Veidekke Asa · OSL:VEI
Veidekke Asa — Q4 2018 Earnings Presentation
42 slides from Veidekke Asa's earnings presentation, Feb 7, 2019
Slide 1: 4th Quarter 2018
4TH QUARTER 2018 Investor presentation 7 February 2019 1
Slide 2: Contents
CONTENTS Highlights 2018 CEO Arne Giske Results – segments and Group CFO Terje Larsen Improvements and development CEO Arne Giske Team Veidekke DA has been engaged by OBOS to build the initial 342 apartments at Ulven in Oslo, along with a large day-care facility and 2 commercial space
Slide 3: Safety is main priority
SAFETY IS MAIN PRIORITY SERIOUS INJURIES* # LTI RATE* 40 8 Two work-related accidents 35 with fatal outcomes 30 6 • Both accidents include 25 heavy machinery 20 4 15 The reduction in the number of 10 2 serious injuries has halted 5 Safety is main priority - - # Veidekke employees, hired staff and su
Slide 4: Highlights 4th quarter
HIGHLIGHTS 4TH QUARTER High level of activity, but lower profitability in Construction Good results in Property Development High order intake Dividend proposal of NOK 5.0 per share Veidekke to build a high-quality commercial building with offices, retail, services and hospitality across 10 storeys a
Slide 5: Revenue and earnings 4th quarter
REVENUE AND EARNINGS 4TH QUARTER REVENUE PROFIT BEFORE TAX 12 500 10 400 8 NOK billion NOK million 300 6 10.5 200 411 4 8.7 8.7 368 376 381 7.3 341 6.6 2 100 0 0 Q4 14 Q4 15 Q4 16 Q4 17 Q4 18 Q4 14 Q4 15 Q4 16* Q4 17 Q4 18 * NOK 18 mill. in positive one-off effect from changes to the disability pens
Slide 6: Profit before tax per business area
PROFIT BEFORE TAX PER BUSINESS AREA CONSTRUCTION PROPERTY DEVELOPMENT INDUSTRIAL 300 300 300 200 200 200 100 198 208 100 100 195 158 187 162 114 70 66 72 88 65 NOK mill. NOK mill. NOK mill. 0 0 0 17 -4 -100 -100 -100 -217 -335 -200 -200 -200 -300 -300 -300 -400 -400 -400 Q4 17 Q1 18 Q2 18* Q3 18 Q4
Slide 7: Revenue and earnings for the year
REVENUE AND EARNINGS FOR THE YEAR REVENUE PROFIT BEFORE TAX 36 1 600 1 400 108 30 1 200 24 1 000 NOK mill. NOK bill. 550 18 35.6 800 30.1 31.4 1 352 1 311 600 12 23.9 24.5 1 043 967 400 6 591 200 0 0 2014 2015 2016 2017 2018 2014 2015 2016* 2017 2018** * NOK 108 mill. in positive one-off effect from
Slide 8: Profit before tax per business area
PROFIT BEFORE TAX PER BUSINESS AREA CONSTRUCTION PROPERTY DEVELOPMENT INDUSTRIAL 800 800 800 81 600 600 600 NOK mill. NOK mill. NOK mill. 550 400 400 400 723 644 629 549 563 549 200 200 388 200 280 306 219 210 190 206 117 0 0 0 40 2014 2015 2016* 2017 2018*** 2014 2015 2016* 2017 2018 2014 2015 2016
Slide 9: Good order intake at level with revenues
GOOD ORDER INTAKE AT LEVEL WITH REVENUES REVENUE AND ORDER INTAKE CONSTRUCTION (“BOOK-TO-BILL RATIO” 1.07) ORDERS IN REVENUE NEXT 12 MONTHS 35 35 30 30 25 25 22.2 NOK bill. 19.7 NOK bill. 20 20 15 15 10 10 5 5 12m revenue 12m order intake 0 0 Q4 14 Q4 15 Q4 16 Q4 17 Q4 18 Per Q4 2017 Per Q4 2018 Nor
Slide 10: Revenue and margin Construction
REVENUE AND MARGIN CONTRUCTION REVENUE (NOK BILL.) MARGIN % 25 000 6% 20 000 4% 2% 15 000 0% 10 000 -2% 5 000 -4% 0 -6% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Revenue Building Construction Revenue Civil Engineering Margin Building Construction Margin Civil Engineering 10
Slide 11: Important milestones for Property Development
IMPORTANT MILESTONES FOR PROPERTY DEVELOPMENT PROFIT BEFORE TAX – 12-MONTHS ROLLING Good results from residential development 700 Active management of land bank 600 • Transactions in Sweden 500 • Significant results in 4th quarter 400 NOK mill. Stepping up the level of activity in 300 commercial dev
Slide 12: Earnings and margin Industrial
EARNINGS AND MARGIN INDUSTRIAL PROFIT BEFORE TAX (NOK MILL.) MARGIN % 300 15% 200 10% 100 5% 0 0% -100 -5% -200 -10% 2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Road Maintenance Asphalt Aggregates Development gain Asphalt Road Maintenance Aggregates Total 12
Slide 13: Financial position
FINANCIAL POSITION NET INTEREST-BEARING POSITION (NOK MILL.) Capital spending 274 • Acquisitions and PP&E NOK 1.3 bill. (1.1) • Significant reduction in 2019 0 Invested capital -606 • Property Development NOK 4.7 bill. (4.2) -764 Solid long-term financing -1 470 • Undrawn bank facility NOK 3.5 bill.
Slide 14: Proposed dividend of NOK 5.0 per share
PROPOSED DIVIDEND OF NOK 5.0 PER SHARE DIVIDEND (NOK PER SHARE) Proposed dividend: NOK 5.0 (5.0) 5.00 5.00 4.50 4.00 Earnings per share: NOK 4.0 (8.8) 3.50 (IFRS) 3.00 2.50 Pay-out-ratio: 125% (57%) Earnings per share segment accounts: NOK 4.0 (8.6) 2012 2013 2014 2015 2016 2017 2018* Numbers in bra
Slide 15: Results segments and Group
Veidekke to build a new health building in Stjørdal that also will serve neighbouring municipalities. The building has high ambitions for the environment and sustainability, and will achieve environmental certification RESULTS SEGMENTS AND GROUP
Slide 16: Business areas 4th quarter
BUSINESS AREAS 4TH QUARTER 4th quarter 2018 4th quarter 2017 Amounts in NOK million Revenue Profit Margin Revenue Profit* Margin Building Construction Norway 3 603 109 3.0% 2 886 115 4.0% Civil Engineering Norway 1 394 -25 -1.8% 1 181 -28 -2.4% Construction Sweden 3 086 68 2.2% 2 692 61 2.3% Constru
Slide 17: Building Construction Norway
BUILDING CONSTRUCTION NORWAY 4th QUARTER 2018 REVENUE AND MARGIN NOK bill. Revenue growth 4 7% • Particularly strong performance in eastern Norway and Trøndelag 3.6 6% 3 3.4 5% 2.9 3.0 3.0 4% 2 A stable result 4.0 % 3% 3.5 % 3.7 % 3.4 % • Low earnings on some projects led to reduced margin 1 3.0 % 2
Slide 18: Civil Engineering Norway
CIVIL ENGINEERING NORWAY 4th QUARTER 2018 REVENUE AND MARGIN* NOK bill. Ongoing project activity is high 1.5 6% 1.4 1.0 1.2 4% 1.0 1.1 The profitability of the project portfolio is weak 0.5 0.9 2% • Comprehensive measures have been implemented 0.0 0% 0.3 % 0.0 % -0.5 -2% Sound order intake in the qu
Slide 19: Construction Sweden
CONSTRUCTION SWEDEN 4th QUARTER 2018 REVENUE AND MARGIN NOK bill. Revenue growth 4 7% • Q2 acquisition accounts for the bulk of the increase 6% 3 • Lower level of activity within residential 3.1 5% 2.7 4% 2 2.5 2.3 3% 2.0 Stable result and margin 1 2.5 % 2% 2.3 % 2.4 % 2.2 % • Non-residential buildi
Slide 20: Construction Denmark
CONSTRUCTION DENMARK 4th QUARTER 2018 REVENUE AND MARGIN NOK bill. Stable revenue in local currency 0.7 10% 0.6 0.5 8% 0.6 0.6 0.6 0.5 High profitability, somewhat lower in the quarter 8.3 % 0.5 6% 0.4 7.0 % 7.0 % • Solid overall project profitability in the portfolio 0.3 6.9 % 5.2 % 4% 0.2 2% 0.1 S
Slide 21: Property Development Norway
PROPERTY DEVELOPMENT NORWAY 4th QUARTER 2018 PROFIT BEFORE TAX Mill. NOK A good result 80 • Sale of two commercial projects generated a combined development 70 71 gain of NOK 46 million 60 • Stable results from residential production 50 40 Stable residential production 30 35 30 • Construction starte
Slide 22: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN 4th QUARTER 2018 PROFIT BEFORE TAX NOK bill. Increased residential sales 120 • Market adaptations in Stockholm. Buyer caution and a high supply of new residential units still characterise the Stockholm market 80 88 91 Increased results compared to the prior quarter, stabl
Slide 23: Industrial
INDUSTRIAL 4th QUARTER 2018 REVENUE AND 12M MARGIN* Mill. NOK Asphalt: Lower profits 2 000 6% • Substantial increase in raw material prices and lower capacity 5% 1 500 1 701 utilisation than last year 4% 1 379 2.9 % 1 339 1 000 2.2 % 3% Aggregates: Sound profits and high margins 1 274 1.8 % 1.3 % 2%
Slide 24: Financial statements
Good sales at Nyegaardskvartalet, Oslo in 2018 FINANCIAL STATEMENTS IFRS
Slide 25: Income statement
INCOME STATEMENT 4th quarter Full year Amounts in NOK million 2018 2017 2018 2017 Revenue 10 495 8 734 35 667 31 175 Operating expenses -10 027 -8 276 -34 656 -29 700 Share of net income from associates and JVs 18 150 163 369 Depreciation/impairment -165 -144 -594 -524 Operating profit 321 465 580 1
Slide 26: Balance sheet – assets
BALANCE SHEET – ASSETS Amounts in NOK million 31.12.2018 31.12.2017 Goodwill and other intangible assets 1 957 1 530 Deferred tax assets - 55 Land and buildings 646 615 Plant and machinery 2 694 2 286 Investments in associates and joint ventures 1 433 1 489 Financial assets 508 508 Total non-current
Slide 27: Balance sheet – equity and liabilities
BALANCE SHEET – EQUITY AND LIABILITIES Amounts in NOK million 31.12.2018 31.12.2017 Equity 3 983 4 220 Pensions and deferred tax liabilities 846 900 Bonds 1 600 - Amounts due to credit institutions 248 613 Other non-current liabilities 414 173 Total non-current liabilities 3 108 1 686 Bond debt and
Slide 28: Cash flow statement
CASH FLOW STATEMENT 2018 2017 Property Amounts in NOK million Construction Industrial Other1) Group Group Development Profit before tax 219 388 40 -46 602 1 327 Depreciation/impairment 365 6 211 12 594 524 Other working capital 816 -558 14 -67 205 -1 149 Cash flow from operating activities 1 400 -16
Slide 29: Improvements and development
IMPROVEMENTS AND DEVELOPMENT
Slide 30: Implemented measures
IMPLEMENTED MEASURES GROUP MEASURES Improvement initiatives and Changes to the corporate Risk management programme resource efficiency management group BUSINESS AREA MEASURES Project development: Building Construction: Civil Engineering: Industrial: Residential and Commercial and ground work and inf
Slide 31: Three focus areas in Property Development
THREE FOCUS AREAS IN PROPERTY DEVELOPMENT RESIDENTIAL DEVELOPMENT - COMMERCIAL DEVELOPMENT - DIFFERENT MARKET DEVELOPMENT IN NORWAY AND SWEDEN INCREASED ACTIVITY IN BOTH NORWAY AND SWEDEN PORTFOLIO OPTIMISATION - SEVERAL COMPLETED TRANSACTIONS AND EXPECT HIGH LEVEL OF ACTIVITY IN 2019 31
Slide 32: Adaptations have effect on sales in Sweden
ADAPTATIONS HAVE EFFECT ON SALES IN SWEDEN NUMBER OF UNITS SOLD* AND SALES RATIO (%) 500 100% Sweden 400 80% • Market- and price adaptations 300 60% • Still a demanding market for new projects 200 40% Norway 100 20% • Normalised market conditions 0 0% • Good portfolio of projects Sweden Norway Sales
Slide 33: Middelthunet – very good start on sales
MIDDELTHUNET – VERY GOOD START ON SALES Stepwise sales start Planned construction 329 units at 42 of 46 units for 183 units from start in 2020 and Majorstuen in Oslo sold the first day January to March 2019 completed in 2022 33
Slide 34: Order book: shift towards non-residential buildings
ORDER BOOK: SHIFT TOWARDS NON-RESIDENTIAL BUILDINGS ORDER BOOK, CONSTRUCTION ORDER BOOK BY SEGMENTS NOK bill. NOK bill. 35 35 30 30 25 25 36% 40% 45% 50% 52% 55% 11 bill. 18 bill. 20 20 15 15 37% 29% 30% 26% 27% 10 10 26% 5 5 27% 31% 25% 24% 21% 19% - - Q4 14 Q4 15 Q4 16 Q4 17 Q4 18 Q3 17 Q4 17 Q1 1
Slide 35: Important projects won in 2018
IMPORTANT PROJECTS WON IN 2018 VIA in Vika, Oslo Kay Fisher Plads, Copenhagen Geely Innovation Centre, Gothenburg Haugesund hospital Universitetsgaten 7, Oslo Sicklaanläggningen, Stockholm The Amager Center, Copenhagen Nyegaardskvartalet, Oslo 35
Slide 36: Increase profitability in Construction
INCREASE PROFITABILITY IN CONSTRUCTION REVENUE (NOK MILL.) MARGIN % 35 000 6% Selectivity 30 000 4% 25 000 2% Risk management 20 000 0% 15 000 10 000 -2% Resource utilisation 5 000 -4% 0 2014 2015 2016 2017 2018 -6% 2014 2015 2016 2017 2018 Hands-on management Revenue Building Construction Revenue C
Slide 37: Profitability measures Industrial
PROFITABILITY MEASURES INDUSTRIAL Pricing strategies and calculation Capacity utilisation Contract management 37
Slide 38: Concluding remarks
CONCLUDING REMARKS Low profitability in 2018 Several profitability measures are implemented High level of activity at the start of the year Dividend proposal of NOK 5.0 per share 38
Slide 39: Welcome back at 9th May
WELCOME BACK AT 9TH MAY Presentation of the 1st quarter 2019 Capital Markets Update • Presentation of Veidekke’s strategy and activities • The group and segments 39
Slide 40: Appendix
APPENDIX
Slide 41: Business areas
BUSINESS AREAS 2018 2017 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Building Construction Norway 13 070 443 3.4% 10 309 378 3.7% Civil Engineering Norway 4 427 -584 -13.2% 4 411 -56 -1.3% Construction Sweden 9 855 214 2.2% 8 810 170 1.9% Construction Denmark 2 218 146 6.6% 2
Slide 42: Residential portfolio
RESIDENTIAL PORTFOLIO Under Under Under Property Development construction Completed Building starts construction Completed Building starts construction Residential portfolio - Veidekke's share 31.12.2016 2017 2017 31.12.2017 2018 2018 31.12.2018 Construction - number of units Norway 600 -363 320 557