Slide 1: 3rd Quarter 2016 Investor presentation
3RD QUARTER 2016 Investor presentation Thursday 3 November 2016
Slide 2: Contents
CONTENTS Highlights CEO Arne Giske Results – segments and Group CFO Terje Larsen Status and outlook CEO Arne Giske Frederiksbjerg Skole in Aarhus won «2016 school buliding of the year» in Danmark 2
Slide 3: Progress and high level of activity
PROGRESS AND HIGH LEVEL OF ACTIVITY + Revenue growth + High level of activity + Improved results Good sales at Hagaterrassen, Stockholm 3
Slide 4: Revenue and earnings – 3rd quarter
REVENUE AND EARNINGS – 3RD QUARTER REVENUE PROFIT BEFORE TAX 597 08.jan 600 90 500 06.jan 400 NOK mill. NOK bill. 04.jan 300 7.4 507 5.6 6.0 5.9 200 390 5.2 358 370 02.jan 274 100 00.jan 0 Q3 12 Q3 13 Q3 14 Q3 15 Q3 16 Q3 12 Q3 13 Q3 14 Q3 15 Q3 16* * Positive one-off effect from changes to the disa
Slide 5: Profit before tax – 3rd quarter
PROFIT BEFORE TAX – 3RD QUARTER 3RD QUARTER: CONSTRUCTION 3RD QUARTER: PROPERTY DEVELOPMENT 3RD QUARTER: INDUSTRIAL 300 283 300 300 250 70 250 250 198 200 200 200 NOK mill. NOK mill. NOK mill. 150 150 125 150 100 213 100 100 193 192 178 183 148 163 128 122 115 50 106 50 50 60 57 52 37 0 0 0 2012 201
Slide 6: Changes in profit before tax
CHANGES IN PROFIT BEFORE TAX PROFIT BEFORE TAX* 650 597 48 6 507 500 24 NOK mill. 8 -9 23 19 390 350 Construction Property development 200 Q3 2015 Norway Sweden Denmark Norway Sweden Industrial Other Q3 2016 * One-off effect from changes to the disability pension scheme in Norway in light red 6
Slide 7: Order backlog
ORDER BACKLOG ORDER BACKLOG CONSTRUCTION AND INDUSTRIAL ORDERS IN REVENUE NEXT 12 MONTHS 30 30 Road Maintenance Denmark Sweden Norway 25 25 20 20 16.8 17.1 NOK bill. NOK bill. 15 15 10 10 5 5 - 0 Q3 12 Q3 13 Q3 14 Q3 15 Q3 16 Per 3Q 2015 Per 3Q 2016 Order backlog for Industrial is presented as Road
Slide 8: Residential sales and production
RESIDENTIAL SALES AND PRODUCTION NO. OF UNITS SOLD* – NORWAY AND SWEDEN NO. OF UNITS UNDER CONSTRUCTION – NORWAY AND SWEDEN 3 000 3 000 2 500 2 500 2 000 2 000 1 500 1 500 1 000 1 000 500 500 0 0 Veidekke’s share Joint venture *12-month rolling 8
Slide 9: High level of activity in Industrial
HIGH LEVEL OF ACTIVITY IN INDUSTRIAL QUARTERLY REVENUE, INDUSTRIAL (NOK MILL.) ACCUMULATED ASPHALT PRODUCTION (MILLION TONNES) 1 600 2013 2014 2015 2016 3,0 2013 2014 2015 2016 1 400 2,5 1 200 2,0 1 000 800 1,5 600 1,0 400 0,5 200 0 0,0 Q1 Q2 Q3 Q4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 9
Slide 10: Occupational health and safety
OCCUPATIONAL HEALTH AND SAFETY INJURIES* LTI RATE** SICKNESS ABSENCE** 120 All injuries Serious injuries 10 6% 100 5% 8 80 4% 6 60 3% 4 40 2% 20 2 1% - 0 0% * Veidekke employees, hired staff and sub-contractors **12-month rolling (LTI = Number of lost-time injuries per million hours worked for Veide
Slide 11: Business areas
Veidekke performs the civil engineering work at the new Munch museum in Oslo BUSINESS AREAS
Slide 12: Business areas, 3rd quarter
BUSINESS AREAS, 3RD QUARTER 3rd quarter 2016 3rd quarter 2015 Amounts in NOK million Revenue Profit* Margin* Revenue Profit Margin Construction Norway* 3 685 216 5.9% 2 742 127 4.6% Construction Sweden 1 714 35 2.0% 1 405 12 0.9% Construction Denmark 459 32 7.0% 354 24 6.8% Total Construction* 5 858
Slide 13: Construction Norway
CONSTRUCTION NORWAY 3rd quarter YTD Significantly increased revenues Amounts in NOK million 2016 2015 2016 2015 • ⅔ of increase from Building Construction, regional variations Revenue 3 685 2 742 10 903 8 406 • ⅓ of increase from Civil Engineering Operating profit (EBIT) 214 115 460 278 Increased ea
Slide 14: Construction Sweden
CONSTRUCTION SWEDEN 3rd quarter YTD Increased revenues Amounts in NOK million 2016 2015 2016 2015 • ¾ of increase from Building Construction Revenue 1 714 1 405 5 577 4 067 • ¼ of increase from Civil Engineering Operating profit (EBIT) 35 17 73 49 Improved profitability Net financial items -1 -5 -3
Slide 15: Construction Denmark
CONSTRUCTION DENMARK 3rd quarter YTD Increased revenues Amounts in NOK million 2016 2015 2016 2015 • Higher activity and business acquisitions last quarter Revenue 459 354 1 199 1 186 Profit- and margin improvement Operating profit (EBIT) 31 23 66 59 • High profitability in the project portfolio Net
Slide 16: Property Development in Norway
PROPERTY DEVELOPMENT IN NORWAY 3rd quarter YTD High residential sales Amounts in NOK million 2016 2015 2016 2015 • Oslo area and Trondheim Revenue 54 43 190 326 Ongoing projects mostly in joint ventures Operating profit (EBIT) 35 4 114 92 • Joint venture projects do not generate accounting revenue,
Slide 17: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN 3rd quarter YTD High residential sales and high sales ratio Amounts in NOK million 2016 2015 2016 2015 Strong result improvement Revenue 400 436 1 678 1 225 Large number of units under construction Operating profit (EBIT) 92 44 233 97 • One project with 21 units started N
Slide 18: Industrial
INDUSTRIAL 3rd quarter YTD High level of activity and good overall result Amounts in NOK million 2016 2015 2016 2015 Asphalt Revenue 1 434 1 359 3 095 2 924 • High revenue Operating profit (EBIT) 198 197 113 141 • Good operations and strong result Net financial items 0 -4 -10 -16 Aggregates Profit b
Slide 19: Financial statements
FINANCIAL STATEMENTS IFRS
Slide 20: Income statement
INCOME STATEMENT 3rd quarter YTD Amounts in NOK million 2016 2015 2016 2015 Revenue 7 045 5 548 20 489 16 855 Operating expenses -6 467 -5 177 -19 515 -16 119 Share of net income from associates and JVs 39 13 135 85 Depreciation/impairment -119 -90 -337 -266 Operating profit* 500 294 771 555 Net fin
Slide 21: Balance sheet – assets
BALANCE SHEET – ASSETS Amounts in NOK million 30.09.2016 30.09.2015 31.12.2015 Goodwill and other intangible assets 1 372 1 024 1 255 Deferred tax assets 65 54 65 Land and buildings 550 545 556 Plant and machinery 1 903 1 422 1 689 Investments in associates and joint ventures 1 260 1 069 1 134 Finan
Slide 22: Balance sheet – equity and liabilities
BALANCE SHEET – EQUITY AND LIABILITIES Amount in NOK million 30.09.2016 30.09.2015 31.12.2015 Equity 3 180 2 766 3 218 Pensions and deferred tax liabilities 825 691 939 Bonds 750 750 750 Amounts due to credit institutions 994 80 517 Other non-current liabilities 138 107 103 Total non-current liabili
Slide 23: Statement of cash flows
STATEMENT OF CASH FLOWS YTD 2016 YTD 2015 Property Amounts in NOK million Construction Industrial Other1) Group Group Development Profit before tax 649 340 103 -291 801 577 Depreciation/impairment 212 1 123 2 337 266 Other working capital -251 -358 -314 343 -580 -1 117 Cash flow from operating activ
Slide 24: Status and outlook
«Utsikten» at Gaularfjellet STATUS AND OUTLOOK
Slide 25: A growing and changing Scandinavian market
A GROWING AND CHANGING SCANDINAVIAN MARKET Residential NOK Private 900 commercial buildings bill. in 2016 Civil Engineering Public buildings 25
Slide 26: Construction market forecasts
CONSTRUCTION MARKET FORECASTS 2015 2016 2017 2015 2016 2017 2015 2016 2017 NOK bill. growth growth NOK bill. growth growth NOK bill. growth growth Residential 130 5% 5% 150 15% 2% 61 5% 10% Private comm. 55 -2% -2% 102 4% 1% 21 3% 7% buildings Public 35 3% 3% 42 7% 5% 27 -2% -2% buildings Civil 80 7
Slide 27: High level of activity in building construction
HIGH LEVEL OF ACTIVITY IN BUILDING CONSTRUCTION Hotel, commercial buildings and residential, Vitaminveien, Oslo Diagonale by the Oslo Opera House Bragenes Torg, Drammen Research facilities at Karolinska Institutet, Huddinge Danish Centre for Particle Therapy, Aarhus Svea Symfoni, Stockholm Pyramiden
Slide 28: Large variation in civil engineering projects
LARGE VARIATION IN CIVIL ENGINEERING PROJECTS Avalanche protection Water and sewerage installations Groundwork Tunnel Power- and industrial plants Environmental clean-up Railway Road construction 28
Slide 29: High order intake and revenue growth
HIGH ORDER INTAKE AND REVENUE GROWTH REVENUE AND ORDER INTAKE (“BOOK-TO-BILL RATIO” 1,00) BUILDING CONSTR. ACCOUNTS FOR >70 % OF THE ORDER RESERVE 30 Civil Engineering Building Construction 30 25 25 25 20 20 NOK bill. 18 NOK bill 15 15 10 10 5 5 12m Revenue 12m Order intake 0 0 Q3 13 Q3 14 Q3 15 Q3
Slide 30: Profit margin Construction
PROFIT MARGIN CONSTRUCTION CONSTRUCTION NORWAY* CONSTRUCTION SWEDEN* CONSTRUCTION DENMARK (HOFFMANN)* 8% 8% 8% 6% 6% 6% 4% 4% 4% 2% 2% 2% 0% 0% 0% *12-month rolling. For Norway is the profit margin exclusive positive one-off effect from changes to the disability pension scheme in Q3 2016 30
Slide 31: Good development for Industrial
GOOD DEVELOPMET FOR INDUSTRIAL Q3 16 4 200 Q1 13 3 200 * 12-month rolling revenues, Industrial, NOK million 31
Slide 32: Industrial
INDUSTRIAL REVENUE LAST 12 MONTHS Road Maintenance Asphalt 29% NOK 4.2 billion 58% 13% Aggregates producer Asphalt contractor Road Maintenance Market share >10 % Market share >35 % Market share >15 % Aggregates 32
Slide 33: Aggregates – good locations and growth
AGGREGATES – GOOD LOCATIONS AND GROWTH Production of aggregates to construction and civil HIGH PROFITABILITY engineering projects Revenue Margin Market leader in Norway with 28 quarries 800 NOK mill. 15% 8 million tonnes aggregates per year 12% 600 150 employees 9% 400 6% Increasing activity 200 3%
Slide 34: Asphalt – solid position and good development
ASPHALT – SOLID POSITION AND GOOD DEVELOPMENT Asphalt contractor – producer and laying HIGH PROFITABILITY • 30 asphalt plants across Norway Revenue Margin • 120 teams 3 000 NOK mill. 15% Annual production of 2.5 million tonnes 2 400 12% • Season from May to October 1 800 9% 700 employees 1 200 6% 60
Slide 35: Road maintenance – turnaround
ROAD MAINTENANCE – TURNAROUND Maintenance of 11 330 km road • 18 contracts with Norwegian Public Roads Administration WEAK RESULTS • 2 contracts related to Public-Private Partnerships Summer maintenance Revenue Margin • Winter maintenance at OSL Gardermoen airport 1 800 NOK mill. 15% 15% market shar
Slide 36: Cooperation – road construction and maintenance
COOPERATION – ROAD CONSTRUCTION AND MAINTENANCE Development Financing Engineering Construction Maintenance and planning PPP - Public-Private Partnership Contractor Partnering contract Execution of Design and Build road projects Construction Industrial Aggregates Supplementary Asphalt deliveries and
Slide 37: Good local presence
GOOD LOCAL PRESENCE Asphalt plants and Quarries & Tromsø Trondheim plants are covering the most AL TA important markets Ålesund 24 Road maintenance contracts Veidekke is well positioned for the many planned road projects Bergen Oslo Bodø Large projects1) Asphalt plants Stavanger Smaller projects Qua
Slide 38: Leading position within the road segment
LEADING POSITION WITHIN THE ROAD SEGMENT • Good operations and continuous improvements • Develop positions through organic growth and acquisitions Aggregates • Good operations and continuous improvements • Develop positions • Large infrastructure projects • Environmental benefits through energy effi
Slide 39: High residential production
Q3 HIGH RESIDENTIAL PRODUCTION 16 2 146 Q1 13 1 381 39
Slide 40: Several residential sale starts
SEVERAL RESIDENTIAL SALE STARTS Facsimile from Q2 2016 presentation 40
Slide 41: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN NO. OF UNITS SOLD* NO. OF UNITS UNDER CONSTRUCTION PROFIT AND RETURN 1 600 97% 97% 96% 1 600 350 NOK mill. 35% 94% 95% 1 400 88% 1 400 300 30% 1 200 83% 1 200 250 25% 80% 1 000 1 000 74% 200 20% 72% 800 800 150 15% 600 600 100 10% 400 400 200 200 50 5% - - 0 0% Profit Ret
Slide 42: Property Development Norway
PROPERTY DEVELOPMENT NORWAY NO. OF UNITS SOLD* NO. OF UNITS UNDER CONSTRUCTION PROFIT AND RETURN 1 600 86% 1 600 350 NOK mill. 35% 81% 81%82% 1 400 78% 1 400 300 30% 1 200 71% 70% 1 200 67% 250 25% 65% 1 000 63% 1 000 200 20% 800 800 150 15% 600 600 100 10% 400 400 200 200 50 5% - - 0 0% Profit Retu
Slide 43: Summing up
SUMMING UP + Revenue growth + Improved results + High level of activity + Good outlook 43
Slide 44: Appendix
APPENDIX
Slide 45: Business areas, year to date
BUSINESS AREAS, YEAR TO DATE First 9 months 2016 First 9 months 2015 Amounts in NOK million Revenues Profit* Margin* Revenues Profit Margin Construction Norway 10 903 479 4.4% 8 406 313 3.7% Construction Sweden 5 577 70 1.3% 4 067 49 1.2% Construction Denmark 1 199 69 5.8% 1 186 63 5.3% Total Constr
Slide 46: Housing portfolio
HOUSING PORTFOLIO Under Under Under Property Development construction Completed Start-up construction Completed Start-up construction Housing portfolio - Veidekke's share 31.12.2014 2015 2015 31.12.2015 2016 2016 30.09.2016 Construction - number of units Norway 399 -248 390 541 -197 305 649 Sweden 7