Vis børsmeldingen
The result presentation is available on the following webcast link:
https://channel.royalcast.com/nrcgroup/#!/nrcgroup/20201109_1
A Q&A session will be held at 10.00 AM (CET), and investors, analysts and
journalists are welcome to participate.
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 0402
Below you will find highlights and a summary from the report.
REVENUE
· NOK 1.96 billion
· 6% growth due to currency effects
EBITA*
· NOK 88 million
· Strong profitability in Finland
ORDERS
· Order intake of NOK 1.2 billion
· Order backlog of NOK 6.8 billion
LIQUIDITY
· Solid cash flow from operations of NOK 129 million
· Cash position of NOK 606 million
Comments on third quarter 2020 results
Third quarter revenue was NOK 1,956 million compared to NOK 1,850 million
reported for the same period of 2019. The revenue growth was 6% in the quarter
due to positive currency effects. Group EBITA* was NOK 88 million compared to
NOK 105 million for the same period last year. The EBITA* margin was 4.5%.
Revenue in Norway was NOK 541 million compared to NOK 683 million in the third
quarter of 2019. The organic growth was -21%. The negative growth is mainly
explained by lower activity in Civil construction due to lower win rate in
tenders this year. EBITA* was NOK 16 million, compared to NOK 52 million in the
same period of 2019. EBITA* margin was 3.0%, down from 7.6% in the third quarter
last year. Lower revenue in Civil construction reduced the overall margin. In
addition, the EBITA margin in parts of the Environmental division was lower than
expected.
Revenue from the Swedish operation amounted to NOK 583 million for the quarter
compared to NOK 460 million in the same period of 2019. The organic growth was
13% mainly driven by Rail construction. Several of the zero margin projects,
following the project adjustments in Q4 2019, are in the final completion stage.
Due to higher than expected production costs, additional write-downs of NOK -35
million are made in the quarter. Lower overhead costs and positive development
in other projects off-set parts of the write-downs. EBITA* was NOK -7 million
compared to NOK 2 million in 2019. The EBITA* margin in the third quarter was
-1.2%.
Finland had revenue of NOK 831 million compared to NOK 712 million in the third
quarter of 2019. The organic growth was 8% in the quarter mainly driven by high
activity in the light rail projects. The EBITA* was NOK 84 million compared to
NOK 55 million in the same period of 2019. EBITA* margin was 10.1% in the
quarter, an increase from 7.8% last year, mainly explained by improved margins
in the light rail projects. In the second quarter, the profitability was
negatively affected by too high production overhead due to overcapacity as the
activity level was lower than expected. Measures to reduce costs and to increase
flexibility in the cost base are being implemented and are expected to have full
effect from the second quarter of 2021.
Group operating profit (EBIT) for the quarter was NOK 70 million compared to NOK
80 million last year. EBIT for the third quarter of 2020 includes M&A expenses
(other income and expenses) of NOK 5 million. Net financial items amounted to
NOK 23 million for the quarter, compared to NOK 17 million for the same period
last year. The net finance expense increased due to higher interest rates and
currency effects. The Group has a 20% interest in a joint venture sharing risks
and rewards of two larger projects with Astaldi and Gülermak in connection with
the Station Haga in Gothenburg. The projects are complex with substantial risk,
hence net income from the associated company has been reported at zero.
The order backlog amounted to NOK 6,835 million at 30 September. Third-quarter
order intake was NOK 1,193 million, split on announced contracts of NOK 341
million and unannounced order intake of NOK 852 million.
In Norway, new orders included appointed contracts of NOK 35 million by
Statnett, for ground and construction work in Skien and of NOK 39 million, for
ground and construction work at Sjursøya in Oslo. New orders in Finland included
a maintenance contract in Central Finland valued at EUR 25 million. The work
commences in February 2021 and is scheduled for completion in November 2025,
with an additional two-year option period.
Tendering activity is high in Norway and Sweden. The Group has identified an
addressable tender pipeline of approximately NOK 16 billion for the next nine
months. This compares to a NOK 19 billion tender pipeline three months ago. The
tender pipeline in Finland improved with approximately NOK 1 billion compared to
the tender pipeline three months ago. In Sweden, the tender pipeline for
maintenance is reduced by NOK 2.5 billion as Storstockholms Lokaltrafik (SL) has
decided to postpone tenders due to the financial impact of Covid-19. The tender
pipeline in rail construction is still strong. In Norway, the tender pipeline
has declined with NOK 1.5 billion compared to three months ago, mainly due to
reduction of larger rail construction tenders, but still a solid tender
pipeline.
In October, the Norwegian parliament proposed a total budget for 2021 of NOK
26.5 billion, up close to 20% from revised budget for 2020, including an
increase of NOK 4.6 billion to rail investment projects and a NOK 500 million
increase to maintenance and renewal spending. The increase in investment
projects is mainly targeted towards InterCity projects already awarded. The
maintenance backlog is expected to increase further to NOK 23 billion at the end
of 2021 as renewal and maintenance spending of NOK 3.5 billion yearly are
required to offset actual wear on existing infrastructure. These factors
indicate continued growth in railway infrastructure investments and activity in
Norway. Start-up of several new larger infrastructure projects around the
greater Oslo-area are expected to support continued high activity in the civil-
and environment market.
The Swedish national budget proposed SEK 30.4 billion for rail investments and
maintenance spending for 2021, with a SEK 2.9 billion increase allocated to
investment projects. Most of the increase is targeted to already on-going
projects. The government has also proposed a yearly increase in maintenance
spending of SEK 500 million to keep up with the maintenance backlog.
Central Government in Finland announced in October a proposal for national
budget in line with NRC Group’s expectations. Rail investments and maintenance
spending are at the same level next year as for 2020. Two years of a high
investment level indicates a strong outlook. Light rail investments are expected
to be at same level in 2021 as this year, mainly related to on-going projects.
NRC Group is involved in all larger light rail projects under construction in
Finland.
In February 2020, 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 to create the foundation 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 this quarter, NRC Group continued a sharp focus on adopting guidelines and
policies to prevent and handle COVID-19 outbreaks. The Group monitors the
development of the pandemic and its potential impact on the industry and on
business continuity. The main risks are related to potential operational impact
if outbreaks intensify and restrictions are resumed. A global rising rate of
coronavirus infection leads to higher uncertainty. Governmental restrictions and
recommendations are intensified in Norway, Sweden and Finland, as the numbers of
affected are at highest levels since March. Restrictions related to workforce
mobility has been implemented and will lead to higher cost for the impacted
projects.
Operations 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. Due to the financial impact Covid-19 has for SL
in Stockholm, tenders for maintenance and upgrades are on hold.
NRC Group’s main priority is to keep employees safe while maintaining
operations. The Group communicate regularly and transparently to equip teams for
virtual working and safe project execution. The Group complies with restrictions
and guidelines from relevant authorities and follow up with immediate actions
when relevant and needed.
Parts 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.
The Covid-19 pandemic has had limited operational impact for NRC Group to date.
Still, if outbreaks intensify and additional restrictions are implemented by the
governments, it will impact the Group’s day-to-day operations leading to higher
production cost and slow progress in affected projects.
Outlook
NRC Group maintains 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. The
Group revised the financial targets in second quarter to an EBITA margin of 1.5
-2.0% for 2020. Due to additional write- downs in third quarter, it is most
likely that the EBITA margin will be in the lower end of this range. For 2021,
the Group targets an EBITA margin up towards 4% based on existing order book and
tender pipeline.
The third quarter 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
