operating profit (EBIT) 35 32 102 91 construction Net fi
Slide 29: Property Development in Norway
PROPERTY DEVELOPMENT IN NORWAY High level of activity and high sales ratio 4th quarter Full year • Good sale in all projects Amounts in NOK million 2016 2015 2016 2015 Increased number of fully owned projects Revenue 148 87 338 413 Good results Operating profit (EBIT) 60 58 174 150 • The results ref
Slide 30: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN Very strong increase in results 4th quarter Full year • Historically high residential production Amounts in NOK million 2016 2015 2016 2015 • Property development gain of NOK 40 million Revenue 1 185 488 2 864 1 712 High residential sales and high sales ratio Operating pr
Slide 31: Industrial
INDUSTRIAL Stabile revenue 4th quarter Full year Asphalt Amounts in NOK million 2016 2015 2016 2015 • Stabile revenue Revenue 1 068 1 109 4 162 4 033 • The result impacted by stop in production Operating profit (EBIT) 38 71 151 211 due to snowfall Net financial items -4 -6 -14 -22 Aggregates Profit
Slide 32: Financial statements
FINANCIAL STATEMENTS IFRS
Slide 33: Income statement
INCOME STATEMENT 4th quarter Full year Amounts in NOK million 2016 2015 2016 2015 Revenue 8 125 7 371 28 613 24 225 Operating expenses -7 769 -6 920 -27 284 -23 039 Share of net income from associates and JVs 56 45 190 130 Depreciation/impairment -129 -107 -466 -372 Operating profit 282 389 1 053 94
Slide 34: Balance sheet – assets
BALANCE SHEET – ASSETS Amounts in NOK million 31.12.2016 31.12.2015 Goodwill and other intangible assets 1 385 1 255 Deferred tax assets 65 65 Land and buildings 560 556 Plant and machinery 1 954 1 689 Investments in associates and joint ventures 1 363 1 134 Financial assets 649 852 Total non-curren
Slide 35: Balance sheet – equity and liabilities
BALANCE SHEET – EQUITY AND LIABILITIES Amount in NOK million 31.12.2016 31.12.2015 Equity 3 465 3 218 Pensions and deferred tax liabilities 877 940 Bonds 750 750 Amounts due to credit institutions 212 517 Other non-current liabilities 136 103 Total non-current liabilities 1 975 2 310 Debt to credit
Slide 36: Statement of cash flows
STATEMENT OF CASH FLOWS 2016 2015 Property Amounts in NOK million Construction Industrial Other1) Group Group development Profit before tax 804 567 136 -415 1 092 950 Depreciation/impairment 295 1 167 3 466 372 Other working capital 153 -273 62 380 322 -551 Cash flow from operating activities 1 252
Slide 37: The way forward
THE WAY FORWARD 37
Slide 38: Denmark Norway Sweden
DENMARK NORWAY SWEDEN Strong Leading in Leading and positions in the selected national largest markets segments
Slide 39: A strong Scandinavian market
A STRONG SCANDINAVIAN MARKET INVESTMENTS IN THE CONSTRUCTION SECTOR 900 billion 450 400 +2 % p.a. 350 +2 % p.a. 300 Bill. 2017-NOK 250 200 +5 % 150 p.a. 100 50 0 2000 2002 2004 2006 2008 2010 2012 2014 2016e 2018p Norway Sweden Denmark Sources: Veidekke, SCB, DST and SSB. 39 Percentages are average
Slide 40: Important trends
IMPORTANT TRENDS Larger projects Increased competition www.trafifverket.se Complex projects Environmental focus 40
Slide 41: Our competitiveness
OUR COMPETITIVENESS 41
Slide 42: Multi local strengths and synergies
MULTI LOCAL STRENGHETS AND SYNERGIES Property Development Building Construction Civil Engineering Industrial 42
Slide 43: Housing development and construction
HOUSING DEVELOPMENT AND -CONSTRUCTION 2016 – combined result of NOK 650 million 43
Slide 44: Strong market positions in Property Development
STRONG MARKET POSITIONS IN PROPERTY DEVELOPMENT Housing development in major regions Land bank of 16 750 units 44
Slide 45: Multi local cooperation
MULTI LOCAL COOPERATION Pyramiden, Stockholm E39, Bergen - Os 45
Slide 46: Product knowledge
PRODUCT KNOWLEDGE School buildings Shopping malls 46
Slide 47: Technology and innovative solutions
TECHNOLOGY AND INNOVATIVE SOLUTIONS The Munch Museum, Oslo Portalen, Lillestøm 47
Slide 48: Ambition of further growth
AMBITION OF FURTHER GROWTH Exploit strong 40 positions and good markets 30 Selective 20 acquisitions Focus on profitability 2012 2016 2020 48
Slide 49: Our long-term goals
OUR LONG-TERM GOALS OCCUPATIONAL CONSTRUCTION PROPERTY DEVELOPMENT INDUSTRIAL HEALTH AND SAFETY 0 5% 15% 6.5% SERIOUS INJURIES MARGIN RETURN ON INVESTED MARGIN CAPITAL Margin is based on Profit before tax 49
Slide 50: In the short term
IN THE SHORT TERM CONSTRUCTION PROPERTY DEVELOPMENT INDUSTRIAL Building Construction Civil Engineering Asphalt Aggregates Maintenance Selective prioritisation of new Take advantage of the good Turnaround in Road projects markets Maintenance Targeted measures in Further develop the land bank Further
Slide 51: A good year for Veidekke
A GOOD YEAR FOR VEIDEKKE Revenue growth and improved results Strong results in Property Development Unsatisfactory profitability in parts of the business A solid foundation for further growth 51
Slide 52: Q&A
Q&A 52
Slide 53: Appendix
APPENDIX
Slide 54: Business areas
BUSINESS AREAS 2016* 2015 Amounts in NOK million Revenues Profit Margin Revenues Profit Margin Construction Norway 15 096 596 4.0% 12 031 493 4.1% Construction Sweden 7 819 102 1.3% 6 156 56 0.9% Construction Denmark 1 713 105 6.2% 1 608 96 6.0% Total Construction 24 629 804 3.3% 19 795 644 3.3% Pro
Slide 55: Financial goals and results
FINANCIAL GOALS AND RESULTS BUSINESS AREA LONG TERM GOAL AVG 2012-15* 2016* Construction Margin (EBT) 5.0% 2.9% 2.9% Norway 3.3% 3.4% Sweden 1.0% 1.3% Denmark 5.4% 6.2% Industrial Margin (EBT) 6.5% 3.7% 2.8% Return on Property development 15.0% 10.4% 21.4% invested capital Norway 11.9% 12.1% Sweden
Slide 56: Housing portfolio
HOUSING PORTFOLIO Under Under Under Property Development construction Completed Start-up construction Completed Start-up construction Housing portfolio - Veidekke's share 31/12/2014 2015 2015 31/12/2015 2016 2016 31/12/2016 Construction - number of units Norway 399 -248 390 541 -293 352 600 Sweden 7
Slide 57: Solid land bank
200 SOLID LAND BANK A total of 16 750 units 1 750 • Veidekke’s share 13 550 200 In Norway • 7 900 units 1 100 3 400 • Veidekke’s share 5 250 1 000 In Sweden • 8 850 units 5 450 • Veidekke’s share 8 300 250 2 100 • 60% options 1 300 57