AF Gruppen ends the year with strong cash flow and a robust order backlog

AF Gruppen's revenues were NOK 8,378 million (8,568 million) in the fourth quarter and NOK 30,530 million (31,205 million) in 2023. Profit before tax was NOK 292 million (502 million) in the 4th quarter and NOK 700 million (1,400 million) in 2023. This corresponds to a profit margin of 3.5% (5.9%) in the 4th quarter and 2.3% (4.5%) in 2023. The total order backlog was NOK 41,991 million (39,765 million) as at 31 December 2023.  

AF Gruppen is in a strong financial position. Net operating cash flow was NOK 855 million (-38 million) in the fourth quarter and NOK 1,552 million (1,460 million) for the full year. As at 31 December 2023, AF Gruppen had net interest-bearing liabilities of NOK 641 million (329 million). Earnings per share for 2023 were NOK 3.73 (8.96). The Board of Directors proposes a dividend for payment of NOK 3.50 (6.50) per share for the first half of 2024.

“During the quarter, we delivered very good profitability in Civil Engineering and Energy and Environment. Nevertheless, we are not satisfied with the overall results in the Group for the fourth quarter or for 2023 as a whole. The weak results in the quarter are due to significant write-downs in the Betonmast Boligbygg project portfolio and in the units that were formerly Betonmast Sweden, as well as further downward adjustment of the project estimate of one offshore project. It is positive that we have a robust order backlog with projects that provide valuable social benefits,” 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. The goal is zero serious injuries and work-related absence. Figures from subcontractors are included in the injury statistics. The LTI rate for the fourth quarter was 0.9 (0.9). For 2023, the LTI rate was 0.8 (1.1).

AF works in a systematic and targeted manner in order to avoid work-related absence. Absence due to illness for the 4th quarter was 4.2% (4.7%). For 2023, absence due to illness was 4.1% (4.6%).

“During the quarter, we delivered solid margin improvements in the Construction business area. We observe positive signals in the market, but the global situation still creates uncertainty, which could affect activity and profitability in the coming year. We are well positioned and have built leading expertise over time to deliver high quality, cost-effective projects with consideration for the environment. Combined with good adaptability and the capacity to deliver, we are well equipped when the market recovers in earnest,” says Tøftum.

Selected highlights from the quarter:

• Civil Engineering has a high level of activity and delivered very good results for the 4th quarter, with strong performances by several units. AF Anlegg reported a very good result, with significant revenue growth and solid profit contributions from several projects. Målselv Maskin & Transport and Stenseth & RS reported very good results and Consolvo delivered good results this quarter.
• The Construction business area reported a good result with increased profitability compared to the same quarter last year. AF Bygg Oslo, Strøm Gundersen, ÅBF and HTB reported very good results. AF Bygg Østfold and Strøm Gundersen Vestfold delivered good results in the quarter.
• Betonmast had a negative result and a reduced level of activity compared to the same quarter last year. The negative result in the quarter is mainly due to significant write-downs in the Betonmast Boligbygg project portfolio. The Betonmast Røsand and Østfold units delivered very good results, and Betonmast Innlandet and Asker og Bærum reported good results.
• Property reported a weak result for the quarter. Sales contracts for 12 (9) homes were signed in the quarter, of which AF’s share is 6 (3). So far this year, sales contracts have been signed for 53 (216) homes, of which AF’s share is 24 (89). In the 4th quarter, 110 homes were handed over at Fyrstikkbakken, and 2 homes were handed over at the completed project Brøter Terrasse. AF has a commercial building in the production stage at Baneveien 16 in Bergen, which also includes one residential unit. There were five residential property projects in the production stage at the end of the quarter. A total of 797 units are in production, of which AF’s share is 360. The sales ratio for commenced projects is 75%.
• Energy and Environment had significant revenue growth in the 4th quarter compared to the same quarter last year, and overall achieved very good results. Our environmental activities clean up and sort different materials for recycling. The foundation of our environmental activities is that waste can to a large extent be reused, and thus be a valuable resource in a growing circular economy. AF Decom reported revenue growth and contributed with a very good result. AF Energi had a significantly increased level of activity compared to the same quarter last year and delivered very good results.
• The Sweden business area, which includes AF’s Swedish operations in civil engineering, building, property and demolition, reported a negative result and a lower level of activity for the quarter compared to the same quarter last year. There is a wide range in the units’ performances this quarter and for 2023 as a whole. The negative result for the business area in the quarter is due to further downward adjustments in the project estimates for AF Bygg Väst, AF Bygg Öst and AF Anläggning Väst. Goodwill was written down by NOK 20 million in the fourth quarter. Several other Swedish units reported very good results for the 4th quarter: Kanonaden, AF Prefab i Mälardalen, AF Bygg Syd and AF Härnösand Byggreturer. HMB delivered good results this quarter.
• Offshore had a negative result and a reduced level of activity compared to the same quarter last year. AF Offshore Decom, which demolishes and facilitates the recycling of offshore installations, delivered a negative result for the quarter, which in its entirety is related to further downward adjustment of the project estimate of one project. Aeron maintained a high level of activity and reported very good profitability for the quarter.