AF Gruppen's revenues were NOK 5,069 million (4,536 million) in the 3rd quarter and NOK 16,146 million (13,111 million) year to date. This corresponds to growth of 12 per cent and 23 per cent respectively, compared to the same periods last year. Earnings before tax were NOK 339 million (313 million) in the 3rd quarter and NOK 929 million (764 million) year to date. This provided a profit margin of 6.7 per cent (6.9 per cent) in Q3 and 5.8 per cent (5.8 per cent) year to date. The order backlog was NOK 23,000 million (18,920 million) at the end of the quarter.
AF Gruppen is in a very strong financial position. Net operating cash flow was NOK 182 million (100 million) for Q3 2019. As at 30 September 2019, AF Gruppen had net interest-bearing liabilities of NOK 598 million. AF had net interest-bearing receivables of NOK 680 million as at 30 September 2018. The change is mainly due to the implementation of a new accounting standard (IFRS 16) from 1 January 2019. Capitalised lease commitments that are recognised this year as a result of the change to the standard were NOK 881 million as at 30 September 2019, and these are included in net interest-bearing liabilities. Earnings per share for the quarter totalled NOK 2.32 (NOK 2.24).
After the end of the quarter the company announced that AF Gruppen has concluded the acquisition of Betonmast AS through Betonmast Holding AS, a company of which AF Gruppen currently owns 67.4 per cent and where the remaining 32.6 per cent is owned by the management and former shareholders of Betonmast.
“AF shall maintain constant development and challenge established truths. We have been in continuous evolution for decades, and have recently welcomed 1,000 new employees to the AF family. The acquisition of Betonmast will stand out as a significant milestone in AF Gruppen’s history, and is the start of something we believe will be a great partnership. Together we have exceptionally strong expertise. Our ambition is to develop this expertise and create lasting value for our stakeholders,” says Morten Grongstad, CEO of AF Gruppen.
AF has an uncompromising attitude towards safety, and imposes the same stringent safety requirements on all partners and suppliers as on our own employees. Figures from the subcontractors are included in the injury statistics. The LTI rate for the third quarter was 0.2 (0.3). Year to date the LTI rate was 0.9 (0.8).
AF works systematically to avoid work-related absence. The goal is overall sickness absence of less than 3.0 per cent. Sickness absence for Q3 was 3.5 per cent (3.1 per cent).
“Strong growth must not be at the expense of safe and profitable operations. It is pleasing that the injury rate in the quarter is low, and our goal of zero work-related absence remains in place. Good and effective risk management is a key to ensure profitable operations. An important rule of thumb for us is to limit exposure to risk that cannot be influenced. Risk management is not only about protecting oneself from threats, but also about being proactive and grasping opportunities. Developments in the third quarter show that safe operations and risk management, in combination with an entrepreneurial spirit and an ability to perform, creates profitable growth,” Grongstad says.
Selected highlights from the quarter:
- Within the Civil Engineering business area, AF Anlegg has maintained a high level of activity in the quarter and the unit is delivering solid results. The E39 Kristiansand - Mandal project is currently occupying around 600 people. This is a large and challenging project, and progress is according to plan.
- Building reports growth of 19 per cent compared to the same quarter last year, of which 7 per cent is structural growth as a result of the acquisition of HTB. Most business units have seen growth in revenues and are delivering good results for the quarter, including the construction companies AF Bygg Oslo, AF Nybygg and Strøm Gundersen, in addition to contracting activities in Bergen and the units involved in rehabilitation in Oslo.
- In Property sales have been good with 61 (65) sold apartments in the 3rd quarter, of which AF’s share is 22 (25). A total of 303 (237) apartments have been sold year to date, of which AF's share is 114 (84). The sales ratio for projects in progress is 81 per cent.
- Energy and Environment reports revenue growth of 27 per cent compared to the same quarter last year. There is good activity in several energy savings contracts (EPC), which are providing increased revenues and good results. AF Decom reports solid results in all departments. The projects linked to a new hospital in Drammen and the Norwegian Radium Hospital are among the reasons for the high level of activity in Eastern Norway.
- The Sweden business area reports revenue growth of 74 per cent compared to the same quarter last year. Growth is due to the acquisition of HMB and revenue growth in all units.The Swedish business showed improvement in the quarter, especially in building units and in the demolition business.
- Offshore reports revenue growth of 21 per cent compared to the same quarter last year, but fails to deliver satisfactory results for the quarter. Preparatory work is ongoing for offshore campaigns in the next years. The growth comes from projects in modification and maintenance, along with deliveries related to electrification in the marine sector.