Veidekke Asa · OSL:VEI
Veidekke Asa — Q1 2018 Earnings Presentation
40 slides from Veidekke Asa's earnings presentation, May 3, 2018
Slide 1: 1st Quarter 2018 Investor presentation
1ST QUARTER 2018 Investor presentation 3 May 2018 Illustrasjon: Schmidt, Hammer Lassen, DK 1
Slide 2: Contents
CONTENTS Highlights Results – segments and Group Strengthened positions Illustration: Semrén+Månsson Veidekke builds a 5 500 m2 shopping center in Selma stad in Gothenburg 2
Slide 3: Highlights 1st Quarter
HIGHLIGHTS 1ST QUARTER Revenue growth and improved results in Construction Low sales and declining results in Property Development Strengthened positions through growth and acquisitions Veidekke rebuilds Amager Centret in Copenhagen 3
Slide 4: Revenue and earnings for the 1st quarter
REVENUE AND EARNINGS FOR THE 1ST QUARTER 1ST QUARTER: REVENUE 1ST QUARTER: PROFIT BEFORE TAX 8,0 100 6,0 50 NOK million NOK billion 4,0 47 7,1 6,5 4 5,9 0 5,2 5,0 -11 2,0 -15 -42 0,0 -50 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 * Figures for 2017 have been restated in accordance with the ne
Slide 5: Profit before tax for the 1st quarter
PROFIT BEFORE TAX FOR THE 1ST QUARTER 1ST QUARTER: CONSTRUCTION 1ST QUARTER: PROPERTY DEVELOPMENT 1ST QUARTER: INDUSTRIAL NOK million NOK million NOK million 200 200 0 9 37 0 -50 150 150 -100 -183 -11 -217 100 100 158 -150 135 -52 50 112 50 72 -200 1 -32 -5 0 0 -250 Q1 Norway Sweden Denmark Q1 2018
Slide 6: Order intake and backlog Construction
ORDER INTAKE AND BACKLOG CONSTRUCTION REVENUE AND ORDER INTAKE CONSTRUCTION ORDER BACKLOG CONSTRUCTION CONSTRUCTION ORDERS IN REVENUE NEXT 12 M (“BOOK-TO-BILL RATIO” 1.17) NOK billion NOK billion NOK billion 35 35 35 30 30 30 25 25 25 Denmark 20.7 20 20 20 17.8 Sweden 15 15 15 10 10 10 Norway 5 5 5
Slide 7: Revenue and margin Construction
REVENUE AND MARGIN CONSTRUCTION NORWAY* SWEDEN* DENMARK (HOFFMANN)* 16 7% 16 7% 16 7% 14 6% 14 6% 14 6% 12 12 12 5% 5% 5% NOK billion NOK billion NOK billion 10 10 10 4% 4% 4% 8 8 8 3% 3% 3% 6 6 6 2% 2% 2% 4 4 4 2 1% 2 1% 2 1% 0 0% 0 0% 0 0% 14 15 16 17 18 14 15 16 17 18 14 15 16 17 18 20 20 20 20 2
Slide 8: Residential sales and production
RESIDENTIAL SALES AND PRODUCTION NO. OF UNITS SOLD* NO. OF UNITS UNDER CONSTRUCTION* 600 1 600 3 000 1 400 500 2 500 1 200 Quarterly sales 400 2 000 12m rolling 1 000 300 800 1 500 600 200 1 000 400 100 500 200 - 0 - 15 15 16 16 17 17 18 15 15 16 16 17 17 18 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Slide 9: Results and sales ratio Property Development
RESULTS AND SALES RATIO PROPERTY DEVELOPMENT OMSETNING PROFIT BEFORE OG MARGIN* TAX PER QUARTER SALES RATIO, RESIDENTIAL UNITS UNDER CONSTRUCTION Norway Sweden 100% 250 200 90% NOK million 150 100 80% 50 0 70% 15 15 16 16 17 17 18 15 15 16 16 17 17 18 20 20 20 20 20 20 20 20 20 20 20 20 20 20 1 3 1
Slide 10: Boligtempen 2018
BOLIGTEMPEN 2018 © non PA BOSTADSMARKNADEN ‘ Bopriserna kvar pa lagre niva: "Ny situation pa marknaden” ORON PA BOSTADSMARKNADEN ‘ Fem experter: Sa lange haller $' oron pa bostadsmarknaden i SIZ omovn Ny rapport: Bostadsbyggandet rasar med 30 procent Utbudet av bostadsratter sjunker i Stockholm Bost
Slide 11: The residential development cycle
THE RESIDENTIAL DEVELOPMENT CYCLE Land purchase Construction start 3-7 years 1-3 years LAND DEVELOPMENT & STRATEGY SALES CONSTRUCTION DELIVERY PURCHASE ZONING 2 060 units sold last Status: 15 250 units in the land bank 2 500 units in production two years 11
Slide 12: Good outcome from asphalt tenders
GOOD OUTCOME FROM ASPHALT TENDERS ASPHALT: TENDERS WON NPRA* QUARTERLY REVENUE, INDUSTRIAL (NOK MILLION) 2017 2018 2 000 2015 2016 2017 2018 7% 7% 1 600 5% 7% 9% 9% 1 200 47% 46% Volume Veidekke Volume Veidekke 1.25 mill. tonnes 11% 1.1 mill. tonnes 16% 800 16% 20% 400 0 Veidekke’s share Q1 Q2 Q3 Q4
Slide 13: Occupational health and safety
OCCUPATIONAL HEALTH AND SAFETY SERIOUS INJURIES* # LTI RATE* SICKNESS ABSENCE 40 6 6% 5 5% 30 4 4% 20 3 3% 2 2% 10 1 1% 0 0 0% 15 16 17 18 15 16 17 18 15 16 17 18 20 20 20 20 20 20 20 20 20 20 20 20 1 1 1 1 1 1 1 1 1 1 1 1 Q Q Q Q Q Q Q Q Q Q Q Q # Veidekke employees, hired staff and sub-contractors
Slide 14: Results segments and Group
Clearing snow is a large part of road maintenance in the first quarter RESULTS SEGMENTS AND GROUP
Slide 15: New revenue recognition standard – IFRS 15
NEW REVENUE RECOGNITION STANDARD – IFRS 15 Took effect on 1 January 2018 Relevant to Veidekke's recognition of revenue from residential projects as well as change orders and supplementary work in construction projects Property development operations • Revenue from residential projects in Sweden and
Slide 16: Business areas 1st quarter
BUSINESS AREAS 1ST QUARTER 1st quarter 2018 1st quarter 2017* Amounts in NOK million Revenue Profit Margin Revenue Profit Margin Construction Norway 4 027 104 2.6% 3 456 67 1.9% Construction Sweden 1 968 28 1.4% 1 877 19 1.0% Construction Denmark 505 26 5.2% 500 26 5.3% Total Construction 6 500 158
Slide 17: Construction Norway
CONSTRUCTION NORWAY 1st QUARTER 2018 REVENUE AND MARGIN NOK billion Revenue increase 5 7% • Growth in Building Construction in the Eastern region 4 6% 4,1 4,0 5% 3,8 Results increase 3 3,5 3,5 4% • Building Construction: Solid profitability in the Eastern region and 2 3,5 % 3% improved results in th
Slide 18: Construction Sweden
CONSTRUCTION SWEDEN 1st QUARTER 2018 REVENUE AND MARGIN NOK billion Revenue increase 3 7% • Increase in Civil Engineering, stable in Building Construction 2,7 6% 5% 2 Results increase 2,2 2,0 2,0 4% 1,9 • Improved profitability in commercial buildings 3% 1 2% • Still low profitability within residen
Slide 19: Construction Denmark
CONSTRUCTION DENMARK 1st QUARTER 2018 REVENUE AND MARGIN NOK billion Stable revenue 0,7 10% • High activity in the Copenhagen area and somewhat lower 0,6 8% 0,6 in Jutland 0,5 0,6 8,3 % 0,5 0,5 6% 0,4 0,5 0,3 5,7 % Stable results at a high level 5,3 % 6,1 % 5,2 % 4% 0,2 2% 0,1 Solid order intake in
Slide 20: Property Development Norway
PROPERTY DEVELOPMENT NORWAY 1st QUARTER 2018 PROFIT BEFORE TAX NOK million Lower residential sales 50 Results decrease 40 46 • Lower sales ratio and fewer units under construction 30 38 36 Three projects with a total 54 units released for sale in the quarter 20 26 27 (Trondheim and Oslo) 10 Return o
Slide 21: Property Development Sweden
PROPERTY DEVELOPMENT SWEDEN 1st QUARTER 2018 PROFIT BEFORE TAX NOK million Lower residential sales 120 Significant decrease in results 112 105 97 • Lower sales ratio 80 88 • No new projects started 40 One project with 36 units released for sale in the quarter 45 Residential units under construction
Slide 22: Industrial
INDUSTRIAL 1st QUARTER 2018 REVENUE AND MARGIN NOK million Low season 2 000 6% Stable revenue and lower results 1 500 4,4 % 5% 3,6 % 4% 1 694 • Asphalt: A growing business leads to higher capacity costs; 2,7 % 1 247 lower contribution from projects in the quarter 1 000 3,3 % 1 274 3% 2,7 % 2% • Aggr
Slide 23: Financial statements
Veidekke builds houses at Nesbukta, Asker FINANCIAL STATEMENTS IFRS
Slide 24: Income statement (IFRS)
INCOME STATEMENT (IFRS) 1st quarter Full year Figures in NOK million 2018 2017 2017 Revenue 7 023 6 438 31 175 Operating expenses -6 965 -6 383 -29 700 Share of net income from associates and JVs 20 65 369 Depreciation/impairment -139 -123 -524 Operating profit -61 -4 1 320 Net financial income -6 1
Slide 25: Balance sheet – assets
BALANCE SHEET – ASSETS Figures in NOK million 31.03.2018 31.03.2017 31.12.2017 Goodwill and other intangible assets 1 569 1 386 1 530 Deferred tax assets 55 65 55 Land and buildings 605 561 615 Plant and machinery 2 306 1 971 2 286 Investments in associates and joint ventures 1 451 1 505 1 489 Finan
Slide 26: Balance sheet – equity and liabilities
BALANCE SHEET – EQUITY AND LIABILITIES Figures in NOK million 31.03.2018 31.03.2017 31.12.2017 Equity 4 030 3 744 4 220 Equity % 23% 24% 25% Pensions and deferred tax liabilities 903 821 900 Bonds 600 750 0 Amounts due to credit institutions 942 680 613 Other non-current liabilities 217 134 173 Tota
Slide 27: Cash flow statement
CASH FLOW STATEMENT Q1 2018 Q1 2017 Property Figures in NOK million Construction Industrial Other1) Group Group Development Profit before tax 158 72 -217 -81 -67 -3 Depreciation/impairment 85 2 50 3 139 123 Other working capital -68 -565 -22 15 -639 -905 Cash flow from operating activities 175 -491
Slide 28: Strengthened positions
The acquisition of Billström Riemer Andersson AB (BRA) has significantly strengthened Veidekke’s position in the important market in western Sweden STRENGTHENED POSITIONS
Slide 29: Growth and strengthened positions
GROWTH AND STRENGTHENED POSITIONS UNITS UNDER REVENUE (12M) ASPHALT VOLUMES (12M) ORDER BACKLOG CONSTRUCTION NOK billion No. of residential units Million tonnes NOK billion 32 3 000 4 32 28 28 2 500 24 3 24 Denmark 2 000 20 20 Sweden 16 1 500 2 16 Sweden Building Construction 12 12 1 000 Norway 8 1
Slide 30: Higher activity in public and commercial buildings
HIGHER ACTIVITY IN PUBLIC AND COMMERCIAL BUILDINGS SHARE OF TOTAL ORDER BACKLOG IN PUBLIC AND COMMERCIAL BUILDINGS Q3 2017 36% Q4 2017 40% Q1 2018 45% Total order backlog for Construction around NOK 31 billion for all periods 30
Slide 31: Selected public and commercial building projects
SELECTED PUBLIC AND COMMERCIAL BUILDING PROJECTS VIA in Vika, Oslo School buildings in Norway and Sweden Sergelshuset in Stockholm Bergen Business Park Patienten in Stockholm The Amager Centret in Copenhagen Harbitz Torg in Oslo Hotel in Carlsberg Byen, Copenhagen 31
Slide 32: Focus on school building segment
FOCUS ON SCHOOL BUILDING SEGMENT NOK 5 billion 20 schools over past two years In Q1, Veidekke was awarded the contract for the construction of Levre school in Bærum, Norway 32
Slide 33: Strengthening important regions
STRENGTHENING IMPORTANT REGIONS Organic growth in the capital regions Position in Mid-Norway strengthened through acquisitions and organic growth Western Sweden is an important growth region for Veidekke and acquisitions lead to improved competitiveness 33
Slide 34: Improved competitiveness in a growing Gothenburg area
IMPROVED COMPETITIVENESS IN A GROWING GOTHENBURG AREA Acquisition of 90.1% of Billström Riemer Andersson AB in the Gothenburg area Reported revenue of SEK 1.4 billion in 2017, with operating margin of 4.5%. Source: Dagens Industri Source: Business Region Göteborg 200 employees Main focus on commerci
Slide 35: Focus on commercial property development
FOCUS ON COMMERCIAL PROPERTY DEVELOPMENT Complements residential property development and building construction Good opportunities in current project portfolio Office building at Lysgården, Trondheim Development and sale of projects Commercial activities in residential projects • Commercial in resid
Slide 36: Solid positions for residential development
SOLID POSITIONS FOR RESIDENTIAL DEVELOPMENT The land bank provides flexibility 2 200 A total of 18 700 residential units • Veidekke’s share: 15 250 3 025 7 450 2 100 A robust portfolio 1 200 36
Slide 37: Veidekke awarded asphalt contracts for large road projects
VEIDEKKE AWARDED ASPHALT CONTRACTS FOR LARGE ROAD PROJECTS Ørlandet HF Hangarer E6 Soknedal Helgeland Nord E39 Skei E6 Arnkværn – Moelv E6 Kolomoen – Arnkværn E39 Bergen Svegatjørn – Rådal E134 Damåsen – Myntbrua E134 Myntbrua – Trollerudmoen E18 Kjørholt – Bamble tunnels AWARDED CONTRACTS FOR 1.4 M
Slide 38: Summary
SUMMARY Revenue growth and improved results in Construction Low residential sales and result decrease in Property Development Strengthened position through growth and acquisitions In April, Veidekke was the awarded contract for construction of Vestli school in Oslo 38
Slide 39: Appendix
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Slide 40: Housing portfolio
HOUSING PORTFOLIO Under Under Under Property Development construction Completed Start-up construction Completed Start-up construction Housing portfolio - Veidekke's share 31.12.2016 2017 2017 31.12.2017 2018 2018 31.03.2018 Construction - number of units Norway 600 -363 320 557 -32 9 534 Sweden 1 70