Revenue for the first quarter was NOK 7,393 million (6,809 million) and profit before tax amounted to NOK 13 million (209 million). This corresponds to a profit margin of 0.2 per cent (3.1 per cent). The order backlog was worth NOK 41,895 million (42,697 million) at the end of the quarter.
There were further downward adjustments of project estimates in the Group's Swedish operations in the quarter. The project estimates are revised downwards by approximately NOK 230 million, and relate to the business units in the former Betonmast Sweden. Of the Swedish business area’s total order backlog of NOK 7,645 million as of 31 March 2023, the order backlog for the abovementioned units was over NOK 2,097 million. The remaining production value of loss making projects in the former Betonmast Sweden is NOK 940 million.
"We delivered weak results in the first quarter as a result of challenges in some of our Swedish units, as well as weak profitability in the construction business area. The industry is experiencing a demanding construction and property market, however the results are primarily due to our own performance. This has resulted in downward adjustments in our Swedish portfolio for the quarter. We will ensure the best possible execution of these projects," said Amund Tøftum, CEO of AF Gruppen.
AF Gruppen is in a solid financial position. Cash flow from operating activities was NOK -24 million (607 million) in the first quarter of 2023. As of 31 March 2023, AF Gruppen had net interest-bearing liabilities of NOK 570 million (-371 million). Earnings per share for the quarter were NOK -0.03 (NOK 1.39). The Board has proposed to the General Meeting of shareholders a dividend of NOK 6.50 (6.50) per share for distribution during the first half of 2023.
AF imposes the same strict requirements on all its partners and suppliers as it does on its own employees. Everyone shall get home safely from our projects, and figures from subcontractors are included in the injury statistics. The LTI rate for the first quarter was 1.4 (0.9). The company works in a systematic and targeted manner in order to avoid work-related absence, and sick leave for the first quarter was 4.4 per cent (5.5 per cent).
"There were many strong performances in the quarter, especially within the Offshore and Civil Engineering business areas. We have a solid order backlog with large, complex projects of high social benefit. Our base principles for the business remain unchanged, as good safety work is a prerequisite for profitable growth. It is pleasing to see that there was a positive development in sick leave during the quarter,” Tøftum said.
Selected highlights from the quarter:
- Civil Engineering increased the level of activity in the first quarter and delivered good results. AF Anlegg had two major projects in production at the end of the quarter: E6 Rentvannstunnel in Oslo and Bergtunnlar Lovö in Stockholm. Both of these projects have a high level of activity and good operations. Several other projects also contributed good results for the quarter. AF Anlegg has two major projects that are in the early start-up phase: The E1 Vannbehandlingsanlegg at Huseby in Oslo and Kabeltunnel Sogn and Ulven in Oslo. AF Anlegg delivered good results for the first quarter. Målselv Maskin & Transport had strong revenue growth and a very good result in the first quarter, and Stenseth & RS also reported a good result.
- The Construction business area had stable revenues during the first quarter, but delivered weak results in total for the quarter. The market is demanding and there are significant variations in terms of results and performance at project and unit level. Strøm Gundersen and AF Bygg Østfold delivered good results in the first quarter.
- Overall, Betonmast reported revenue on the same level as the previous year. Although the result for the quarter was weak, it was an improvement when compared with the first quarter of last year. The Betonmast Romerike, Trøndelag, Røsand and Asker and Bærum units delivered good results in the quarter.
- The Property business area had low sales of residential homes in the quarter. Rising interest rates and economic instability have resulted in a challenging property market, which contributed to the low sales during the quarter. Sales contracts for 20 (57) homes were signed in the quarter, of which AF’s share is 9 (26). There were seven residential property projects in the production stage at the end of the quarter. A total of 940 units are in production, of which AF’s share is 438. The sales ratio for commenced projects was at 78 per cent. AF also has a significant development portfolio in Norway which is estimated at 1,580 (1,658) residential units. AF’s share of this was 788 (802) residential units.
- Energy and Environment had a higher level of activity in the first quarter when compared to the same quarter last year, however the overall results reported were below expectations. AF’s demolition business, AF Decom, reported a low level of activity for the quarter and delivered a weak result. AF Energy reported significant revenue growth in the quarter, and a high level of activity and good operational performance in the projects contributed to a very good result in the first quarter.
- AF’s Swedish operations in respect of civil engineering, construction, property and demolition are combined in the Sweden business area. Sweden reported a negative result that was a consequence of further downward adjustments of the project estimates in the Group's Swedish business. The project estimates have been adjusted downwards by approximately NOK 230 million, excluding VAT, and relate to the business units in former Betonmast Sweden. The projects included in the downward adjustment have a remaining production value of NOK 940 million, excluding VAT. AF Prefab in Mälardalen and AF Härnösand Byggreturer both achieved revenue growth and very good results for the quarter. Kanonaden, AF Bygg Syd and HMB made positive profit contributions, however delivered somewhat below expectations in the quarter.
- There was a signiﬁcant increase of 32 % in revenue for the Offshore business area compared to the first quarter last year, and the business area delivered good results that were on par with the previous year. AF Offshore Decom had a high level of activity compared to the same quarter last year and reported good profitability. A high level of activity at Miljøbase Vats also contributed to the good result for the quarter. Aeron had a high level of activity and good profitability for the quarter.