Veidekke

Earnings Release • Mar 31, 2022

Veidekke: New uncertainties in otherwise strong Scandinavian construction markets

Veidekke: New uncertainties in otherwise strong Scandinavian construction markets

Growth in the Scandinavian construction markets is strong and thus far in line

with Veidekke's positive forecasts from last autumn. However, the war in Ukraine

is casting substantial uncertainty over future contracting market developments.

On the back of a record industry order intake at the end of 2021, particularly

in Sweden, activity levels were recovering at the start of 2022.

"Following start-up of many projects last year, Veidekke expects construction

production to be high in 2022. We anticipate growth in the Swedish building

sector and the Norwegian transport infrastructure sector," says Kristoffer Eide

Hoen, Director of Business Development and Analysis at Veidekke ASA.

Recent increases in production values are partially attributable to high

construction cost inflation. However, cost inflation has been compensated for by

increased sale prices in many market segments. For example, both average

construction costs and new-build prices for apartments in Norway increased by

approximately 6% in 2021.

The invasion of Ukraine is putting additional pressure on both European markets

and global commodity prices, exacerbating existing strains on certain supply

chains resulting from the Covid-19 pandemic. Rises in the prices of input

factors already committed or announced as at 30 March indicate a 5% to 10%

increase in construction cost indices from December 2021 to December 2022.

However, given the uncertainty of the current situation, the range of potential

outcomes is broad.

There are indications of somewhat lower demand for new construction projects in

the year ahead, particularly compared to the strong figures recorded in Sweden

and Norway towards the end of 2021. This change is linked to both new

geopolitical uncertainty and expectations of rising interest rates and further

increases in construction costs.

Forecasts as to new-project demand and future price levels are considerably less

certain than usual, and any escalation or de-escalation of the conflict level in

Europe may result in different scenarios than those adopted as the basis for

Veidekke's forecasts.

Veidekke's market report will be presented at 08:30 on Thursday 31 March. The

presentation will be streamed as a webcast on

www.veidekke.com (https://365veidekke.sharepoint.com/sites/KO

-Konjunkturrapport/Shared%20Documents/General/Marked%20og%20analyse/01%20Markedso

ppdatering%20(Veidekke.com)/07%20Markedsoppdatering%201.%20kvartal%202021/04%20Pr

essemelding/www.veidekke.com).

For more information, please contact:

Kristoffer Eide Hoen, Director of Business Development and Analysis, Veidekke

ASA, +47 976 75 434, Kristoffer.Eide.Hoen@veidekke.no

Veidekke press photos (https://veidekke.fotoware.cloud/fotoweb/archives/5028

-Pressebilder-Veidekke/)

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Veidekke is one of Scandinavia's largest contractors. In addition to undertaking

all types of building and civil engineering assignments, the group also

maintains roads and produces asphalt and aggregates. Veidekke emphasises

stakeholder involvement and local experience. Its annual turnover is

approximately NOK 38 billion, and half of its 7,800 employees own shares in the

company. Veidekke is listed on the Oslo Stock Exchange, and has posted a profit

every year since its inception in 1936.