AF Gruppen with strong growth and healthy result

Revenues for Q4 were NOK 5,656 million (4,296 million) and earnings before tax were NOK 373 million (310 million). This corresponds to a profit margin of 6.6% (7.2%).

AF Gruppen’s revenues in 2018 were NOK 18,767 million (13,704 million). Preliminary profit before tax for 2018 was NOK 1,136 million (935 million), corresponding to a profit margin of 6.1 per cent (6.8 per cent).

A good order intake in 2018 resulted in an order backlog of NOK 21,541 million (19,773 million) at year-end. 

The civil engineering market in Norway is good and not very sensitive to cyclical fluctuations, since public sector demand is the greatest driver behind investments in civil engineering in Norway. Revenues were NOK 5,861 million (3,569 million) and earnings before tax were NOK 293 million (269 million) for 2018. Civil Engineering had a very high level of activity and a growth in revenues of 64% in 2018. Growth was organic.

In 2018 there was a high level of activity and growth in Building. The activity level is expected to remain stable into 2019. Revenues for the year amounted to NOK 9,055 million (7,474 million), and earnings before tax amounted to NOK 645 million (481 million).

Activity levels were high in 2018 with numerous ongoing projects in the residential market. A hesitant housing market may impact the number of new building starts. Property has a high level of activity and numerous projects under construction. This provided good results for 2018. Property reported earnings before tax of NOK 157 million (64 million) in 2018. Earnings for the year include the sale of commercial property at Hasle in Oslo.

The market is good for both Environment and Energy. Environment reported revenues of NOK 598 million (474 million) and a good result before tax of NOK 43 million (27 million) in 2018. Energy reported revenues of NOK 277 million (244 million) and a poor result before tax of NOK -2 million (22 million) in 2018. As of 2019 Energy and Environment will be organised and report as one business area.

The market for the removal and recycling of oil platforms is characterized by strong competition and few removal contracts for execution in 2018 and 2019. In the course of the autumn, several new contracts have been signed. The offshore campaign for these projects will only be implemented from 2020 and onwards. Revenues for 2018 were NOK 655 million (664 million) and earnings before tax were NOK -27 million (49 million).

There is strong competition in the Swedish construction market, and the residential market is more hesitant than in Norway. The market for environmental services is also good in Sweden. Sweden reported revenues of NOK 2,270 million (1,611 million) and earnings before tax of NOK 113 million (82 million). After the end of the quarter AF Gruppen has concluded an agreement to acquire 70 per cent of the shares in HMB Holding AB (HMB). HMB constructs both commercial buildings and housing in Stockholm/Mälardalen, as well as in Dalarna, Västmanland, Uppland and Gästrikland.

AF Gruppen is in a very strong financial position. Net operating cash flow was NOK 582 million (325 million) in Q4 and NOK 841 million (1 354 million) in 2018. As at 31 December 2018, AF Gruppen had net interest-bearing receivables of NOK 894 million (1,210 million). Earnings per share for 2018 were NOK 7.88 (6.43). The Board of Directors has proposed a dividend of NOK 5.00 (5.00) per share for the first half of 2019.

AF imposes the same strict requirements on all its partners and suppliers as on its own employees. Figures from the subcontractors are included in the injury statistics. The LTI rate for the fourth quarter was 0.6 (1.1). For 2018, the LTI rate was 0.8 (1.1).

AF works systematically to avoid work-related absence. The goal is overall sickness absence of less than 3.0 per cent. Sickness absence in Q4 was 3.3% (3.0 %), and for 2018 it was 3.3% (3.0%).

“AF Gruppen’s result for 2018 shows that we are on track to achieve our ambitions for profitable growth and revenues of NOK 20 billion in 2020. In 2018 we have seen significant organic growth in both Civil Engineering and Building. In addition, the acquisitions of western Norwegian contractor HTB in Q4 and the Swedish contractor HMB after the end of the year provide a good foundation for structural growth going forward. With earnings before tax for the year amounting to NOK 1,136 million and a profit margin of 6.1%, there are a lot of employees who should be thanked.

Distinct core values, risk management and systematic work on health, safety and the environment are a part of AF’s culture. Despite being able to look back on a year with a low injury rate, the fatal accident on the Tvedestrand-Arendal project in May has affected us. Our responsibility is to learn from our mistakes and implement measures that reinforce the barriers towards adverse events such that similar accidents do not happen again. Good value creation must not be at the expense of safety and ethics,” says CEO Morten Grongstad of AF Gruppen.

www.afgruppen.com/investor