Vis børsmeldingen
https://channel.royalcast.com/nrcgroup/#!/nrcgroup/20200818_1
A Q&A session will be held at 11.00 AM (CET), and participants can ask questions
via the moderator.Participants dial-in numbers:
NO: +47 2350 0296
SE: +46 (0)8 5065 3942
FI: +358 (0)9 7479 0404
DK: +45 3515 8121
UK: +44 (0)330 336 9411
US: +1 929 477 0448
Below you will find highlights and a summary from the report.
REVENUE
· NOK 1.66 billion (NOK 1.55 billion in Q2 2019)
EBITA*
· NOK 27 million (NOK 51 million in Q2 2019)
· Impacted by cost related to overcapacity in Finland
ORDERS
· Order intake of NOK 1.3 billion
· Order backlog of NOK 7.5 billion
LIQUIDITY
· Cash flow from operations of NOK 31 million
· Cash position of NOK 691 million
REVISED FINANCIAL TARGETS
· EBITA margin 2020 between 1.5% - 2.0%
· EBITA margin 2021 up towards 4.0%
· Long term ambition in 2024 maintained
Comments on second quarter and first half 2020 results
Second-quarter revenue was NOK 1,661 million compared to NOK 1,551 million
reported for the same period of 2019. The revenue increase was 7% in the quarter
due to positive currency effects. Group EBITA* was NOK 27 million compared to
NOK 51 million for the same period last year. The EBITA* margin was 1.6% (3.3%),
which includes increased production overhead in Finland as a result of
overcapacity of personnel and lower utilisation of machines. The EBITA* margin
in the quarter was also affected by execution of zero margin projects following
project margin adjustments in the fourth quarter of 2019.
Implementation of improvement measures aimed to professionalise the organisation
and strengthening the tendering process, risk assessment and project execution
continues. The NOK 55 million overhead cost reduction in Norway and Sweden is on
track. Overcapacity in Finland has however led to higher production overhead
than expected. During the second half of 2020, additional measures will be
implemented in Finland to improve profitability and to achieve a more flexible
cost base.
Revenue for the first six months of 2020 was NOK 2,915 million compared to NOK
2,681 in the first half of 2019, an increase of 9%. EBITA* amounted to NOK -27
million compared with NOK -3 million in first half of 2019.
Revenue in Norway was NOK 476 million compared to NOK 545 million in the second
quarter of 2019. The organic growth was -13%. In Civil construction the activity
level was lower compared with same quarter last year, mainly due to lower win
rate in tenders in 2020. The activity level in Rail was as expected. EBITA* was
NOK 27 million, compared to NOK 43 million in the same period of 2019. Civil
construction continued to deliver good margins even if some of the projects were
negatively affected by Covid-19. Environment deliver strong margins, but
somewhat lower than last year. The improvement program in Rail progressed
according to plan.
Revenue from the Swedish operation amounted to NOK 487 million for the quarter
compared to NOK 411 million in the same period of 2019. The organic growth was
5%. EBITA* was NOK -13 million compared to NOK -24 million in 2019. The EBITA*
was affected by execution of zero margin projects following project margin
adjustments in 2019. The improvement program in Sweden is on track.
Finland had revenue of NOK 700 million, compared to NOK 601 million in the
second quarter of 2019. The organic growth was 3% in the quarter driven by light
rail projects. The EBITA* was NOK 19 million in the quarter compared to NOK 45
million in the same period of 2019. Revenues and profitability were affected by
the completion of the maintenance area 1 contract by the end of March 2020. In
addition, EBITA was lower than expected as a result of increased production
overhead, including lower utilisation of machines due to lower activity in core
Rail construction. This has impacted the results negatively in Maintenance and
in core rail operations. The core rail construction activity has been lower than
expected due to fewer tenders in the market. Additional measures, which is
estimated to include layoff of approximately 60-80 FTEs, will be implemented in
the second half of 2020 to reduce costs and increase the flexibility of the cost
structure going forward. The measures are expected to have full effect from
second quarter of 2021.
Group operating profit (EBIT) for the quarter was NOK 12 million compared to NOK
30 million last year. EBIT for the second quarter included NOK 2 million of
other income compared to M&A expenses of NOK 4 million in the same period of
2019. Net financial items amounted to NOK -18 million for the quarter, compared
to NOK -19 million for the same period last year. The group has a 20% interest
in a joint venture sharing risks and rewards of two larger projects with Astaldi
and Gülemark in connection with the Station Haga in Gothenburg. The projects are
complex with substantial risk, hence net income from the project has been
reported at zero.
The order backlog amounted to NOK 7,526 million at 30 June. Second-quarter order
intake was NOK 1,307 million, split on announced contracts of NOK 554 million
and unannounced order intake of NOK 753 million, partly offset by NOK 168
million of negative currency adjustments due to NOK strengthening vs. SEK and
EUR in the quarter.
In Norway, new orders included an appointed contract of NOK 199 million by Bane
NOR, for preparatory works for the new ERTMS signalling system on Bergensbanen,
Flåmsbanen and Randsfjordbanen.
In Sweden, NRC Group was appointed a contract of SEK 65 million for track,
electro and signal/telecom work on the railway connection between Lund and
Arlöv, and a SEK 69 million contract for building a new station at Lustån,
located on the railway connection between Avesta and Hedemora. New orders in
Finland included a three- year maintenance contract in Northern Finland valued
at approximately EUR 16.1 million.
Tendering activity remains high in Norway and Sweden, while activity in Finland
has been lower than expected. The company has identified a total adressable
tender pipeline of approximately NOK 19 billion for the next nine months. This
compares to an approximately NOK 18 billion tender pipeline three months ago.
The Norwegian market remains active with several ongoing tenders. In June, the
Parliament approved the revised national budget which included approximately net
NOK 550 million of extra allocations to existing investment projects in 2020 in
addition a previously approved NOK 200 million increase to maintenance and
renewal spending. There is broad political support for improving the national
railway system with NOK 27 billion allocated to the railway sector in 2020, up
close to 5% from the revised 2019 budget.
In Sweden, tendering activity remains strong with several ongoing tenders, but
at fierce price competition. The Swedish national budget forecasts SEK 13.6
billion in new investments for 2020, up 30% from 2019, and maintenance
investments, including renewal and reinvestments, of SEK 10.2 billion, an
increase of 1%. In 2021, new investments, upgrades and maintenance spending are
expected to grow by 19% in total. The sum of planned spending for the three
coming years is estimated to exceed the average annual level for the NTP plan
period.
In Finland, the expectation in the beginning of the year was that the
addressable market would grow to EUR 0.89 billion in 2020. The main drivers for
the growth was expected to be by light rail projects and an expected increase in
renewal and reinvestment activities, based on Governmental decisions from 2019.
NRC is already taking part in the ongoing light rail projects in the market.
Tender activity and updated tender pipeline so far this year, does not reflect a
market growth in line with expectations at the start of the year, for 2020. In
June, The Central Government of Finland announced a supplementary budget for
rail investments for the MAL (land, housing and transport) agreement 2020 - 2031
for the Helsinki area. The MAL agreement represents a total of EUR 1 billion for
investments in infrastructure, whilst the supplementary budget estimates EUR 500
- 600 million in rail investments from 2021 and onwards. This supports the long
-term market growth expectations as previously communicated.
In February, NRC Group presented its strategy update to position NRC Group as a
Nordic leader in sustainable infrastructure. NRC Group has established a clear
strategic roadmap with the ambition of NOK 10 billion in revenues and 7% EBITA
margin in 2024. This implies a return to the 2016-2017 average margins, with the
main uplift to come from internal improvements. Several measures have been
implemented to restore profitability and create the groundwork for continued
organic growth and expansion with complementary services.
The revenue ambition reflects an extensive group-wide process built on expected
annual growth of 9% for the Nordic rail services market, organic growth and
expansion opportunities in complementary services, and bolt-on M&As in existing
segments and services. The Group is positioned to benefit from large and growing
infrastructure markets that are supported by strong macro trends such as
sustainability, population growth and urbanisation, and political consensus for
increased investments in Norway, Sweden and Finland.
Update on Covid-19
In the first quarter, NRC Group immediately implemented new guidelines and
policies to handle Covid-19 outbreaks to safeguard the health and safety of its
employees and to maintain business operations.
NRC Group continues to monitor the development of the pandemic and its potential
impact on the industry and the company’s business. The main risks are related
potential operational impact if outbreaks intensify and restrictions are
resumed. NRC Group will follow up with immediate actions if relevant and needed.
Operations also depend on that customers, predominantly the public transport
agencies and the municipalities in Norway, Sweden and Finland, continue to
announce and award tenders as scheduled to enable efficient planning and
execution of projects during 2020 and 2021. Most tender processes are
progressing as normal. Covid-19 has had limited negative financial effect as per
end of June.
Part of NRC Group’s activities are related to maintenance and upgrades of
existing railway infrastructure. These operations are defined as critical to the
society, and the company will prioritise these activities in case of situations
where certain resources become scarce. NRC Group is well positioned to ensure
business continuity.
Outlook
NRC Group continues focus on implementation of the updated strategy and
improvement measures to restore profitability. The long-term ambitions stand
firm based on a positive market outlook.
NRC Group expects revenue for the full year 2020 to be in line with 2019. For
2020, the Group expects an EBITA margin between 1.5% and 2.0%. This compares to
a previous margin target exceeding 2.8% for the year. The adjustment is related
to higher production overhead due to overcapacity in Finland, and lower revenue
in Civil Norway leading to lower results.
For 2021, the Group targets an EBITA margin up towards 4% based on existing
order book and tender pipeline. The ambition level for 2024 is unchanged.
The second quarter and first half 2020 result report and result presentation can
be found attached and will be available on the company’s homepage:
www.nrcgroup.com.
For further information, please contact Dag Fladby, Chief Financial Officer, NRC
Group ASA on tel: +47 90 89 19 35.
This information is subject of the disclosure requirements pursuant to section 5
-12 of the Norwegian Securities Trading Act.
Kilde
