Revenues for Q2 totalled NOK 7,189 million (6,568 million) and amounted to NOK 13,398 million (13,175 million) for the first half of the year. Profit before tax was NOK 356 million (258 million) in the 2nd quarter and NOK 602 million (465 million) for the first half of the year. This resulted in a profit margin of 5.0% (3.9%) for Q2 and 4.5% (3.5%) for the first half of the year. AF Gruppen reported a historic high order backlog, totalling NOK 37,837 million (34,155 million) at the end of the quarter.
“Thoroughness and hard work through time in project activities enables us to report good revenue growth and a good result in Q2 and the year’s first six months for AF Gruppen. Several of our business areas contributed to good profitability in the quarter, with a high level of activity and good margins. In combination with the safety trend going in the right direction, we are pleased with the quarter we have put behind us,” says Amund Tøftum, CEO of AF Gruppen.
AF Gruppen is in a strong financial position. Net operating cash flow was NOK 529 million (202 million) in Q2 2021 and NOK 734 million (701 million) for the first half of the year. As at 30.06.21, AF Gruppen had net interest-bearing liabilities totalling NOK 333 million (49 million) and NOK 3,205 million in available liquidity. Earnings per share amounted to NOK 2.09 (1.56) for Q2, and NOK 3.65 (2.79) for the first half of the year.
AF imposes the same strict requirements on all its partners and suppliers as it does on its own employees. Figures received from subcontractors are included in the injury statistics. The LTI rate for Q2 was 0.9 (2.3). The LTI rate for the first half of 2021 was 1.2 (1.9).
AF works in a systematic and targeted manner in order to avoid work-related absence. Sickness absence in Q2 was 4.3% (4.6 %), and for the first six months of 2021 it was 4.7% (4.8%). The Covid-19 pandemic has led to a slight increase in sickness absence compared to previous years.
After the end of the quarter, it was announced to the stock exchange that AF Gruppen is to build Construction City, an industry cluster that will bring together the construction, civil engineering and real estate industry in Norway. The contract is valued at NOK 2,7 billion, excluding VAT.
“In order to succeed going forward, we have to remain curious and strengthen our culture, which is founded upon an ability to follow through and a willingness to innovate. The development of Construction City is a good example of true innovation. The cluster gathers and facilitates learning in the construction, civil engineering and real estate industry. It will be AF Gruppen’s new headquarters and our largest Construction-project of all time,” Tøftum says.
After the end of the quarter, it was also announced to the stock exchange that AF Gruppen and Aker Solutions have signed a letter of intent to merge the two companies' existing offshore decommissioning operations into a 50/50-owned company. The goal is to create a leading global player for the environmentally-friendly recycling of offshore installations. The transaction is expected to be completed during the second half of 2021 and is subject to due diligence and approval from the Norwegian competition authorities.
Selected highlights from the quarter:
- The activity level in Civil Engineering increased considerably compared to the same quarter last year, and the business area delivered good results during the quarter. AF Anlegg currently has two major projects in progress: E39 Kristiansand vest–Mandal øst and Bergtunnlar Lovö in Stockholm.
- Turnover for Construction is on par with the same period last year, and the business area delivered good profitability in the quarter. The order backlog has seen a solid increase in the quarter.
- Betonmast reported weak profitability in the quarter, and as expected, profitability is lower than for AF Gruppen’s other business. There are significant variations in the results of the various units, and as a result of risk reviews of ongoing projects, write-downs have been made on several projects in the quarter. The order backlog has seen a strong increase in the quarter, and the bulk of the increase is related to the Swedish part of Betonmast.
- Property enjoyed good sales during the quarter. A total of 148 (70) apartments were sold in the quarter, of which AF’s share was 70 (25). A total of 270 (150) have been sold year to date, and AF's share is 125 (53). There were five 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 233. The sales ratio for commenced projects is 83%.AF also has a significant development portfolio in Norway which is estimated at 2,112 (2,413) units. AF’s share of this was 1,064 (1,173) residential units.
- Energy and Environment increased its level of activity and maintained stable good profitability during the quarter. Revenues in the 2nd quarter were NOK 323 million, which corresponds to growth of 47 per cent compared to the same quarter last year.
- The Sweden business area increased sales and maintained stable profitability in the second quarter compared with the same quarter last year. The construction business reports good growth in revenues and stable, good results, while results are variable in the construction units.
- Revenues for the Offshore business area increased significantly compared to the 2nd quarter last year, and profitability was good. Solid implementation of offshore campaigns as well as good operational performance at AF Miljøbase Vats contributed to the good result for the quarter.