Veidekke Asa · OSL:VEI
Veidekke Asa — Investor Presentation (March 2021)
40 slides from Veidekke Asa's investor presentation, March 2021
Slide 1: Veidekke Market update March 2021
Veidekke Market update March 2021 Kristoffer Eide Hoen and Anders Wettre
Slide 2: A market of opportunities
A market of opportunities Veidekke market update March 2021 Focus topics: Veidekke market report Presentation by: • Residential market March 2021 Kristoffer Eide Hoen, Chief Analyst • Care facilities 08:30 – 09:00 Anders Wettre, Analyst • Rehabilitation Submit your questions until 10:00 to • Transpo
Slide 3: Brief introduction to key terms/contexts
Brief introduction to key terms/contexts • Building starts: the order intake of the companies • Production: the revenues of the companies • The distinction is made because production can go on for several years after a project has been started. • Production is a direct algorithm/consequence of build
Slide 4: Market forecasts and Covid-19
Market forecasts and Covid-19 • At the time of publication, parts of Scandinavia are more exposed to new infections and lockdowns than previously during the course of the pandemic. The scale of the next wave and its consequences underline the unpredictability of the situation and the uncertainty of
Slide 5: Market overview
01 Market overview 5 © Veidekke
Slide 6: The contracting markets: Market developments
The contracting markets Market developments Highlights Construction-sector production by country NOK billion • Market growth: 300 • Growth prospects for 2021 have been increased 250 since the previous report • In Norway, we expect 1% growth in 2021 (-4%) 200 • In Sweden, we expect 0% in 2021 (-10%)
Slide 7: How certain can we be of continued high activity?
How certain can we be of continued high activity? A large proportion of production in 2021 is known Order book, 5 largest Scandinavian construction companies* Value of building starts, 2020 v. earlier years Growth in Nordic/Scandinavian construction sector Q4 2019 to Q4 2020 NOK billion 15% 250 215
Slide 8: Several trends are creating opportunities
Several trends are creating opportunities: The interest-rate effect: Customers are cutting: Investor uncertainty: New housing boom? Growth in the refurb market? Where is the commercial market headed? Increasing life expectancy: Strong central government finances: Uncertainty among municipalities? 8
Slide 9: Low interest rates are boosting the residential sector
02 Low interest rates are boosting the residential sector 9 © Veidekke
Slide 10: Strongest sales of new residential units since 2016-17
Strongest sales of new residential units since 2016-17 Figures for Norway from Economics Norway’s “Econ Nye boliger” report Off-plan apartment sales Comments Last four months (Nov.-Feb.), compared to corresponding period in earlier years 8 000 • Drivers: low interest rates and high household saving
Slide 11: Production of apartments and small houses
Production of apartments and small houses Construction-sector production, apartments and small houses Comments NOK billion 120 Forecast 120 • In Norway, production will shrink 3% in 2021, +8% but grow 5% in 2022 100 100 +2% • In Sweden, 2% growth is expected in 2021, 80 80 and 8% growth in 2022 60 -
Slide 12: Capital cities have bottomed out
Capital cities have bottomed out Projects starts for apartments and small houses are on the up Value of building starts by quarter Comments NOK billion 6 Forecast 14 • Steep fall in Stockholm and Oslo following a peak in 2017 12,4 5 4,6 12 • Residential construction has remained stronger in other Sw
Slide 13: Increasing life expectancy
03 Increasing life expectancy 13 © Veidekke
Slide 14: Twice as many 80 year-olds
Twice as many 80 year-olds Sweden and Norway Sweden Norway Number of 80–85 year-olds Number of 80–85 year-olds 450 000 200 000 Population projections Population projections 400 000 180 000 350 000 160 000 140 000 300 000 120 000 250 000 100 000 200 000 80 000 150 000 60 000 100 000 40 000 50 000 20
Slide 15: Twice as many care facilities
Twice as many care facilities Sweden and Norway Sweden, construction-sector production care facilities Norway, construction-sector production care facilities NOK billion NOK billion 18 Forecast 10 Forecast 16 9 14 8 7 12 6 10 5 9,4 8 15,5 8,8 14,5 4 8,2 13,9 13,5 6 11,9 7,0 10,2 3 10,0 5,2 5,3 8,3 5
Slide 16: Climate – the challenge of our time, but also an opportunity?
04 Climate – the challenge of our time, but also an opportunity? 16 © Veidekke
Slide 17: Quotes
Quotes: “Of course price is important, but not as important as it used to be. The lowest price no longer necessarily wins.” “More has happened in society in the past 12 months than in the previous 12 years.” “Accept your role! Tools and methods that help us make good decisions.” “Those who can solve
Slide 18: Veidekke's client survey
Veidekke’s client survey What climate requirements can we expect? Client climate requirements in three dimensions Comments Indexing of replies: max. score 33 per area, total max. 100 • Veidekke interviewed 18 major clients in the autumn of 2020 Major commercial clients 23 26 28 regarding their expec
Slide 19: Reuse: the refurbishment market
Reuse: the refurbishment market Estimated market development and forecast Refurbishment of non-residential buildings in Scandinavia Comments NOK billion 50 Forecast • The refurb market in the commercial buildings segment 45 will total NOK 45 billion in 2020* 40 19 • Reduced growth in the commercial
Slide 20: Refurbishment – share of the total market
Refurbishment – share of the total market Distribution by segment Sweden, seven largest segments Norway, seven largest segments Refurbishment share of total project volume 2015–2020 Refurbishment share of total project volume 2015–2020 Culture and entertainment 69 % Hotels 50 % Schools 43 % Administ
Slide 21: Strong central government finances – investment in transport infrastructure
05 Strong central government finances – investment in transport infrastructure 21 © Veidekke
Slide 22: The civil engineering market in Norway and Sweden
The civil engineering market in Norway and Sweden Continued growth in the transport infrastructure segment Investment by civil engineering segment Comments NOK billion, Norway and Sweden 200 Forecast +5% +3% • Estimated growth of 5% in the civil engineering market 180 in 2021 and 3% in 2022 160 • Tr
Slide 23: Our forecasting: Transport infrastructure
Our forecasting Transport infrastructure Long term Medium term Short term Specific projects National Transport Plan Action plan National budget Veidekke’s project database Transport agencies’ infrastructure plans Detailing the next planning period Final framework and specific measures Contracts > 50
Slide 24: Transport infrastructure in Sweden
Transport infrastructure in Sweden Many roads and even more railways Road and railway investment Comments E4 Förbifart is in an intensive SEK billion civil engineering phase “Unprecedented” residential 35 construction activity is generating several years of high-paced • Clear signs of growth follow
Slide 25: The transport infrastructure market in Norway
The transport infrastructure market in Norway Many roads and even more railways Road and railway investment Comments Nye Veier AS’s production NOK billion value exceeding NOK 10 Civil engineering start on billion first PPP project since the 50 early 2000s • Further growth expected in roads investmen
Slide 26: Focus topic: internationalisation
06 Focus topic: internationalisation 26 © Veidekke
Slide 27: The transport infrastructure market in Sweden
The transport infrastructure market in Sweden Reorientation towards larger contracts Development in contract sizes, Swedish Transport Administration Comments Contract value in SEK million, percentage 100 % • Reorientation towards ever-larger contracts with 13% 90 % 17% facilitation of international
Slide 28: The transport infrastructure market in Norway and Sweden
The transport infrastructure market in Norway and Sweden The largest contracts are becoming larger Development of contract sizes Comments Norway and Sweden, contracts > 500 million 100 % • Reorientation towards ever-larger contracts with 12% 90 % 16% facilitation of international competition 80 % 41
Slide 29: International players, 2017–2020
International players, 2017–2020 Scandinavian players did well Proportion by contract size, contracts > 500 million Proportion by client, contracts > 500 million Percentages, Norway and Sweden Percentages, Norway and Sweden 43% 72% 76% 76% 77% 82% 88% 96% 57% 24% 28% 24% 23% 12% 18% 4% Norwegian Pub
Slide 30: International players, 2021–2022
International players, 2021–2022 Strengthening their position PPP Hålogalandsvegen Announcement May/June 2021 Major transport infrastructure projects Start-up in the period 2021–2022 E6 Svenningelv–Lien One international player PQ (1/3) E6 Storhove–Øyer Clients Two international players PQ (2/5) Nor
Slide 31: The Norwegian asphalt market
The Norwegian asphalt market Better prospects than in 2020 Tonnes of asphalt by client segment Comments 1,000 tonnes 9 000 Forecast • 2020 marked a trough in the Norwegian asphalt market +9% 8 000 -9% 0% • Unusually weak year for maintenance assignments 7 000 for central government and counties 6 00
Slide 32: The Norwegian asphalt market
The Norwegian asphalt market Increased allocations by central government and county authorities Maintenance for central government and municipalities Comments 1,000 tonnes 3 500 Forecast • 2020 marked a trough in the Norwegian asphalt market 3 000 +40% • Unusually weak year for maintenance assignmen
Slide 33: Trouble ahead?
07 Trouble ahead? 33 © Veidekke
Slide 34: Commercial buildings: Hardest hit by Covid-19
Commercial buildings Hardest hit by Covid-19 Construction-sector production, commercial buildings Comments NOK billion +2% 160 Forecast • Investor uncertainty due to Covid-19 -10% -4% 140 42 • Offices and hotels are particularly vulnerable 44 120 43 35 in the short term 43 37 100 38 39 • A 6% year-o
Slide 35: What is happening in Norwegian municipalities?
What is happening in Norwegian municipalities? Very low number of building starts in autumn 2020 Municipal building starts in second half of 2020 Comments NOK billion, daycare centres, primary and lower secondary schools and care facilities 12 • Very low number of building starts in the second half
Slide 36: Summary
Summary Scandinavian construction market Comments Construction-sector production, NOK billion 800 Forecast • High activity levels but weak growth in 2021 and 2022 -1% +2% 700 • Considerable uptick since last report 600 • Good opportunities in several segments 500 400 300 200 100 0 2008 2009 2010 201
Slide 37: Keen on numbers and the construction industry?
Keen on numbers and the construction industry? Veidekke.com/no/Markedsanalyse 1. Interactive database (PBI) for the Scandinavian construction market 2. Key figures in MS Excel 3. Market presentation as .pdf 37 © Veidekke
Slide 38: Annexes
08 Annexes 38 © Veidekke
Slide 39: The contracting markets Scandinavia
The contracting markets Scandinavia Norway Sweden Denmark By sector, NOK billion By sector, NOK billion By sector, NOK billion 110 110 110 CAGR 2021-2022 CAGR 2021-2022 +2 % CAGR 2021-2022 100 +5 % 100 100 +5 % 90 90 90 +5 % 80 80 80 70 70 70 -1 % -9 % 60 60 60 -9 % 50 -5 % 50 +2 % 50 40 40 40 30 +2
Slide 40: Thank you
= Thank you