Ncc Ab Class A · OMXSTO:NCC_A
Ncc Ab Class A — Investor Day (November 2023)
123 slides from Ncc Ab Class A's investor day presentation, Nov 9, 2023
Slide 1: Welcome to NCC’s Capital Market Day
Welcome to NCC’s Capital Market Day 1 2023-11-09 © NCC | Capital Market Day
Slide 2: Presenters
Presenters Tomas Carlsson Susanne Lithander Kenneth Nilsson Henrik Landelius Catarina Molén-Runnäs CEO CFO, Head of Finance and IT Head of NCC Infrastructure Head of NCC Building Sweden Head of NCC Building Nordics Grete Aspelund Joachim Holmberg Marie Reifeldt Maria Grimberg Head of NCC Industry He
Slide 3: Agenda
Agenda 13.15 NCC strategic and financial update Q&A Business insight: Business areas Infrastructure, Building Nordics, Building Sweden, Property Development Q&A 14.45 Break for coffee 15.15 Business insight: Business area Industry Development priorities: Climate, digitalization, construction industr
Slide 4: NCC strategy update
NCC strategy update Tomas Carlsson CEO 4 2023-11-09 © NCC | Capital Market Day
Slide 5: Make NCC profitable over time; address low value-creation
Make NCC Address the low profitable value-creation over time in NCC and the industry 5 2023-11-09 © NCC | Capital Market Day
Slide 6: Focus on core activities
Development Improve profitability Strategic direction priorities Focus on core Leverage the Construction activities large company management competence Operational excellence Digitalization 6 2023-11-09 © NCC | Capital Market Day
Slide 7: Solid order backlog
Solid order backlog SEK M 60 000 50 000 40 000 30 000 20 000 62 333 59 486 54 821 50 945 56 096 58 816 54 525 55 763 62 510 60 960 59 047 54 995 58 910 10 000 0 Q1 2020 Q2 Q3 Q4 Q1 2021 Q2 Q3 Q4 Q1 2022 Q2 Q3 Q4 Q1 2023 Order backlog, orders received R12 7 2023-11-09 © NCC | Capital Market Day
Slide 8: Fundamentally a stable business where choosing the right projects is important
Fundamentally a stable business where choosing the right projects is important Net sales SEK M 60 000 40 000 20 000 58 566 58 387 57 256 53 922 52 296 50 610 52 321 53 414 53 385 54 641 54 178 54 198 56 551 57404 57359 0 Q1 2020 Q2 Q3 Q4 Q1 2021 Q2 Q3 Q4 Q1 2022 Q2 Q3 Q4 Q1 2023 Q2 Q3 SEK M, Net sal
Slide 9: Net sales on same level – but fewer employees
Net sales on same level – but fewer employees 60 000 17000 Net sales 55 000 16000 15000 50 000 14000 45 000 13000 40 000 12000 No of employees 35 000 11000 30 000 10000 Q1 Q1 Q1 Q1 Q1 Q1 2018 2019 2020 2021 2022 2023 9 2023-11-09 © NCC | Capital Market Day
Slide 10: Fundamental stability despite shocks
Fundamental stability despite shocks EBIT R12, SEK M Pandemic 1600 Ukraine war 1400 1200 1000 Percentage Of Completion 800 Completed projects (PD) 600 400 200 0 Q1 2020 Q2 Q3 Q4 Q1 2021 Q2 Q3 Q4 Q1 2022 Q2 Q3 Q4 Q1 2023 Q2 Q3 10 2023-11-09 © NCC | Capital Market Day
Slide 11: Focus on core activities
Development Improve profitability Strategic direction priorities Focus on core Leverage the Construction activities large company management competence Operational excellence Digitalization 11 2023-11-09 © NCC | Capital Market Day
Slide 12: Our purpose, our market position
Take the customer through Our the construction process to purpose a positive end-result for all stakeholders Our Proactive construction experts market realizing complex projects position with our customers 12 2023-11-09 © NCC | Capital Market Day
Slide 13: Competitive edge by leveraging the large company
People and Culture Build a knowledge-based company and a culture based on shared values and behaviors Competitive Digital and data-informed Invest in IT, digitalization and in becoming data-informed edge by leveraging the Customer proactivity large company Be proactive towards customers in managing
Slide 14: Strategic initiatives
Strategic initiatives Common Business Area Specific Integrated Leading supply chain construction Build great industry Core business competence Unrivaled Purpose cost management Market position Values Leverage our Leading construction construction expertise industry competence Data-informed decision-
Slide 15: Fact-based approach to projects
Fact-based approach to projects Successful projects Problem projects Tender process Customer Organization NCC Risks Opportunities Risks Cost Control Tender process Customer Organization NCC Design Cost Control 15 2023-11-09 © NCC | Capital Market Day
Slide 16: Summary
Summary • Clear strategic direction – relevant and implemented in all business areas • Few but focused strategic initiatives • Internally driven volatility decreased • External volatility and change mainly well managed 16 2023-11-09 © NCC | Capital Market Day Summary – the turnaround and forward
Slide 17: Two financial targets and a dividend policy
Two financial targets and a dividend policy Earnings per share Net debt Dividend policy ≥16.00 < 2.5 60% SEK 2023 x EBITDA of profit after tax 17 2023-11-09 © NCC | Capital Market Day
Slide 18: Current status, per Sep 30 2023
Current status, per Sep 30 2023 Earnings per share Net debt Dividend policy ≥16.00 < 2.5 60% SEK 2023 x EBITDA of profit after tax For 2022 Q3 2023 R12 Q3 2023 R12 55% of profit after tax 16.21 1.06 6.00 SEK x EBITDA SEK 18 2023-11-09 © NCC | Capital Market Day
Slide 19: Dividend policy
Dividend policy Adopted 27 April 2022 Remains the same Dividend policy 60% SEK of profit after tax For 2022 55% of profit after tax 4 2,5 5 6 6 2018 2019 2020 2021 2022 6.00 SEK 19 2023-11-09 © NCC | Capital Market Day
Slide 20: Net debt / EBITDA
Net debt / EBITDA Significant headroom Remains the same Net debt < 2.5 2,5 x EBITDA 2 1,5 1 0,5 0 Q3 2023 R12 -0,5 -1 1.06 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2020 2021 2022 2023 x EBITDA 20 2023-11-09 © NCC | Capital Market Day
Slide 21: Earnings per share 16 SEK in 2023
Earnings Per Share 16 SEK in 2023 Earnings per share ≥16.00 SEK SEK 2023 Q3 2023 R12 8 2019 12 2020 14 2021 10 2022 16.21 SEK 21 2023-11-09 © NCC | Capital Market Day
Slide 22: Earnings per share: why 16 SEK?
Earnings Per Share Why? Relevant for all business models Clear shareholder focus Why 16 SEK? Keeping Achievable with contributions from all business areas 16 SEK as a target for the short to medium term 22 2023-11-09 © NCC | Capital Market Day
Slide 23: Earnings per share: when?
Earnings Per Share When? Contribution from Contracting and Industry expected to increase over time In the short term, highly dependent on the property Keeping market opening up 2000 16 SEK as a target for the short to 478 1500 Includes medium term 201 SEK 175 M 312 434 482 one-off 1000 divestment ga
Slide 24: Several projects to sell in a more active market
Several projects to sell in a more active market Sold projects, expected time of profit recognition 2023 2024 2025 2026 2027 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 // Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Kontorværket 1 Arendal Albatross MIMO Park Central Land sale Solna, part II Ongoing projects, not sold Completed proje
Slide 25: Internal targets
Internal targets Business area EBIT margin ROCE BA Infrastructure BA Building Sweden 3.5% N/A BA Building Nordics Industry 6% 12% Property Development N/A 12% 25 2023-11-09 © NCC | Capital Market Day
Slide 26: Financial targets and dividend policy
Financial targets and dividend policy Earnings per share Net debt Dividend policy ≥16.00 < 2.5 60% SEK x EBITDA of profit after tax 26 2023-11-09 © NCC | Capital Market Day
Slide 27: Health & Safety and Climate targets
Health & Safety, 2026 2.0 LTIF4 Climate, 2030 -60% Scope 1 & 2 Will be revised in the coming years. New target setting and better data available -50% Scope 3 27 2023-11-09 © NCC | Capital Market Day
Slide 28: Financial update
Financial update Susanne Lithander CFO and Head of Finance and IT 28 2023-11-09 © NCC | Capital Market Day
Slide 29: The NCC group balance sheet
The NCC group balance sheet Overview of the consolidated NCC balance sheet, Q3 2023 (SEK billion) 25 On-going Property projects 3 Completed Property 8 projects 5 7 Long-term interest- 3 bearing liabilities 4 19 Current interest- 3 17 34 34 bearing liabilities 9 Machinery & 17 3 plants 6 Fixed assets
Slide 30: NCC’s asset light operation provide high capital efficiency
NCC’s asset light operation provide high capital efficiency despite challenging market situation ROE 3 % Average Inventory Days (development properties) 4 (Earnings before tax (LTM) / Market Capitalization) (Inventory / Revenue (LTM) * 365) 305 5 Peers 17% NCC w/ development w.a. 2 12% 6 Peer avg. 1
Slide 31: Contracting units provide free capital of close to SEK 2 billion
The contracting units currently provide the group with free capital of close to SEK 2 billion Operating capital employed by NCC business unit groupings (SEK billion) 12 10 8 Property Development Property Development Property Development Σ14 Industry and PD Industry Industry Industry Contracting Σ-2
Slide 32: No residential development
No residential development Lower exposure to volatility on financial markets Aggregated interest-bearing liabilities, excluding leasing liabilities, up to 2025 (SEK billion) Revenue 2022 (Other scale, for comparison purpose) Loans to tenant owner associations Financial liabilities 20 180 15 120 10 6
Slide 33: …and a diversified future financing model
…and a diversified future financing model NCC corporate debt maturity structure (SEK billion) Undrawn credit facilities Commercial paper Banks Green Bonds 3.2 1.4 3.2 0.3 0.3 0.3 0.5 1.0 0.8 0.3 0.5 0.5 0.1 2023 2024 2025 2026 2027 33 2023-11-09 © NCC | Capital Market Day
Slide 34: Development of Return On Equity and Equity/Asset (2018-2023)
Development of Return On Equity and Equity/Asset (2018-2023) 40% 37% 32% 32% 30% 24% 24% 22% 20% 20% 17% 14% 11% 10% 10% 0% -10% -18% -20% 2018 2019 2020 2021 2022 R12, Sep 30 2023 Return on Equity Equity / Asset 34 2023-11-09 © NCC | Capital Market Day
Slide 35: NCC weighs capital allocation options
NCC weighs capital allocation options based on external movements and corporate objectives Capital allocation options, by payback time and benefit recurrence Growth potential / Benefit recurrence NCC business model still holds firm Acquisition(s) Capital surplus is invested in Property development,
Slide 36: Summary
Summary • Strong Financial position - Financial flexibility • Contracting & Industry generating cash and improving working capital 36 2023-11-09 © NCC | Capital Market Day Summary – the turnaround and forward
Slide 37: Market opportunities
Market opportunities Tomas Carlsson CEO 37 2023-11-09 © NCC | Capital Market Day
Slide 38: Strong market share in attractive region with further growth potential
Strong market share in attractive region with • The Nordics is a region with strong and stable business further growth potential conditions and macroeconomic stability Sweden Denmark Norway Finland • Fundamental need for Building Sweden Building Nordics investments in residential, public buildings a
Slide 39: Market outlook Q3
Market outlook Q3 • Large parts of the construction market remains strong with many new projects in early phases • Local variations • Commercial and residential markets weak • Municipalities and regions somewhat more muted 39 2023-11-09 © NCC | Capital Market Day Granåsen, T rodheim,Norway
Slide 40: Large variations regionally and between types of projects
Currently mixed market signals Large variations regionally and between types of projects 40 2023-11-09 © NCC | Capital Market Day
Slide 41: Segment specific growth opportunities
As you will hear from the business areas: Segment specific growth opportunities is a key element in NCC’s strategic direction 41 2023-11-09 © NCC | Capital Market Day
Slide 42: Green Industry Transformation (GIT)
Green Industry Transformation (GIT) -the industrial development of a generation 42 2023-11-09 © NCC | Capital Market Day
Slide 43: Construction investment in industry will triple
Construction investment in industry will triple More than SEK 140 bn – most from 2024 to 2030 x3 Plus green energy production, energy distribution and other infrastructure 2015 2020 2025 2030 Not: Summor och belopp är uppskattningar och bilden gör inga anspråk på att vara komplett Källa: Investering
Slide 44: The challenge and the opportunity
The challenge The opportunity • Large complex projects – • NCC has leading expertise in large extensive construction projects • Fast pace anticipated • Ability to bring together all the experience • New technology deployed in a across business areas and markets scale never seen before • Ability to b
Slide 45: A new Business Area for the Green Industry Transformation
A new Business Area for the Green Industry Transformation • Ensure specific expertise • Existing Business Areas will keep its focus on all the other opportunities and enablers in the growth areas • Energy distribution, infrastructure, public buildings, residentials • Initial focus on the northern pa
Slide 46: The industrial development of a generation
The industrial development of a generation Initially focus in the north of the Nordics Kiruna Incumbents and challengers Enablers Gällivare Priority for Boden Priority for the ordinary Luleå Business business in Area GIT the BAs Skellefteå > SEK 150 bn >SEK 100 bn 46 2023-11-09 © NCC | Capital Marke
Slide 47: Recruitment for new Head of Business Area GIT ongoing
Recruitment process for new Head of Business Area Green Industry Transformation ongoing CEO Building Building Property Green Industry Infrastructure Industry Sweden Nordics Development Transformation Business Area Green Industry Transformation starts Jan 1, 2024 and will initially be reported under
Slide 48: Summary
Summary • New Business Area: Green Industry Transformation to capture growth opportunities in the green transition • Existing business areas to focus on surrounding opportunities in society including new infrastructure 48 2023-11-09 © NCC | Capital Market Day Summary – the turnaround and forward
Slide 49: Infrastructure
Infrastructure Kenneth Nilsson Head of NCC Infrastructure 49 2023-11-09 © NCC | Capital Market Day
Slide 50: NCC Infrastructure
NCC Infrastructure Roads & Railways Groundworks 3,800 employees 1,500 Energy & Water Industry ongoing projects Treatment 550 customers 50 2023-11-09 © NCC | Capital Market Day
Slide 51: Our operations
Our operations Other Roads Norway Foundation engineering 4% 13% 11% 9% Industry 5% Denmark 13% Railways 23% Groundworks 24% 74% Sweden 24% Energy & Water Treatment Net sales Jan-Sep 2023 51 2023-11-09 © NCC | Capital Market Day
Slide 52: Steady improvement since 2019
Steady improvement since 2019 22 000 Net sales, SEK M Operating margin 4% 20 000 3% 2,5% 2,7% 18 000 2,4% 2,1% 2% 16 000 1,1% 1,2% 1% 14 000 12 000 0% 10 000 -0,8% -1% 8 000 -2% 6 000 -3% 4 000 2 000 -4,1% -4% 0 -5% 2016 2017 2018 2019 2020 2021 2022 2023 Q3 R12 52 2023-11-09 © NCC | Capital Market
Slide 53: Our improvement agenda
Our improvement agenda Increased focus Strengthened core competencies and competitiveness • Divested non-core business • Yearly operational action • Strategic direction plan • Develop our capabilities • Specialization in prioritized segments • Ensure basic capabilities A stronger organization Develo
Slide 54: Prioritized segments that address critical long-term needs in society
Prioritized segments that address critical long-term needs in society Water Electricity Efficient Climate Treatment Production and Transportation Change Distribution 54 2023-11-09 © NCC | Capital Market Day
Slide 55: Specialization in prioritized segments is key
Specialization in prioritized segments is key for business area Infrastructure going forward Prioritized segments represent more than 50% of net sales in the business area Criteria for • Strong track record and segment expertise segment • Strong market selection • Potential for increased profitabili
Slide 56: An example from the water treatment segment
An example from the water treatment segment Market-growth driven by: • Aging water and sewage systems • Growing population and continued urbanization • New environmental rules CRV, Kristianstad • Climate change Strong market Unique offering Exceptional track Growing market expected We offer the enti
Slide 57: Generally a continued good market outlook
Generally a continued good market outlook • Main scenario: Continued good market in all relevant countries • In our prioritized segments, we are likely to see a strong market going forward • Variation in market development between regions Venjar-Eidsvoll, railway 57 2023-11-09 © NCC | Capital Market
Slide 58: Summary
Summary • Stable improvement in profitability since 2018 • Going forward: • Good market – especially within the prioritized segments • Continued focus on project selection, operational improvements and organizational development CRV Reningsverk, 58 2023-11-09 © NCC | Capital Market Day Kristianstad
Slide 59: Denmark
Denmark Kenneth Nilsson Catarina Molén-Runnäs 59 2023-11-09 © NCC | Capital Market Day
Slide 60: NCC in Denmark is growing
NCC in Denmark is growing Strong orders received Growing net sales All Business Areas contribute 16 000 14000 14 144 12 624 14 000 12000 10 12 000 10 073 10 541 10000 9 068 20 10 000 8 613 8000 53 8 000 6000 17 6 000 4000 4 000 2 000 2000 Building Denmark 0 0 Infrastructure 2021 2022 Sep 2023 2021 2
Slide 61: Danish economy strongest in the Nordics
Danish economy strongest in the Nordics Inflation < EU average 0.9% in September Interest rate 3.75% Low unemployment rate 2.9% 61 2023-11-09 © NCC | Capital Market Day
Slide 62: Four major growth areas for NCC
Four major growth areas for NCC Growth Pharma and Green Energy Infrastructure Copenhagen public sector Plan 2035 New city areas and Investments in From now until 2035 Political decision on infrastructure pharma and public the electricity 106 bn DKK investments sector drives consumption in infrastruc
Slide 63: Building Denmark – a top three contractor
Building Denmark – a top three contractor in a very fragmented market Focus on complex projects. At the fore-front of several segments, including large, non- residential projects in wood 63 2023-11-09 © NCC | Capital Market Day
Slide 64: Infrastructure Denmark – a highly specialized organization
Infrastructure Denmark – a highly specialized organization Energy and District Water Cloudburst power heating treatment and coastal distribution protection Focus on selected market segments with a strong and growing market Skybrudstunneln, 64 2023-11-09 © NCC | Capital Market Day Copenhagen
Slide 65: Building Sweden – Building Nordics
Building Sweden – Building Nordics Two business areas of equal size Building Sweden Building Nordics Jan-Sep 2023 Jan-Sep 2023 Net sales 10,203 Net sales 10,835 EBIT 191 EBIT 204 Order backlog 18,293 Order backlog 18,747 65 2023-11-09 © NCC | Capital Market Day
Slide 66: Building Nordics
Building Nordics Catarina Molén-Runnäs Head of NCC Building Nordics 66 2023-11-09 © NCC | Capital Market Day
Slide 67: Three countries
Three countries Share of net sales, Jan-Sep 2023 Denmark 2,400 employees 48% 10% Finland 17% Offices Residential 36% 30% Refurbishment 23% Norway Public buildings 20% Other 16% Net sales Jan-Sep 2023 67 2023-11-09 © NCC | Capital Market Day
Slide 68: Strong order backlog and growth – focus on profitability
Strong order backlog and growth – focus on profitability and growth in earnings 20 000 450 18 000 400 16 000 350 14 000 300 Million SEK 12 000 250 10 000 200 8 000 150 6 000 4 000 100 2 000 50 11769 15807 12 134 14856 11 324 17271 13 568 17127 14975 18747 0 0 2019 2020 2021 2022 R12 Sep 30, 2023 Net
Slide 69: Three countries with many similarities – and some differences
Three countries with many similarities – and some differences Denmark Finland Norway Small but growing Weakest of the Strong market Nordic markets Top ten market position Top 3 market Top five market position position Focus on selected segments and Leading in Actions taken to operational profitabili
Slide 70: Focus on strong segments
Focus on strong segments Residential Refurbishment Healthcare Hotels Offices Swimming facilities Security classified buildings Denmark Finland Norway 70 2023-11-09 © NCC | Capital Market Day
Slide 71: Gradual adaptation of the portfolio
Gradual adaptation of the portfolio Orders received, Jan-Sep 4% 10% 7% 25% 8% Offices Residential 36% 17% Refurbishment 32% Public buildings Other 18% 43% 2022 2023 71 2023-11-09 © NCC | Capital Market Day
Slide 72: Summary
Summary • Strong order backlog • Focus on building on our strengths • Choose the right projects • Deliberate change in portfolio • Operational excellence 72 2023-11-09 © NCC | Capital Market Day Papirön, Copenhagen
Slide 73: Building Sweden
Building Sweden Henrik Landelius Head of NCC Building Sweden 73 2023-11-09 © NCC | Capital Market Day
Slide 74: NCC Building Sweden
NCC Building Sweden • Geographically present all over Sweden • 400 ongoing projects • Stable margins despite a challenging market • Strong order backlog • Satisfied customers contribute to strong position in the market • Customers evenly distributed between public and private • 2,700 employees 74 20
Slide 75: Strong order backlog and improved earnings
Strong order backlog and improved earnings EBIT margin Jan-Sep 1.9% Order backlog Net sales 20000 500 18000 450 16000 400 11% 15% 14000 350 12000 300 10000 250 28% 8000 200 28% 6000 150 4000 100 18% 2000 50 0 0 2019 2020 2021 2022 R12, Jan- Sep 2023 Offices Residential Refurbishment Public buildings
Slide 76: Building Sweden portfolio adjustment
Building Sweden portfolio adjustment Residential Public buildings SEK M SEK M 3 000 2,0 3 000 2,0 1,5 1,5 2 000 2 000 1,0 1,0 1 000 1 000 0,5 0,5 0 0,0 0 0,0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2020 2021 2022 2023 2020 2021 2022 2023 Orders Recei
Slide 77: Leading position in prioritized segments
Leading position in prioritized segments Education Residential Healthcare Offices Swimming Security- facilities classified buildings 77 2023-11-09 © NCC | Capital Market Day
Slide 78: Demand for security classified buildings
Demand for security classified buildings • Unstable national and international security situation • More projects exposed to • National protective legislation • European security legislation • NATO requirements • Competence center to meet the demand on the market and leverage knowledge 78 2023-11-09
Slide 79: Summary
Summary • Strong order backlog and improved earnings • Leading position in prioritized segments • Well positioned to meet the clear demand for Public Buildings 79 2023-11-09 © NCC | Capital Market Day
Slide 80: Property Development
Property Development Joachim Holmberg Head of NCC Property Development 80 2023-11-09 © NCC | Capital Market Day
Slide 81: NCC Property Development
NCC Property Development A development focused and specialized business area Active in in the Nordic capitals and major cities 81 2023-11-09 © NCC | Capital Market Day
Slide 82: Our core segment
Our core segment Commercial developments Våghuset, Gothenburg, Sweden W e Land, Helsinki, Finland Arendal, Gothenburg, Sweden W e Land, Helsinki, Finland Fredriksberg D MIMO, Möndal Sweden 8 500 sqm Bettorp 82 (Other) 2023-11-09 © NCC | Capital Market Day Kineum Gårda MIMO, Möndal Sweden Arendal,Got
Slide 83: Ongoing Portfolio Q3
Ongoing Portfolio Q3 7 projects 130,000 sqm Completion rate 56% 1 W e Land, Helsinki, Finland MiMo, Gothenburg, Sweden 1 4 1 Flow, Malmö, Sweden Nova, Solna, Sweden 83 2023-11-09 © NCC | Capital Market Day
Slide 84: Completed Portfolio Q3
Completed Portfolio Q3 4 projects 87,000 sqm 1 Våghuset, Gothenburg, Brick Studios, Gothenburg, Sweden Sweden 1 2 Kulma 21, Helsinki, Finland Hangar 5, Bromma, Sweden 84 2023-11-09 © NCC | Capital Market Day
Slide 85: The Nordic transaction market considerably down
The Nordic transaction market considerably down compared to previous years 20 50 40 15 Mdr EUR Mdr EUR 30 10 48 16 20 38 5 9 10 16 3 0 0 2021 2022 2023 2021 2022 2023 Source Newsec Advice 85 2023-11-09 © NCC | Capital Market Day
Slide 86: Adapting the way we work
Land investment/ Adapting the way Zoning we work Our core objective is divestment of completed projects but we are adapting the Construction/ way we work to ensure that we maximize letting the property value of the completed projects in our portfolio. Operating net Secure property value Divestment 8
Slide 87: Current project portfolio – Sweden and Finland
Current project portfolio – Sweden and Finland 7 ongoing projects, 4 completed 34% let, 3 projects projects, occupancy sqm pre-sold, 1 project sqm rate 87% started this year 87 2023-11-09 © NCC | Capital Market Day
Slide 88: Profit recognized when built, let, sold, paid and handed over
Profit recognized when built, let, sold, paid and handed over EBIT, SEK M 600 500 478 482 434 400 312 300 201 200 100 0 2019 2020 2021 2022 Jan-Sep 2023 88 2023-11-09 © NCC | Capital Market Day Våghuset, Gothenburg, Sweden
Slide 89: Increased investments in ongoing projects
Increased investments in ongoing projects Capital employed and ROCE 10000 10% 9225 9% 8,0% 7,7% 8000 8% 6,7% 6,2% 7% 5,7% 6000 6% 4942 5% 4000 4% 3% 2000 2% 1% 4935 6433 6330 7996 4283 0 0% 2019 2020 2021 2022 2023 YTD Completed ROCE % 89 2023-11-09 © NCC | Capital Market Day
Slide 90: Summary
Summary • High quality portfolio of ongoing and completed projects • Keeping completed projects until the market activity is back • New project starts requires high letting level and secured exit • Tenant focus – based on customer insights • Develop pipeline, backfill landbank and progress zoning 90
Slide 91: Industry
Industry Grete Aspelund Head of NCC Industry 91 2023-11-09 © NCC | Capital Market Day
Slide 92: Market leader in the Nordics in asphalt and stone materials
Market leader in the Nordics in asphalt and stone materials Stone materials Asphalt production Paving services 92 2023-11-09 © NCC | Capital Market Day
Slide 93: Product mix and geographical distribution
29% 210 quarries 55 plants Product mix 71% Asphalt Stone Jan-Sep 2023 * 2% 2,600 employees 21% Geographical distribution 53% Sweden Denmark 24% Norway Finland 93 2023-11-09 © NCC | Capital Market Day
Slide 94: Stable market – recent cost shock
2 000 Stable market – recent 1 800 1 600 cost shock 1 400 1 200 1 000 4.8 million 800 600 400 199 188 1 657 1 925 1 462 1 532 1 737 1 334 1 531 1 716 tons asphalt 133 200 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2021 2022 2023 9 000 8 000 7 000 28.4 million 6 000 5 000 4 000 tons stone 3 000 2 000 5 892 8
Slide 95: Starting point for Industry 2022
Starting point for Industry 2022 Historically War in Lack of sense of Weak and mature Ukraine urgency and slow unsatisfying market reaction development of Inflation without any financial major Rising performance energy Weak customer chocks and cost focus prices Lack of organizational development 95
Slide 96: Actions and measurements
Actions and measurements Sense of urgency Customer and price Organizational • Shortened reporting lines • Customer dialogue development • Clear target and • Contract management • Strengthened leadership expectation setting • Selection of customers and • Clarified expectations • Improved cost managem
Slide 97: Higher prices visible in net sales – returning to more normal earnings
Higher prices visible in net sales – returning to more normal earnings 4 000 600 8 7 500 3 000 6 400 5 2 000 300 4 3 200 1 000 2 100 2 908 3 383 2 953 3 280 3 637 3 374 1 058 3 471 3 862 1 821 977 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2021 2022 R12 Sep 30 2023 2021 2022 2023 Net sales Linjär (Net s
Slide 98: Volumes expected to stay relatively stable over time
Volumes expected to stay relatively stable over time • In the short term, some remaining impact from cost increases and more muted municipal economic • Road maintenance debt large and growing in all Nordics countries • Stone volumes follows general construction trends • NCC has a more diligent proje
Slide 99: Market segment mix, total market
Market segment mix, total market 23% 33% Private Municipality projects Municipality maintenance State infra 11% State maintenance 14% 19% 99 2023-11-09 © NCC | Capital Market Day
Slide 100: On stable ground – highlights
On stable ground – highlights 1 Turnaround for low 2 We have managed 3 There is good performing units - to achieve more activity levels in now delivering result sustainable pricing our markets 4 Strong market 5 Aim to outperform position – we will the market leverage that development 100 2023-11-09
Slide 101: Summary – the turnaround and forward
Summary – the turnaround and forward • NCC Industry back on normal profit levels • Diligent cost management • Close customer contact and contract management • Continued work with pricing and customer segmentation • Climate criterias in procurement will increase – Industry well positioned 101 2023-11
Slide 102: Climate
Climate Grete Aspelund Catarina Molén-Runnäs 102 2023-11-09 © NCC | Capital Market Day
Slide 103: Climate and Energy targets
Climate and Energy targets Reduction targets for 2030 Scope 1 and 2, ton CO₂e Scope 3, kg Co₂e/bought volumes per SEK M net sales Selected categories -60% -50% Ready-made Asphalt Rebar steel Transport -58% concrete In progress 30 June, 2023 -20% -29% -43% 30 June, 2023 30 June, 2023 30 June, 2023 co
Slide 104: Where do emissions come from?
Where do emissions come from? Yellow machines and Machines for asphalt crushing plants in the sites: milling and paving: 37,800 ton 21,650 ton Asphalt plants: Ships (extraction of marine aggregates): 40,750 ton 6,300 ton 104 2023-11-09 © NCC | Capital Market Day
Slide 105: Energy Cutting the use Saving natural
Energy optimization Cutting the use of fossil fuels Saving natural Recycled stone materials resources LTA* Bio fuels Moisture reduction *LTA = Low Temperature Asphalt **RAP = Recycled Asphalt Green electricity RAP** Bio binders (new initiative) 105 2023-11-09 © NCC | Capital Market Day
Slide 106: Actions to reduce energy use and GHG emissions
Division Stone Materials Actions to • Shift to biodiesel in vehicles in Sweden reduce • Electrification of sites and mobile crushers in Sweden energy use • Focus on reduced idling and GHG • Eco-driving/eco-operator educations emissions Division Asphalt • Shift to wood pellets or TOP in asphalt plant
Slide 107: Concrete is the most widely used construction material in the world
Concrete is the most widely used construction material in the world – and offers many benefits. At the same time, it has a major climate impact. 107 2023-11-09 © NCC | Capital Market Day
Slide 108: Kungsörnen residential housing project, Helsingborg
Kungsörnen residential housing project, Helsingborg The climate impact was reduced to nearly half, compared with other corresponding construction projects. 108 2023-11-09 © NCC | Capital Market Day
Slide 109: Office Building in Marmormolen wharf in Copenhagen
-24% Office Building in Marmormolen emissions wharf in Copenhagen by using FutureCem in concrete wall elements compared to standard elements. As a single action constitutes for minus 4% of the building's reduction of climate impact. -25% emissions compared to national legislation (BR23) by using low
Slide 110: Granåsen football hall, Trondheim
Granåsen football hall, Trondheim • - 55% emissions The project is using the most climate-improved concrete “lowcarbon extreme” in the Norwegian market in foundations • 100 ton CO2e saved in construction of 13 000 m 2 • Left over concrete reused in outdoor support walls, benches and stairs • Site te
Slide 111: Västlänken Centralen, Gothenburg
Västlänken Centralen, Gothenburg The project with the most climate-improved concrete in volume today in Sweden. • Totally 30 percent reduced climate impact • 350 000 m3 concrete • Basically only eco-friendly concrete • Cement has been replaced in production with 16 percent (or more) slag as an alter
Slide 112: Digitalization
Digitalization Susanne Lithander Kenneth Nilsson 112 2023-11-09 © NCC | Capital Market Day
Slide 113: The NCC journey to become data informed
The NCC journey to become data informed IT debt Giant leap Future Business opportunities proofing NCC Operational development Common Development Roadmap Meeting external demands 113 2023-11-09 © NCC | Capital Market Day
Slide 114: A knowledge-based company
A knowledge- based company Marie Reifeldt Tomas Carlsson 114 2023-11-09 © NCC | Capital Market Day
Slide 115: NCC’s foundation is our ability to manage the complexity of a construction process
NCC’s foundation is our ability to manage the complexity of a construction process 115 2023-11-09 © NCC | Capital Market Day
Slide 116: It’s about the people!
It’s about the people! Bilder på personer Många små ansiktsbi 100 Mega Project Managers 400 Project Managers >1,200 Site Managers 116 2023-11-09 © NCC | Capital Market Day
Slide 117: Best project management in the industry
Best project management in the industry Direct bottom- line impact 117 2023-11-09 © NCC | Capital Market Day
Slide 118: A mind-shift towards project management
A mind-shift towards project management • Mega project management program – extended • General project management • Practical leadership training • Risk management training Mega Project Management Program Executive development Assessment Basic leadership training General leadership programs 2018 201
Slide 119: NCC Academy – an industry-leading portfolio to develop the best
NCC Academy – an industry-leading portfolio to develop the best 119 2023-11-09 © NCC | Capital Market Day
Slide 120: Summary and conclusions
Summary and conclusions Tomas Carlsson 120 2023-11-09 © NCC | Capital Market Day
Slide 121: Summary
Summary • Well-positioned in the right segments • Deleveraging risk profile in contracts • Investing in long term value-creation • Strong financial position giving flexibility to act CRV Reningsverk, 121 2023-11-09 © NCC | Capital Market Day Kristianstad
Slide 122: Contacts
Contacts Tomas Carlsson, CEO tomas.carlsson@ncc.se Susanne Lithander, CFO and Head of Finance and IT susanne.lithander@ncc.se M +46 730 37 08 74 Maria Grimberg, Head of Communications and Investor Relations maria.grimberg@ncc.se M +46 70 896 12 88 2023-11-09 © NCC | Capital Market Day
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