Veidekke Asa · OSL:VEI
Veidekke Asa — Investor Presentation (March 2024)
36 slides from Veidekke Asa's investor presentation, Mar 21, 2024
Slide 1: Market update spring 2024
21 March 2024 Questions? Kristoffer Eide Hoen | Head of Business Development and Analysis kristoffer.eide.hoen@veidekke.no Anders Wettre | Analyst anders.wettre@veidekke.no
Slide 2: About Veidekke's market report
About Veidekke’s market report • Veidekke prepares figures for the Scandinavian markets based on statistics published by Statistics Norway (SSB), Statistics Sweden (SCB) and Statistics Denmark (DST). Other information sources include major construction clients like the Swedish Transport Administrati
Slide 3: Our focus: the Scandinavian contracting markets
Our focus: the Scandinavian contracting markets Not included: - Detached houses and holiday homes - Residential refurbishment, “off-the-books work” and household DIY The contracting markets in 2023 Production of buildings* and infrastructure in NOK billion Total Scandinavian market 2023: ~ NOK 1 050
Slide 4: Contracting markets: Forecasts 2024–2025
Contracting markets Forecasts 2024–2025 Comment Production in the Scandinavian contracting markets • Following strong growth in 2022, production slowed in 2023, Percentage change since previous year, current prices falling by 5% in value terms in Sweden and Denmark. Norway, however, maintained a hig
Slide 5: Agenda
Agenda 01 Introduction 02 Economic environment 03 The contracting markets 04 Construction costs 05 Summary 5
Slide 6: Introduction
01 Introduction
Slide 7: Less geopolitical unrest – for the time being
Less geopolitical unrest – for the time being Geopolitical turmoil and risk premium in European corporate debt • The geopolitical risk indicator (GPR) increased after 350 Geopolitical risk (GPR index) the terrorist attack on Israel in October and the Risk premium on European corporate bonds subseque
Slide 8: Economic environment
02 Economic environment - Growth and the labour market - Inflation and interest rates - Demographic factors
Slide 9: Rising market interest rates?
Rising market interest rates? Market interest rates have risen again, but risk premiums are stable 10-year government bonds • Market interest rates have generally developed 6 positively since the autumn 2023 report, showing a clear decline. 5 • In most markets long-term bond yields are somewhat lowe
Slide 10: Soft landing for the economy thus far
Soft landing for the economy thus far Economic growth in Scandinavia and selected countries GDP growth • Global economic growth is expected to remain moderate, which will have a negative impact on Scandinavian 2022 2023 2024 2025 export markets. 3,8 4 3,5 • Leading GDP forecasts indicate an economic
Slide 11: Labour markets remain strong
Labour markets remain strong Still few indications of material increases in unemployment Unemployment • Low unemployment equates to a lower risk of material 16 demand disruption in private segments such as residential units and commercial buildings. 14 • To date, higher interest rates and weaker eco
Slide 12: Inflation/CPI are falling, but it is taking time
Inflation/CPI are falling, but it is taking time Forecasts indicate a downward trend Inflation/CPI • Inflation declined throughout 2023 at both an overall and 2022 2023 2024 2025 underlying level. The latter category usually excludes goods such as energy and food. 9 8,5 8,4 • Central banks need to f
Slide 13: Declining population growth
Declining population growth Population growth • Population growth in Norway totalled 1.1% in 2023. 1,6 % Excluding immigration by Ukrainian refugees, the increase was a moderate 0.6%, in line with the years up to 2021. 1,4 % • Population growth in Sweden and Denmark was also on a par with the low le
Slide 14: The contracting markets
O03 The contracting markets VEIDEKKE
Slide 15: Estimated order intake, construction operation
Estimated order intake, construction operation Stable order intake among major listed companies Order intake, Nordic construction operations Estimated order intake, Scandinavian construction projects Reporting companies, inflation-adjusted estimates in NOK billion Inflation-adjusted and in NOK billi
Slide 16: The Scandinavian contracting markets, current prices
The Scandinavian contracting markets Historical figures and forecasts, current prices Norway, production by sector Sweden, production by sector Denmark, production by sector NOK billion, current prices NOK billion, current prices NOK billion, current prices 160 180 180 CAGR 2024–2025 CAGR 2024–2025
Slide 17: The Scandinavian contracting markets, fixed prices
The Scandinavian contracting markets Historical figures and forecasts, fixed prices Norway, production by sector Sweden, production by sector Denmark, production by sector NOK billion, fixed prices NOK billion, fixed prices NOK billion, fixed prices 180 180 180 CAGR 2024–2025 CAGR 2024–2025 CAGR 202
Slide 18: Buildings
Buildings VEIDEKKE
Slide 19: Positive signs in the secondhand residential market
Positive signs in the secondhand residential market Residential prices, index Prices, secondhand residential units in Scandinavia, apartments • Prices of secondhand homes in Norway and Index: January 2020 = 100 Sweden have maintained their relatively flat trend of recent years. In Denmark, however,
Slide 20: New residential unit sales in Norway
New residential unit sales in Norway Sale starts and sales remain low, but there is an upward trend Comment Ready-for-sale and sold apartments New residential unit prices (apartments) • New apartment sales remained weak throughout Number of units, 12-month rolling total and last two months Year-on-y
Slide 21: Apartments and small houses, Norway and Sweden
Apartments and small houses, Norway and Sweden Estimated value of order intake Comment Norway, estimated order intake Sweden, estimated order intake • The number of building starts involving new NOK billion NOK billion apartments and small houses in Norway fell by 27% in 2023. In Sweden, the decline
Slide 22: Commercial buildings in Norway and Sweden
Commercial buildings in Norway and Sweden Surprisingly strong figures for 2023 Comment Norway, estimated order intake Sweden, estimated order intake • The commercial buildings segment continued NOK billion NOK billion to surprise, in the form of strong building start figures in both Norway and Swede
Slide 23: Public buildings in Norway and Sweden
Public buildings in Norway and Sweden Reduced number of building starts in Norway and Sweden Comment Norway, estimated order intake Sweden, estimated order intake • The number of building starts in the Norwegian NOK billion NOK billion public buildings segment continued to decline in 2023. The 8% ye
Slide 24: Infrastructure
Infrastructure VEIDEKKE
Slide 25: The civil engineering market in Norway and Sweden
The civil engineering market in Norway and Sweden Production tapering off at a high level Comment Norway, production Sweden, production • Stabilisation at a high production level with NOK billion, current prices NOK billion, current prices many large ongoing projects in the market. • Strong growth i
Slide 26: Transport infrastructure in Norway
Transport infrastructure in Norway More roads, less rail Comment Roads market, production Railways market, production Roads NOK billion, current prices NOK billion, current prices • Reduced forecasts compared to autumn 2023. 50 4% 7% 14% 13% 4% -7% 3% 14% -3% 8% 1% 50 13% -12% 3% 3% 20% 5% 34% 18% -
Slide 27: Transport infrastructure in Sweden
Transport infrastructure in Sweden Somewhat lower production volumes in the coming years Comment Roads market, production Railways market, production Roads NOK billion, current prices NOK billion, current prices • Slight decline in central government 40 40 investment until the end of the forecast pe
Slide 28: Norway: energy, water supply and sewerage
Norway: energy, water supply and sewerage Further growth expected Comment Production Energy NOK billion, current prices • Low rate of investment in new power plants in recent years. 30 12% 13% 3% 19% 4% 8% -9% 12% 9% 10% 8% • Statkraft, the largest power company in Norway, is planning to upgrade and
Slide 29: Sweden: energy, water supply and sewerage
Sweden: energy, water supply and sewerage Further growth expected Comment Production Energy NOK billion, current prices • Updated figures from Statistics Sweden show investment growth of 18% in 80 -3% -11% 13% 16% 21% 8% -10% 38% 16% 7% 4% 2023. • Svenska kraftnät has reported a sharp increase in in
Slide 30: Road maintenance, Norway
Road maintenance, Norway High priority going forward Comment Road maintenance Railway maintenance • Road maintenance will be highly prioritised in NOK billion NOK billion the upcoming national transport plan, and we are likely to see increasing activity levels from 40 9% 4% 9% 1% 2% 15% 10% 8% 10% -
Slide 31: Construction costs
O04 Construction costs VEIDEKKE
Slide 32: Cost inflation set to fall
Cost inflation set to fall Construction cost indices show slower growth than last year Construction cost index, Construction cost index, Comment residential blocks, Norway residential blocks, Sweden • Construction cost inflation has slowed significantly Percentage change since same month last year P
Slide 33: Construction cost index, civil engineering (Norway)
Construction cost index, civil engineering (Norway) Prices are stabilising Comment Construction cost index, roads • Construction costs in the civil engineering and road maintenance sectors Percentage change since same quarter last year fell sharply last year compared to 2022, as a result of reduced
Slide 34: Summary
05 Summary
Slide 35: Contracting markets: Forecasts 2024–2025
Contracting markets Forecasts 2024–2025 Comment Production in the Scandinavian contracting markets • Following strong growth in 2022, production slowed in 2023, Percentage change since previous year, current prices falling by 5% in value terms in Sweden and Denmark. Norway, however, maintained a hig
Slide 36: 3
3 6