AF Gruppen (AFG) delivered good growth, but weak results for the first quarter
of 2023. Profitability was negatively impacted by downward adjustments in the
Swedish construction portfolio. Revenue increased by 9 % in the quarter to NOK
7,393 million, compared with the same quarter last year, while profit before tax
was NOK 13 million.
Revenue for the first quarter was NOK 7,393 million (6,809 million) and profit
before tax amounted to NOK 13 million (209 million). This corresponds to a
profit margin of 0.2 per cent (3.1 per cent). The order backlog was worth NOK
41,895 million (42,697 million) at the end of the quarter.
There were further downward adjustments of project estimates in the Group's
Swedish operations in the quarter. The project estimates are revised downwards
by approximately NOK 230 million, and relate to the business units in the former
Betonmast Sweden. Of the Swedish business area's total order backlog of NOK
7,645 million as of 31 March 2023, the order backlog for the abovementioned
units was over NOK 2,097 million. The remaining production value of loss making
projects in the former Betonmast Sweden is NOK 940 million.
"We delivered weak results in the first quarter as a result of challenges in
some of our Swedish units, as well as weak profitability in the construction
business area. The industry is experiencing a demanding construction and
property market, however the results are primarily due to our own performance.
This has resulted in downward adjustments in our Swedish portfolio for the
quarter. We will ensure the best possible execution of these projects," said
Amund Tøftum, CEO of AF Gruppen.
AF Gruppen is in a solid financial position. Cash flow from operating activities
was NOK -24 million (607 million) in the first quarter of 2023. As of 31 March
2023, AF Gruppen had net interest-bearing liabilities of NOK 570 million (-371
million). Earnings per share for the quarter were NOK -0.03 (NOK 1.39). The
Board has proposed to the General Meeting of shareholders a dividend of NOK 6.50
(6.50) per share for distribution during the first half of 2023.
AF imposes the same strict requirements on all its partners and suppliers as it
does on its own employees. Everyone shall get home safely from our projects, and
figures from subcontractors are included in the injury statistics. The LTI rate
for the first quarter was 1.4 (0.9). The company works in a systematic and
targeted manner in order to avoid work-related absence, and sick leave for the
first quarter was 4.4 per cent (5.5 per cent).
"There were many strong performances in the quarter, especially within the
Offshore and Civil Engineering business areas. We have a solid order backlog
with large, complex projects of high social benefit. Our base principles for the
business remain unchanged, as good safety work is a prerequisite for profitable
growth. It is pleasing to see that there was a positive development in sick
leave during the quarter," Tøftum said.
Selected highlights from the quarter:
o Civil Engineering increased the level of activity in the first quarter and
delivered good results. AF Anlegg had two major projects in production at the
end of the quarter: E6 Rentvannstunnel in Oslo and Bergtunnlar Lovö in
Stockholm. Both of these projects have a high level of activity and good
operations. Several other projects also contributed good results for the
quarter. AF Anlegg has two major projects that are in the early start-up phase:
The E1 Vannbehandlingsanlegg at Huseby in Oslo and Kabeltunnel Sogn and Ulven in
Oslo. AF Anlegg delivered good results for the first quarter. Målselv Maskin &
Transport had strong revenue growth and a very good result in the first quarter,
and Stenseth & RS also reported a good result.
o The Construction business area had stable revenues during the first quarter,
but delivered weak results in total for the quarter. The market is demanding and
there are significant variations in terms of results and performance at project
and unit level. Strøm Gundersen and AF Bygg Østfold delivered good results in
the first quarter.
o Overall, Betonmast reported revenue on the same level as the previous year.
Although the result for the quarter was weak, it was an improvement when
compared with the first quarter of last year. The Betonmast Romerike,
Trøndelag, Røsand and Asker and Bærum units delivered good results in the
quarter.
o The Property business area had low sales of residential homes in the quarter.
Rising interest rates and economic instability have resulted in a challenging
property market, which contributed to the low sales during the quarter. Sales
contracts for 20 (57) homes were signed in the quarter, of which AF's share is 9
(26). There were seven residential property projects in the production stage at
the end of the quarter. A total of 940 units are in production, of which AF's
share is 438. The sales ratio for commenced projects was at 78 per cent. AF also
has a significant development portfolio in Norway which is estimated at 1,580
(1,658) residential units. AF's share of this was 788 (802) residential units.
o Energy and Environment had a higher level of activity in the first quarter
when compared to the same quarter last year, however the overall results
reported were below expectations. AF's demolition business, AF Decom, reported a
low level of activity for the quarter and delivered a weak result. AF Energy
reported significant revenue growth in the quarter, and a high level of activity
and good operational performance in the projects contributed to a very good
result in the first quarter.
o AF's Swedish operations in respect of civil engineering, construction,
property and demolition are combined in the Sweden business area. Sweden
reported a negative result that was a consequence of further downward
adjustments of the project estimates in the Group's Swedish business. The
project estimates have been adjusted downwards by approximately NOK 230 million,
excluding VAT, and relate to the business units in former Betonmast Sweden. The
projects included in the downward adjustment have a remaining production value
of NOK 940 million, excluding VAT. AF Prefab in Mälardalen and AF Härnösand
Byggreturer both achieved revenue growth and very good results for the quarter.
Kanonaden, AF Bygg Syd and HMB made positive profit contributions, however
delivered somewhat below expectations in the quarter.
o There was a significant increase of 32 % in revenue for the Offshore business
area compared to the first quarter last year, and the business area delivered
good results that were on par with the previous year. AF Offshore Decom had a
high level of activity compared to the same quarter last year and reported good
profitability. A high level of activity at Miljøbase Vats also contributed to
the good result for the quarter. Aeron had a high level of activity and good
profitability for the quarter.
For further information:
Amund Tøftum, CEO, mobile +47 920 26 712
Anny Øen, CFO, mobile +47 982 23 116
Knut Ekern, Director Corporate Communications, mobile +47 930 02 600
www.afgruppen.no