Slide 1: AF Gruppen ASA Q2 2024
AF Gruppen ASA Q2 2024 30 August 2024 JV AF Ghella is building a clean water tunnel for the Norwegian Agency for Water and Sewerage Works. Photo: Bård Gudim
Slide 2: Overview
2nd quarter 2024 Overview Weak result driven by a downward adjustment of a project estimate in Offshore Revenue of NOK 7,651 (7,853) million in Q2 and NOK 14,838 (15,246) million year-to-date Earnings before tax of NOK 21 (292) million in Q2 and NOK 207 (305) million year-to-date Profit margin
Slide 3: Health and safety
2nd quarter 2024 Health and safety Total recordable injury frequency Lost-time injury frequency (LTIF) Sick leave (TRIF) 2.0 10.0 5.0% 7.9 4.1% 4.1% 8.0 4.0% 3.6% 1.5 6.5 6.0 6.0 3.0% 1.0 0.8 0.6 4.0 2.0% 0.5 0.4 2.0 1.0% 0.0 0.0 0.0% 2021 2022 2023 YTD Q2 24 2021 2022 2023 YTD Q2 24 2021 2022 2023
Slide 4: Revenues and earnings
2nd quarter 2024 Revenues and earnings Revenues Earnings before tax Profit margin NOK million NOK million 9,000 700 4.0% 3.7% 7,853 7,651 8,000 600 3.5% 7,000 3.0% 500 6,000 2.5% 5,000 400 2.0% 4,000 292 300 1.5% 3,000 200 2,000 1.0% 100 0.5% 1,000 0.3% 21 0 0 0.0% Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q2 2
Slide 5: Return on capital employed
2nd quarter 2024 Return on capital employed Earnings before tax and interest Average capital employed Return on capital employed expense * NOK million NOK million 2,000 6,000 40% 5,032 4,849 5,000 1,500 30% 4,000 1,000 799 3,000 20% 15.9% 14.5% Target 704 2,000 500 10% 1,000 0 0 0% 2020 2021 2022 20
Slide 6: Cash flow statement
2nd quarter 2024 Cash flow statement Q2 Q2 YTD YTD Cash flow from operations NOK million 2024 2023 2024 2023 EBIT 37 303 238 318 NOK million Depreciation, amortisation and impairment 173 135 329 266 1,552 1,600 Change in net working capital 544 -114 386 -178 1,400 Taxes paid -60 -71 -118 -152 1,200
Slide 7: Net interest-bearing debt and liquidity
2nd quarter 2024 Net interest-bearing debt and liquidity Net interest-bearing receivables (debt) Components net interest-bearing receivables (debt) NOK million NOK million 500 2,000 -1 582 -979 0 1,000 411 -500 0 -1 000 -1,000 -979 -1 500 -2,000 -1 582 -2 000 -3,000 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q2
Slide 8: Balance sheet
2nd quarter 2024 Balance sheet Equity share NOK million 30.06.24 30.06.23 31.12.23 Long term debt Equity Non-current assets 8,629 8,119 8,407 Current assets, ex. cash 5,807 6,260 5,894 Cash and cash equivalents 411 494 347 Equity-share*: 19.2 % Total assets 14,846 14,872 14,647 (19.5 %) Equity 2,844
Slide 9: Environment
2nd quarter 2024 Environment Source separation rate Metal demolished and sorted for Recycling environmental parks Waste sorted: 99,000 (172,168) tonnes YTD in 2024 recycling Recycling rate 78% (78%) YTD in 2024 % Tonnes Tonnes 100 96 95% 60,000 600,000 86 87% 88 87% 80 50,000 500,000 40,000 37,443 4
Slide 10: Business Areas
Business Areas 2nd quarter 2024 10 Nye Tøyenbadet. Photo: Max Emanuelson
Slide 11: Civil Engineering: Record high revenue and a good result
Civil Engineering Record high revenue and a good result NOK million Q2 24 Q2 23 1H 24 1H 23 Revenues 2,400 1,505 4,444 2 956 EBIT 140 104 256 181 EBT 154 107 285 185 EBIT % 5.8% 6.9% 5.8% 6.1% EBT % 6.4% 7.1% 6.4% 6.3% Civil Engineering had a 59% revenue growth compared to Q2 of last year and deli
Slide 12: Construction: Stable profitability
Construction Stable profitability NOK million Q2 24 Q2 23 1H 24 1H 23 Revenues 2,279 2,674 4,482 5 264 EBIT 95 112 159 162 EBT 97 105 163 151 EBIT % 4.2% 4.2% 3,5% 3,1% EBT % 4.2% 3.9% 3,6% 2,9% Construction maintained profitability despite revenue decline of 15 % relative to Q2 of last year AF
Slide 13: Betonmast: Weak result
Betonmast Weak result NOK million Q2 24 Q2 23 1H 24 1H 23 Revenues 979 1,117 1,984 2,323 EBIT 9 33 -10 67 EBT 19 37 9 77 EBIT % 1.0% 3.0% -0,5% 2.9% EBT % 2.0% 3.4% 0,4% 3.3% Betonmast experienced a 12 % revenue decline compared to the same quarter of last year Betonmast Røsand, Østfold and Innl
Slide 14: Property: Low residential sales
Property Low residential sales NOK million Q2 24 Q2 23 1H 24 1H 23 Revenues 5 6 11 16 EBIT -8 -3 -15 -5 EBT -4 -1 -7 0 Capital employed 897 756 897 756 A challenging real estate market with high interest rates and uncertainty still contributing to low sales figures. Sales contracts for 21 (16) uni
Slide 15: Sweden: Varying performance and break-even result
Sweden Varying performance and break-even result NOK million Q2 24 Q2 23 1H 24 1H 23 Revenues 1,401 2,150 2,763 4 077 EBIT 1 27 3 -135 EBT -2 26 -3 -138 EBIT % 0.1% 1.3% 0,1% -3,3% EBT % -0.2% 1.2% -0,1% -3,4% Sweden has a revenue decline of 35 % compared to Q2 of last year AF Prefab i Mälardale
Slide 16: Energy and Environment: High activity and good results
Energy and Environment High activity and good results NOK million Q2 24 Q2 23 1H 24 1H 23 Revenues 388 326 726 613 EBIT 22 19 40 30 EBT 21 21 38 33 EBIT % 5.7% 5.9% 5,4% 4,9% EBT % 5.4% 6.3% 5,3% 5,4% Energy and Environment has increased activity levels by 19 % compared to the same quarter last ye
Slide 17: Offshore: Demanding quarter marked by adjustment
Offshore Demanding quarter marked by adjustment NOK million Q2 24 Q2 23 1H 24 1H 23 Revenues 285 342 580 586 EBIT -234 17 -220 35 EBT -241 12 -234 28 EBIT % -82.1% 5.0% -38,0% 5,9% EBT % -84.5% 3.6% -40,3% 4,8% AF Offshore Decom has performed yet another downward adjustment of the estimated result
Slide 18: Solid order backlog
2nd quarter 2024 Solid order backlog Development in order backlog Order backlog business areas NOK million NOK million Offshore Civil 45,000 1,871 Engineering 38,253 Sweden 15,053 40,000 4,437 35,000 Energy and 30,000 Environment 1,208 Order 25,000 backlog 20,000 38,253 15,000 Betonmast (44,693) 10,
Slide 19: Cost development in Construction Norway
Cost development in Construction Norway Q2 2024 | Theme presentation Photo: Max Emanuelson
Slide 20: Cost development for Norwegian residential buildings
Development in construction costs Cost development for Norwegian residential buildings Construction costs are frequently cited as a primary reason for the limited number of new homes being built in Norway Some groups anticipate a decrease in cost levels, and we have examined the cost trends of t
Slide 21: Most residential buildings have a relatively equal distribution of costs
Development in construction costs Most residential buildings have a relatively equal distribution of costs Labour is by far the largest input factor in construction projects. Of the materials, the most important input factors are timber (28%) and concrete (22%). 21
Slide 22: The price of labour is the biggest driver of construction costs
Development in construction costs The price of labour is the biggest driver of construction costs Annual growth in per cent • Labour accounts for 55% in a reference project from Statistics Norway. • Expectations and signals of real wage growth in the coming years. • Expected labour emigration – layo
Slide 23: Higher labour costs will sustain the index despite stabilising material prices
Development in construction costs Higher labour costs will sustain the index despite expected stabilisation in material prices • Construction costs – 12 months growth in construction costs has never been negative since Statistics Norway started in 1979. • Continued increase in most cost indices. • T
Slide 24: Continued significant price increases for key materials in 2024
Development in construction costs Continued significant price increases for key materials in 2024 The two largest input factors of materials: Price index for lumber • Main material groups have risen: We observe that even though several material prices have fallen Pine Spruce (from abnormally high le
Slide 25: Expected cost increase on several key input factors
Development in construction costs Expected cost increase on several key input factors Øre per kwh 80 70 • Increased electricity prices: 60 Expected The price of electricity has been 20-40 50 40 development in average øre/kWh in the period 2000-2022, but is 30 spot price per expected to stabilise at
Slide 26: Increased climate and environmental requirements
Development in construction costs Increased climate and environmental requirements Tougher climate and environmental requirements: Requirements for the reduction of greenhouse gas emissions, the transition to a circular economy, land use, the utilisation of natural resources and standards for the
Slide 27: Illustration case: cost of comparable housing projects in 2003 and 2024
De ve lopm e n t in c on s t ru c t ion c os t s Illustration case: The development of cost for comparable housing projects in 2003 and 2024 Case: A medium-sized housing Significant increase in housing standard and project in 2024 has a cost 2.5 times higher than a quality, in combination with incre
Slide 28: Some expect lower material prices and costs, but key factors indicate the opposite
Development in construction costs While some groups expect material prices and construction costs to decrease, several key factors indicate the opposite trend Low exchange Interest rates Inflation – Prospects for Continued high rate (NOK) have stabilised at continued strong increased geopolitical co
Slide 29: Productivity
De ve lopm e n t in c on s t ru c t ion c os t s Lower costs will largely depend on succeeding with productivity growth and good choice of solutions Productivity New technology Competence and innovation Industrialisation Soutions Increased Solution and collaboration in Early involvement material the
Slide 30: Expected cost development ahead
Development in construction costs Expected cost development ahead There are limited indications that construction costs will decrease significantly in the near future. We construct higher quality and more energy-efficient buildings, meeting increased technical and regulatory requirements. To s
Slide 31: Summary
2nd quarter 2024 Summary NOK million Q2 24 Q2 23 1H 24 1H 23 Revenues 7,651 7,853 14,838 15 246 EBIT 37 303 238 318 EBT 21 292 207 305 EBIT % 0.5% 3.9% 1,6% 2,1% EBT % 0.3% 3.7% 1,4% 2,0% Varying performance and collectively a weak result Strong financial position Order intake: NOK 5,629 (10,8
Slide 32: Thank you for your attention
Thank you for your attention Presentation Q3 15 November 2024 Holmängens sewage treatment plant in Sweden. Photo: Hans Fredrik Asbjørnsen