Strong safety performance and high order backlog in the third quarter

AF Gruppen's revenues were NOK 6,907 million (7,537 million) in the third quarter and NOK 22,152 million (22,638 million) year to date. Profit before tax was NOK 103 million (263 million) in the third quarter and NOK 408 million (898 million) year to date. This provided a profit margin of 1.5 % (3.5 %) in the third quarter and 1.8 % (4.0 %) year to date. The order backlog was NOK 41,864 million (39,716 million) at the end of the quarter. 

AF Gruppen is in a strong financial position. Cash flow from operating activities was NOK 494 million (272 million) for the third quarter of 2023. Cash flow from operating activities was NOK 697 million (1,498 million) year to date. As at 30 September 2023, AF Gruppen had net interest-bearing liabilities of NOK 1,381 million (-254). Earnings per share for the quarter were NOK 0.43 (NOK 1.46). In order to maintain strategic flexibility, the Board has decided not to distribute dividends for the second half of 2023.

"AF Gruppen delivered results below expectations in the third quarter, and we have varying performances in our units. The challenges in Sweden continue, and we have made a downward adjustment of the project estimate for one offshore project. Despite this, many units are delivering solid performances, with strong profit contributions from the Civil Engineering and Energy and Environment business areas," says Amund Tøftum, CEO of AF Gruppen.

AF imposes the same strict safety requirements on all its partners and suppliers as it does on its own employees. AF’s subcontractors are included in the injury statistics. The LTI rate for the third quarter was 0.0 (0.9). So far this year, the LTI rate was 0.8 (1.2).

AF works in a systematic and targeted manner to avoid work-related absence. Absence due to illness in the third quarter was 3.9 % (4.0 %). So far this year, absence due to illness has been 4.1 % (4.5 %).

"The AF culture is characterised by systematic work on health, safety and the environment. Safety is our number one priority at AF, and our goal is for everyone to get home safely from work every day. It is gratifying that the trend in serious incidents is moving in the right direction and that we have finished a quarter without LTI incidents. This shows that our goal of zero work-related absence or serious incidents is achievable, but this requires us to maintain good risk management and a high level of compliance throughout the organisation," says Tøftum.

 

Selected highlights from the quarter:

• The Civil Engineering business area had a high level of activity and delivered very good results for the third quarter, with strong performances from several units. AF Anlegg had strong revenue growth in the third quarter, with solid profit contributions from several projects. AF Anlegg has several major projects in production, and in general there is a high level of activity and good operational performance in the projects. Målselv Maskin & Transport and Stenseth & RS reported revenue growth and very good results for the third quarter.
• The Construction business area achieved profitability on par with the same quarter last year. Strøm Gundersen, Strøm Gundersen Vestfold and Åsane Byggmesterforretning delivered very good results for the third quarter. AF Byggfornyelse, AF Bygg Østfold and Haga & Berg achieved good results.
• Betonmast reported a decline in revenue compared with the same quarter last year and a weak result for the quarter. The Betonmast Røsand, Asker and Bærum and Østfold units delivered good results for the quarter. After the end of the quarter, Betonmast Trøndelag signed a contract with Sit (the Student Welfare Organisation in Gjøvik, Ålesund and Trondheim) to build 724 student housing units in Trondheim valued at approximately NOK 930 million excluding VAT. 
• The market sentiment for the Property business area is poor. Rising interest rates have a negative impact on housing sales and have contributed to low sales figures in the quarter. Sales contracts for 5 (89) homes were signed in the quarter, of which AF’s share is 2 (34). So far this year, sales contracts have been signed for 41 (210) homes, of which AF’s share is 19 (88).  There were six residential property projects in the production stage at the end of the quarter. A total of 920 units are in production, of which AF’s share is 422. The sales ratio for commenced projects was 77 %.
• Energy and Environment increased its level of activity in the third quarter by 46 % compared with the same quarter last year, and overall achieved a good result. AF Energi reported significant revenue growth for the quarter, and a high level of activity and good operational performance in the projects contributed to a good result in the quarter. AF Decom had a higher level of activity in the third quarter compared with the same quarter last year and delivered a good result.
• Overall, the Sweden business area had a weak, negative profit before tax this quarter. There is a wide range in the units' performance. AF Prefab in Mälardalen and AF Härnösand Byggreturer, reported very good results in the quarter. Kanonaden and HMB delivered good results. Organisational and structural changes have been made in the third quarter. AF Bygg Stockholm is now part of AF Bygg Öst and AF Öresund is organised under AF Bygg Syd.
• Offshore had a negative result this quarter. AF Offshore Decom delivered a negative result, which in its entirety is related to a downward adjustment of the project estimate for one project. Aeron maintained a high level of activity but delivered profitability somewhat below expectations for the quarter.