AF Gruppen reports high growth, varying profitability and a solid financial position

11 Nov 2022 07:00 CET

AF Gruppen (AFG) recorded growth of 18% for Q3 2022. Revenues amounted to NOK
7,537 million and profit before tax amounted to NOK 263 million in the quarter.

AF Gruppen's revenues were NOK 7,537 million (6,358 million) in the third
quarter and NOK 22,638 million (19,756 million) year to date. Profit before tax
was NOK 263 million (344 million) in the third quarter and NOK 898 million (945
million) year to date. This provided a profit margin of 3.5% (5.4%) in the third
quarter and 4.0% (4.8%) year to date. The order backlog was NOK 39,716 million
(40,391 million) at the end of the quarter.

AF Gruppen is in a strong financial position. Cash flow from operating
activities was NOK 272 million (380 million) for the third quarter of 2022. Net
operating cash flow was NOK 1,498 million (1,114 million) year to date. As at 30
September 2022, AF Gruppen had net interest-bearing receivables of NOK 254
million (-26 million). Earnings per share for the quarter were NOK 1.46 (NOK
2.08). The Board of Directors has proposed a divided of
NOK 4.00 (4.00) per share for the second half of the year.

“We've had a quarter marked by varying performance. In the third quarter, the
offshore business delivered solid growth and very good profitability, and in
demolition, environment and energy we also recorded very good results. We have
adjusted the project estimates significantly for the Swedish Betonmast units, so
overall we did not deliver profitability at the AF level,” says Amund Tøftum,
CEO of AF Gruppen.

AF imposes the same strict requirements on all partners and suppliers as for own
employees. Figures from subcontractors are included in the injury statistics.
The LTI rate for Q3 was 0.9 (0.8). So far this year, the LTI rate was 1.2 (1.1).


AF works systematically to avoid work-related absence. Sick leave for Q3 was
4.0% (4.2%). So far this year, sick leave has been 4.5% (4.6%).

“In today's market, it is important to have robust organisation, active risk
management and the ability to choose the right projects. We have a strong market
position and recently we have signed a number of solid contracts where we will
contribute to solving important societal challenges within infrastructure,
removal and transport. We are also well positioned within rehabilitation,
refurbishment and extensions,” says Tøftum.

Selected highlights from the quarter:

• Civil Engineering has high revenues, and the profit margin is good, despite
high prices on energy and raw materials. AF Anlegg has three major projects in
production, E6 Kristiansand vest–Mandal øst, Bergtunnlar Lovö in Stockholm and
E39 Rentvannstunnel i Oslo. Målselv Maskin & Transport and Consolvo continue to
deliver very good results.

• The Construction business area has a high level of activity, and a wide
variation in earnings of the units. Overall, profitability was unsatisfactory.
Profitability is negatively impacted by the price development for building
materials. AF Bygg Oslo, Strøm Gundersen Vestfold and Haga & Berg are
distinguished by very good results in the quarter.

• Overall, the profitability of Betonmast is unsatisfactory. Betonmast Romerike
delivered a very good result in the quarter. The units Betonmast Oslo, Betonmast
Trøndelag, Betonmast Asker and Bærum and Betonmast Østfold delivered good
results in the quarter.

• The Property business area had low sales in the quarter, and the reduced
demand after the summer is a result of what we see as a shift in sentiment in
the market. In the quarter a total of 89 (158) sales contracts were signed, of
which AF's share is 34 (77) units. So far this year 210 (428) sales contracts
have been signed, of which AF’s share is 88 (202) units. Rolvsrud Arena, was the
project that signed the most sales contracts in the quarter. There were seven
residential property projects in the production stage at the end of the quarter.
A total of 793 units are in production, of which AF’s share is 369. The sales
ratio for commenced projects was 83%.

• Energy and Environment delivered a very good result in the third quarter. AF
Decom, which demolishes and sorts various materials for recycling, still has
somewhat low activity, but also reports very good profitability in this quarter.
The AF Energy unit delivered a very good result in the third quarter. There is
increased demand and good market prospects for their energy-efficient solutions
for buildings and industry.

• The Sweden business area delivered a negative result overall in the quarter,
affected by adjustments to project estimates in the former Betonmast Sweden. A
review of the project portfolio of these units has been carried out. The review
has resulted in major downward adjustments to the profit expectations for
certain projects, mainly related to increased costs, both as a result of
increased material prices and own performance. Organisational changes were made
in the former Betonmast Sweden during the quarter. Kanonaden and AF Härnösand
Byggreturer continue to deliver very good results in the quarter. HMB performed
well and delivered good results for the quarter.

• Offshore had revenue growth of 84% compared to the 3rd quarter last year, and
very good profitability also this quarter. There has been high production with
good operational performance at the Environmental Base at Vats, and successful
execution of the offshore campaign in the quarter. AF Offshore Decom was awarded
a major removal and recycling contract for TotalEnergies EP Nederland in 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

More information:
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575457_AF Gruppen Q3 2022.pdf