Turnover for the 1st quarter was NOK 6,809 million (6,209 million) and profit before tax amounted to NOK 209 million (245 million). This corresponds to a profit margin of 3.1 per cent (4.0 per cent). An exceptional order intake resulted in an order backlog of NOK 42,697 million (33,818 million) at the end of the quarter.

AF Gruppen is in a very strong financial position. Cash flow from operating activities was NOK 607 million (205 million) for the 1st quarter of 2022. As at 31 March 2022, AF Gruppen had net interest-bearing receivables of NOK 371 million (46 million). Earnings per share for the quarter were NOK 1.39 (NOK 1.55). The Board proposed to the General Meeting of shareholders a dividend of NOK 6.50 (6.50) per share for distribution during the first half of 2022.

“It is pleasing with a record-high order backlog and that the business areas Civil Engineering, Offshore and Energy and Environment reported very good results in the quarter.

At the same time, there are profitability challenges in several of the construction units as a result of the ripple effects from the war in Ukraine and new shutdowns in China. Increased raw material and energy prices as well as delivery challenges had a negative effect on the results this quarter. We work closely with clients, suppliers and subcontractors to ensure stability and profitability for the projects,” says Amund Tøftum, CEO of AF Gruppen.

AF imposes the same strict requirements on all its partners and suppliers as it does on its own employees. Everyone should arrive home safely from our projects, and figures from subcontractors are included in the injury statistics. The LTI rate for Q1 was 0.9 (1.5).

AF works in a systematic and targeted manner in order to avoid work-related absence. Absence from work due to sickness for Q1 was 5.5% (5.2%). Both this year and last year, absence from work due to sickness for the first quarter was impacted the Covid-19 pandemic.

AF provides a wide range of services that solve society's climate and environmental challenges. This also applies to AF Gruppen's onshore and offshore demolition activities, where over 95 per cent of all material from demolition is sorted for recycling. Metals, especially steel, are one of the main raw materials that are recycled. The total volume of steel recycled in the first quarter represents a reduction in alternative CO2 emissions of 27,806 tonnes compared with ore-based steel production.

“AF has a strong position in the demolition and recycling of offshore installations in the North Sea, and we see a significant growth potential globally. With more than 15 years of experience from complex projects for world-leading players, we have a good basis for further growth in an area where strong demand is expected in the coming years. Here, our goal is to make a contribution to the green transition with good profitability,” says Tøftum.

Selected highlights from the quarter:

  • Civil Engineering reported solid profitability and had a record-high order backlog at the end of the quarter. AF Anlegg entered into a contract with the City of Oslo to build drinking water tunnels in Oslo, in a working partnership with Italian company Ghella. The total value of the contract is approximately NOK 8,750 million excluding VAT for the working partnership, of which AF Gruppen's share is 60%. An agreement was also entered into and implemented for the purchase of 80% of the shares in Stenseth & RS during the quarter.
  • Turnover for Building increased considerably compared to the same period last year, but profitability was low in the quarter. Price developments for raw materials such as steel and wood products have a negative impact on the profitability of the building units. Provisions have been made for future losses, particularly in the AF Nybygg portfolio, and estimates have been revised downwards as a result of higher material prices. Despite the price developments, Haga & Berg excelled with very good results in the first quarter. AF Bygg Oslo and Åsane Byggmesterforretning also delivered good results in the quarter.
  • Overall, Betonmast delivered weak profitability in the quarter, and the level of activity was at the same level as the same period last year. High material prices also affect the units of Betonmast, and there is a great deal of variation in the earnings of the units. Since 2022, Betonmast Sweden has become part of the Swedish business area, and the comparison figures have been restated.
  • Property had low sales of residential homes in the quarter. There were six residential property projects in the production stage at the end of the quarter, and the sales ratio for commenced projects is 86%. An agreement was signed during the quarter for the sale of all shares in the company that owns the hotel and offices building Karvesvingen 7 at Hasle in Oslo. The building has a gross floor area of 21,056 square metres, and AF Eiendom's share of the sale is 49.5%. The transaction was completed in April 2022.
  • Energy & Environment had a good start to the year with higher margins and a high order intake. AF Decom delivers demolition and recycling services with good profitability.AF Energi delivered results below expectations in the quarter, with variable profitability in the project portfolio.
  • AF’s Swedish operations in respect of civil engineering, building, property and demolition are combined in the Sweden business area. Sweden increased its turnover compared to the same quarter last year, while the result was somewhat lower. The civil engineering company Kanonaden achieved a 12% revenue growth compared to the same quarter last year and the unit continues to excel with solid results. Price developments for important raw materials such as steel and wood products have a significant impact on projects, and the units have made provisions in the projects to take into account price developments.Since 2022, Betonmast Sweden has become part of the Swedish business area, and the comparison figures have been restated.
  • In the Offshore business area, turnover increased by 15.6% compared to the first quarter of last year and profitability was good, with an operating margin of 9.4% during the quarter. AF Offshore Decom, which dismantles and facilitates the recycling of offshore installations, had a high level of activity in the quarter and significantly improved profitability compared to the corresponding quarter in 2021. The good result in the quarter reflects high production and good operations as well as the positive impact of the sale of precious metals.