AF Gruppen with low profitability in the second quarter of 2024

30 Aug 2024 07:00 CEST

AF Gruppen (AFG) recorded second quarter revenues of NOK 7,651 million. Profit
before tax was NOK 21 million in the second quarter, corresponding to a profit
margin of 0.3%. The Group delivered good results in Civil Engineering and
Energy and Environment, but downward adjustments made to the estimated results
for one offshore project reduced the result for the Group.

Revenues for the second quarter totalled NOK 7,651 million (7,853 million) and
amounted to NOK 14,838 million (15,246 million) for the first half of the year.
Profit before tax was NOK 21 million (292 million) in the second quarter and NOK
207 million (305 million) for the first half of the year. This resulted in a
profit margin of 0.3% (3.7%) for the second quarter and 1.4% (2.0%) for the
first half of the year. AF Gruppen had an order intake of NOK 5,629 million
(10,877 million) in the second quarter and an order backlog of NOK 38,253
million (44,693 million) at the end of the quarter.

“AF Gruppen maintained a high level of activity in the quarter, but the result
is impacted by downward adjustments made to the estimated results for one of the
Group’s offshore projects. The quarter includes several strong performances,
especially in the areas of Civil Engineering and Energy and Environment. It is
gratifying to see continued positive trends in safety performance and sick
leave,” says Amund Tøftum, CEO of AF Gruppen.

Net operating cash flow was NOK 661 million (227 million) in the second quarter
of 2024 and NOK 789 million (203 million) for the first half of the year. As at
30 June 2024, AF Gruppen had net interest-bearing liabilities of NOK 979 million
(1,582 million). Earnings per share amounted to NOK -0.07 (NOK 1.72) during the
second quarter, and NOK 1.23 (NOK 1.69) for the first half of the year.

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 second quarter was 0.4 (0.7). For the first six
months of 2024 the LTI rate was 0.6 (1.1).

AF works in a systematic and targeted manner to avoid work-related absence. Sick
leave in the second quarter was 3.6% (3.9%), and for the first six months of
2024 was 4.1% (4.2%).

“In recent years, the construction industry has experienced a high level of
uncertainty regarding market forces that affect activity and employment for most
players in the industry. To stimulate increased activity and profitability, the
whole industry must work together to strengthen interaction, innovation and
productivity throughout the value chain,” says Tøftum.

Selected highlights from the quarter:

• Civil Engineering significantly increased activity in the 2nd quarter with a
revenue growth of 59% compared to the same quarter last year. AF Anlegg had
another quarter of record-high revenue and delivered good results. The unit has
a solid project portfolio with several major projects in production, and there
is a high level of activity and good operational performance in the projects in
general. Målselv Maskin & Transport, Stenseth & RS and VSP reported very good
results for the 2nd quarter.

• Construction saw a decline in revenue of 15% in the 2nd quarter compared with
the same quarter last year. AF Bygg Østfold, Strøm Gundersen, Strøm Gundersen
Vestfold and Haga & Berg delivered very good results for the quarter, while AF
Byggfornyelse and ÅBF reported good results.

• Betonmast reported a weak result for the quarter. Betonmast Røsand, Innlandet
and Østfold units delivered good results for the quarter. Betonmast Romerike and
Buskerud-Vestfold reported results somewhat below expectations and Betonmast
Asker og Bærum delivered results below expectations. Betonmast Boligbygg, Oslo
and Trøndelag reported weak results this quarter.

• Property reported a weak result for the quarter. A challenging property market
with high interest rates and uncertain market sentiment continues to contribute
to low sales figures. Sales contracts for 21 (16) homes were signed in the
quarter, of which AF’s share is 10 (7). In the 2nd quarter, a total of 132 homes
were handed over, mainly in the projects Skårersletta MIDT and Bekkestua Have.
There were a total of 41 (4) completed unsold units at the end of the quarter,
of which AF's share was 21 (1). There were three residential property projects
in the production stage at the end of the quarter. A total of 589 units are in
production, of which AF’s share is 246. This gives a sales ratio of 68% for
commenced projects.

• Energy and Environment increased its level of activity by 19 % in the second
quarter, compared with the same quarter last year, and reported good
profitability. AF Energi has significantly increased activity compared to the
same quarter last year. A high level of activity and good operational
performance in many projects contributed to a good result for the 2nd quarter.
AF Energi completed the purchase of 70% of the shares in ETA Norge, a contractor
in bioenergy, during the quarter. AF Decom had a high level of activity compared
with the same quarter last year and delivered good results for the 2nd quarter.

• There are still significant variations in the results from Sweden. AF Prefab i
Mälardalen delivered very good results for the 2nd quarter, while Kanonaden and
AF Härnösand Byggreturer reported good results. The former Betonmast Sweden
companies had negative results also this quarter. AF Anläggning Väst has now
been discontinued.

• The Offshore business area delivered a negative result for the quarter.
Further downward adjustments have been made to the estimated results for one
project in AF Offshore Decom carried out on the Dutch continental shelf. The
estimate was revised down by NOK 240 million excl. VAT. This project was also
mentioned and had a downward adjustment in the second half of 2023. Aeron has
increased activity compared to the same quarter last year and reported good
profitability for the quarter.

For further information:
Amund Tøftum, CEO, mobile +47 920 26 712
Anny Øen, CFO, mobile +47 982 23 116
Knut Ekern, Communications Director, mobile +47 930 02 600.
www.afgruppen.no

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626651_AF Gruppen Quarterly Report Q2 2024.pdf