Veidekke ASA (Oslo Stock Exchange: VEI) is conducting a capital markets update
today where concrete targets for profitability, capital efficiency and safety
will be presented. Veidekke's overarching objective is to restore a business
with strong profitability in the property development, building construction,
civil engineering and industrial operations. The implemented measures are
intended to bolster Veidekke's position in key markets, boost profitability and
enable Veidekke to continue to offer shareholders an attractive dividend in the
years ahead.
"Following a period of strong growth in most of our operations, Veidekke will
now give priority to improving results, rather than further expansion. Various
profit-enhancing measures have already been implemented. In combination with
other improvement projects, we expect these measures to impact positively on
profitability across the group. Our primary aim until 2020 is to increase
profitability, and thereafter to further lift performance in the period to
2022," says group CEO Arne Giske.
The specific financial targets presented in the capital markets update are:
· Increase profit margin to above 4.5% by 2022
· Annual revenue growth estimated at 3%-5% in the period to 2022
· Halving the total investment level in 2019 to NOK 500-600 million
· Reduce capital employed by NOK 2-3 billion compared to current level
"At the same time as improving margins, we will cut tied-up capital by reducing
fixed and current assets and accelerating the turnover rate of the property
development business. Together with improved results, this will help increase
returns and ensure that we can continue to offer shareholders an attractive
dividend in the years ahead," continues Arne Giske.
Several Veidekke units have solid results, but in recent years, profitability
has declined in parts of the operation. During the capital markets update,
Veidekke will present several business-level measures to boost results.
Following several years of strong residential sales growth and good results, the
property development operation has reported a weakening residential market, with
fewer sales and building starts, particularly in the Stockholm region.
· In Sweden, Veidekke's short-term priority is to sell residential units
under construction while simultaneously developing selected projects for sale
and adjusting activity and cost levels on an ongoing basis.
· Exploit the strong market in Norway by maintaining a high level of project
starts and transactions.
The building construction operation will adopt a stronger focus on major cities
and population centres:
· Building construction Norway will change from being a generalist builder to
a product specialist in the residential, office buildings and schools segments.
· Raise the margin level in general, and complete the special improvement
programme for residential construction projects in the Stockholm region
· Strengthen Hoffmann's position as a leading developer and construction
company for commercial buildings in Denmark
The civil engineering operation in Norway has adopted new priorities to boost
profits and reduce risk:
· Stricter project selection
· Significant reduction in tied-up capital
· Strengthened management team and staff expertise
The industrial operation aims to regain profitability by 2020, through special
measures targeting the asphalt and road maintenance operations.
· The turnaround project concentrating on the road maintenance operation is
producing promising results
· Improved capital utilisation and an improved pricing strategy will help
boost the profitability of the asphalt operation
"Veidekke has around 8,500 employees, half of whom are also shareholders in the
company. Together, we are custodians of a proud heritage going back to 1936.
With the measures presented today, the group's foundation for efficient
operation and increasing value creation in Scandinavia will be reinforced for
many years to come," concludes group CEO Arne Giske.
Presentation and webcast
The capital markets update and the Q1 2019 results will be presented at
Veidekke's head office at Skabos vei 4, Skøyen, Oslo, at 08:30 today. A live
webcast will be available on www.veidekke.com, and it will be possible to submit
questions online.
For press photos, see www.flickr.com/photos/veidekke, for more information,
contact:
Group CEO Arne Giske, tel. +47 905 89 526
CFO Jørgen G. Michelet, tel. +47 917 43 856
Executive Vice President Communications and Public Affairs Lars Erik Lund, tel.
+47 413 31 369
This information is subject to the disclosure requirements pursuant to section 5
-12 of the Norwegian Securities Trading Act.
Subscribe to notices from Veidekke (http://veidekke.com/no/borsmeldinger/abonner
-pa-meldinger/)
Veidekke is one of Scandinavia's largest construction and property development
companies. The company undertakes all types of building construction and civil
engineering contracts, develops residential projects, maintains roads, and
produces asphalt and aggregates. The company is known for its involvement and
local knowledge. Its annual turnover is NOK 36 billion, and half of its 8,500
employees own shares in the company. Veidekke is listed on the Oslo Stock
Exchange and has always posted a profit since it was founded in 1936.