Slide 1: 2nd Quarter 2015 Investor presentation
2ND QUARTER 2015 Investor presentation Thursday 13 August 2015
Slide 2: Contents
CONTENTS Highlights CEO Arne Giske Results – segments and Group CFO Terje Larsen Status and outlook CEO Arne Giske Brf Hovås Park, Göteborg 2
Slide 3: The progress continues
THE PROGRESS CONTINUES + A good result + Very strong residential sales + Strong order intake + Strengthening our position within Construction Veidekke to build the first section of the new E134 at Kongsberg 3
Slide 4: Revenue and earnings – 2nd quarter
REVENUE AND EARNINGS – 2ND QUARTER REVENUE PROFIT BEFORE TAX 7 400 6 300 5 242 NOK mill. NOK bill. 4 200 3 6,0 6,2 5,4 5,4 318 4,6 225 2 100 148 166 145 1 0 0 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 11* Q2 12 Q2 13 Q2 14 Q2 15 * Acquisition and revaluation of Bouwfonds and sale of Veidekke Gjenvinning 4
Slide 5: Profit before tax – 2nd quarter
PROFIT BEFORE TAX – 2ND QUARTER 2ND QUARTER: CONSTRUCTION 2ND QUARTER: PROPERTY DEVELOPMENT 2ND QUARTER: INDUSTRIAL 200 200 200 150 150 150 NOK mill. NOK mill. NOK mill. 133 109 100 100 100 159 116 50 50 50 100 100 87 82 81 73 44 40 50 52 46 26 36 0 0 0 2011 2012 2013 2014 2015 2011* 2012 2013 2014
Slide 6: Changes in profit before tax
CHANGES IN PROFIT BEFORE TAX PROFIT BEFORE TAX 325 25 318 300 25 -1 0 35 275 NOK mill. 250 -5 11 225 225 200 175 150 Construction Property Development Q2 2014 Norway Sweden Denmark Norway Sweden Industrial Other Q2 2015 6
Slide 7: Profit margin improvement Construction
PROFIT MARGIN IMPROVEMENT CONSTRUCTION CONSTRUCTION NORWAY* CONSTRUCTION SWEDEN* CONSTRUCTION DENMARK (HOFFMANN)* 8% 8% 8% 6% 6% 6% 4% 4% 4% 2% 2% 2% 0% 0% 0% Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 *12-month rolli
Slide 8: Strong residential sales – increasing production
STRONG RESIDENTIAL SALES – INCREASING PRODUCTION NORWAY: NO. OF UNITS SOLD AND UNDER CONSTRUCTION, END OF QUARTER SVERIGE:NO. SWEDEN: ANT. OF BOLIGER SOLGT UNITS SOLD OG I PRODUKSJON, AND UNDER CONSTRUCTION,KVARTALSSLUTT END OF QUARTER 400 Sold 1 500 Under construction 400 Sold 1 500 Under construct
Slide 9: High activity level in Industrial
HIGH ACTIVITY LEVEL IN INDUSTRIAL QUARTERLY REVENUE, INDUSTRIAL ASPHALT PRODUCTION (THOUSAND TONNES) 1 600 2011 2012 2013 2014 2015 600 2013 2014 2015 1 400 500 1 200 400 1 000 NOK mill. 800 300 600 200 400 100 200 - - Q1 Q2 Q3 Q4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 9
Slide 10: Order backlog
ORDER BACKLOG ORDER BACKLOG CONSTRUCTION AND INDUSTRIAL ORDERS IN REVENUE NEXT 12 MONTHS 28 28 Road Maintenance Denmark Sweden Norway 24 24 20 20 NOK bill. NOK bill. 16 16 12 12 8 8 4 4 - 0 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Per Q2 2014 Per Q2 2015 Order backlog for Industrial is presented as Road Mainte
Slide 11: Road contract awarded in Hordaland
ROAD CONTRACT AWARDED IN HORDALAND 12.7 km section of the new E39 between Os and E39 HORDALAND: SVEGATJØRN - RÅDAL Bergen Four-lane highway with two tunnels in addition to two intersections, a water tunnel and bridges Contract value of NOK 2.3 billion Completion August 2020 11
Slide 12: Building contract in Stockholm
BUILDING CONTRACT IN STOCKHOLM SEB’s new offices at Solna in Stockholm with SEB’S NEW OFFICES 90,000 m2 which will contain 4,400 workplaces Turnkey contract based on close collaboration between Veidekke Bygg Stockholm, Arcona and Construction Norway Contract value of SEK 1.7 billion Completion in 20
Slide 13: We are strengthening our team – increased capacity and expertise
WE ARE STRENGTHENING OUR TEAM – INCREASED CAPACITY AND EXPERTISE REINERTSEN’S LAND BASED CONSTRUCTION AND REKAB’S* CONSTRUCTION OPERATIONS IN UPPSALA CIVIL ENGINEERING OPERATIONS Building construction operations in and around Building construction operations in Uppsala-area Oslo, Trondheim and Bodø.
Slide 14: Occupational health and safety
OCCUPATIONAL HEALTH AND SAFETY LTI RATE* (NUMBER OF LOST-TIME INJURIES PER MILLION HOURS WORKED) SICKNESS ABSENCE* (PERCENT) 14 Norway Denmark Sweden Group 8% Norway Denmark Sweden Group 12 10 6% 8 4% 6 4 2% 2 0 0% Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 2011 2012 2011 2012 Q1 13
Slide 15: Business areas
Gartnerløkka 4, Oslo BUSINESS AREAS
Slide 16: Business areas, 2nd quarter
BUSINESS AREAS, 2ND QUARTER 2nd quarter 2015 2nd quarter 2014 Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway 2 940 115 3.9% 3 033 104 3.4% Construction Sweden 1 482 26 1.8% 1 267 -9 -0.7% Construction Denmark 377 17 4.6% 448 22 4.8% Total Construction 4 799 15
Slide 17: Construction Norway
CONSTRUCTION NORWAY 2nd quarter YTD Stable revenue Amounts in NOK million 2015 2014 2015 2014 • Increase in Building Construction, decrease in Civil Engineering Revenue 2 940 3 033 5 664 5 839 Increased profit margin Operating profit (EBIT) 102 86 163 133 Substantial order intake Net financial items
Slide 18: Construction Sweden
CONSTRUCTION SWEDEN 2nd quarter YTD 17% increase in revenue Amounts in NOK million 2015 2014 2015 2014 • Increase in Building Construction, decrease in Civil Engineering Revenue 1 482 1 267 2 662 2 360 Increased profit margin Operating profit (EBIT) 26 -5 32 0 • Increased profitability in Building C
Slide 19: Construction Denmark
CONSTRUCTION DENMARK 2nd quarter YTD 16% decrease in revenue Amounts in NOK million 2015 2014 2015 2014 High and stable profit margin Revenue 377 448 832 867 Decrease in order backlog, several orders to be clarified Operating profit (EBIT) 16 19 36 34 during the autumn Net financial items 1 3 3 5 Ma
Slide 20: Property Development in Norway
PROPERTY DEVELOPMENT IN NORWAY 2nd quarter YTD Very strong residential sales Amounts in NOK million 2015 2014 2015 2014 • Strong sales accelerated construction start on several projects Revenue 138 198 284 409 • Construction of 50% of the residential units started in 2015 Operating profit (EBIT) 67
Slide 21: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN 2nd quarter YTD Very strong residential sales in the quarter, 55% pre-sales Amounts in NOK million 2015 2014 2015 2014 Five new projects were put up for sale Revenue 473 224 788 763 • 262 units, 72% sold Operating profit (EBIT) 37 8 54 55 Revenue and profit reflect the on
Slide 22: Industrial
INDUSTRIAL 2nd quarter YTD High level of activity in the infrastructure markets Amounts in NOK million 2015 2014 2015 2014 impacts Industry Revenue 1 132 1 110 1 564 1 513 Asphalt Operating profit (EBIT) 87 92 -56 -42 • High level of activity, but fewer large new construction projects Net financial
Slide 23: Financial statements
FINANCIAL STATEMENTS IFRS
Slide 24: Income statement
INCOME STATEMENT 2nd quarter YTD Amounts in NOK million 2015 2014 2015 2014 Revenue 6 339 6 218 11 307 11 525 Operating expenses -5 992 -5 958 -10 942 -11 176 Share of net income from associates and JVs 21 56 71 77 Depreciation/impairment -89 -79 -175 -160 Operating profit 280 237 261 265 Net financ
Slide 25: Balance sheet – assets
BALANCE SHEET – ASSETS Amounts in NOK million 30.06.2015 30.06.2014 31.12.2014 Goodwill and other intangible assets 910 881 914 Deferred tax assets 54 55 54 Land and buildings 540 508 501 Plant and machinery 1 400 1 354 1 389 Investments in associates and joint ventures 1 044 1 013 1 151 Financial a
Slide 26: Balance sheet – equity and liabilities
BALANCE SHEET – EQUITY AND LIABILITIES Amounts in NOK million 30.06.2015 30.06.2014 31.12.2014 Equity 2 454 2 220 2 744 Pensions and deferred tax liabilities 732 560 744 Bonds 750 750 750 Amounts due to credit institutions 76 763 73 Other non-current liabilities 89 136 104 Total non-current liabilit
Slide 27: Statement of cash flows
STATEMENT OF CASH FLOWS YTD 2015 YTD 2014 Construction Property Amounts in NOK million Industrial Group Group and Other Development Profit before tax 206 137 -67 276 287 Depreciation/impairment 100 1 75 175 160 Other working capital -796 299 -449 -945 -48 Cash flow from operating activities -489 437
Slide 28: Status and outlook
Landslide protection E10, Lofoten, Norway STATUS AND OUTLOOK
Slide 29: On track
ON TRACK Large infrastructure contracts won Strengthened position in Sweden and increased profitability Residential production is increasing and sales volume is very high From Veidekke’s Q1 2015 presentation 29
Slide 30: Market outlook - a complex view
MARKET OUTLOOK - A COMPLEX VIEW Economic +1.0%-1.5% +2.5%-3.0% +1.0%-2.0% Decline in areas with high exposure Positive development with lower interest Positive development in the Copen- growth 2015 to the oil sector rates and strong employment market hagen region and some large cities Construction a
Slide 31: High level of activity in transport infrastructure
HIGH LEVEL OF ACTIVITY IN Vegpakke Harstad E6 Evenes - Sortland TRANSPORT INFRASTRUCTURE RV 80 Bodø E6 Helgeland sør Several large projects are due for tendering in 2015/16 FV 714 Laksevegen E6 Trondheim sør FV659 Nordøyvegen The projects amount to more than NOK 50 billion in both Norway and Sweden
Slide 32: Order intake and revenue - Construction
ORDER INTAKE AND REVENUE - CONSTRUCTION 26 000 24 000 22 000 NOK mill. 20 000 18 000 16 000 14 000 12 000 Q4 10 Q2 11 Q4 11 Q2 12 Q4 12 Q2 13 Q4 13 Q2 14 Q4 14 Q2 15 Revenue Order intake 12-month rolling 32
Slide 33: Order backlog - growth in both Norway and Sweden
ORDER BACKLOG - GROWTH IN BOTH NORWAY AND SWEDEN CONSTRUCTION NORWAY – ORDER BACKLOG CONSTRUCTION SWEDEN – ORDER BACKLOG 16 7 Building Construction Civil Engineering Building Construction Civil Engineering 14 6 12 5 10 NOK bill. NOK bill. 4 8 3 6 2 4 2 1 - - Q2 10 Q2 11 Q2 12 Q2 13 Q2 14 Q2 15 Q2 10
Slide 34: Increasing project size
INCREASING PROJECT SIZE 2 500 2 000 NOK Mill. 1 500 1 000 500 0 YTD 2015 2014 2013 2012 Projects with contract value above NOK 300 million 34
Slide 35: A balanced project portfolio
A BALANCED PROJECT PORTFOLIO 1 000 APARTMENTS ESTRIDS KRONA (S) RANHEIM STADIUM (N) OFFICES FOR ENERGINET (D) 750 NOK mill. 500 250 Average size 0 1 50 100 150 200 250 300 320 Number of projects * Orders last 24 months above NOK 10 million 35
Slide 36: Good progress in Construction
GOOD PROGRESS IN CONSTRUCTION MARGIN DEVELOPMENT CONSTRUCTION* 4,0 % Increasing profitability 3,5 % Multi-local arrangement 3,0 % A balanced project portfolio reduces risk 2,5 % Focus on implementation as well as increasing 2,0 % profitability in Sweden 1,5 % *12-month rolling 36
Slide 37: Large opportunities in Property Development
200 LARGE OPPORTUNITIES IN PROPERTY DEVELOPMENT Strong strategic land bank 1 650 • In total 13 900 units 200 Land acquisitions first half year 850 • Norway: 600 units 2 650 • Sweden: 700 units 800 Capital tied-up 4 000 • Invested capital NOK 2.8 billion 250 2 200 • 70% of the Swedish land bank are o
Slide 38: High activity level in the residential market
HIGH ACTIVITY LEVEL IN THE RESIDENTIAL MARKET SALE AND PRODUCTION OF RESIDENTIALS - GROSS 2 000 High residential sales 1 500 Increasing production 1 000 Joint venture model 500 Focal points • Portfolio optimisation 0 • Develop new projects Prod. Sweden Prod. Norway Gross sale • Collaboration with Co
Slide 39: Good positions in Industrial
GOOD POSITIONS IN INDUSTRIAL REVENUE AND MARGIN - INDUSTRIAL 5 000 6% 4 000 4% 3 000 2 000 2% 1 000 0 0% Leading asphalt contractor Road maintenance Aggregates producer Revenue (NOK mill.) Profit margin (%) Market share 35% Market share 20% Market share 10% 12-month rolling 39
Slide 40: Summing up
SUMMING UP + A good quarter + Result and profit margin development + Order intake and residential sales + Strengthening our positions + Continued market growth Sørengstranda, Oslo 40
Slide 41: Next reports
Next economic activity report: 15 September 3rd quarter results 2015: 4 November
Slide 42: Appendix
APPENDIX
Slide 43: Business areas, year to date
BUSINESS AREAS, YEAR TO DATE First 6 months 2015 First 6 months 2014 Amounts in NOK mill. Revenues Profit Margin Revenues Profit Margin Construction Norway 5 664 186 3.3% 5 839 168 2.9% Construction Sweden 2 662 36 1.4% 2 360 -4 -0.1% Construction Denmark 832 39 4.7% 867 39 4.4% Total Construction 9
Slide 44: Housing portfolio
HOUSING PORTFOLIO Property Under construction Completed Start-up Under construction Completed Start-up Under construction Housing portfolio - Net at 31 Dec. 2013 2014 2014 at 31 Dec. 2014 2015 2015 at 30.06.2015 Construction - number of homes Norway 749 -508 158 399 -202 244 441 Sweden 720 -347 377