FOURTH QUARTER 2018 RESULTS
Lars Opsahl, acting CEO | Anne Harris, CFO
DISCLAIMER
This presentation includes forward-looking statements which are based on our current expectations and projections about future events. All statements other than statements of historical facts included in this presentation, including statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, including our plans for future costs savings and synergies may be deemed to be forward-looking statements. Words such as "believe," "expect," "anticipate," "may," "assume," "plan," "intend," "will," "should," "estimate," "risk" and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. In addition any forwardlooking statements are made only as of the date of this notice, and we do not intend and do not assume any obligation to update any statements set forth in this presentation.
INTRODUCTION AND HIGHLIGHTS
Lars Opsahl, acting CEO
Highlights
- Fourth quarter earnings weaker than expected
- Growth from improved billing ratio and billing rates in Norway, reduced by high level of project write-downs
- Weak results in LINK arkitektur
- Full year 2018 earnings
- Growth from increased capacity and billing ratio, reduced by net project write-downs
- Reduced earnings LINK arkitektur and International
- Strong increase in sales and order backlog to NOK 2.8 billion
- Solid cash generation reduced net interest-bearing debt
- Proposed dividend for 2018 of NOK 1.50 per share
Financial summary 4Q and FY 2018
• 4Q 2018
- Net operating revenues up 5.4 % y-o-y to NOK 892.2 million
- EBIT of NOK 9.5 million, 1.1 % margin
• FY 2018
- Net operating revenues up 11.4 % y-o-y to NOK 3 334.8 million
- Organic growth 4.0 %*
- Driven by acquisitions and increased billing ratio
- High level of project write-downs (2.0 %)
- Calendar effect of one less working day
- EBIT of NOK 99.0 million, 3.0 % margin
- Higher employee benefit expenses reflect increased headcount and ordinary salary adjustment
*Adjusted for calendar effect
Effects of improvement programme - Norway
Improving profitability for Greater Oslo & Regions Norway
Major order intake 4Q
Water supply to Oslo for Oslo Kommune
- The contract consists of four parts, all won by Multiconsult
- Estimated value of approximately NOK 200 million, in addition to significant options
- The project includes a raw water tunnel between Holsfjorden and Oslo and a tunnel from Huseby to central Oslo in order to transfer clean water to existing water grid in Oslo
multiconsult.no
- Work has been initiated and a large part will be completed during the first three years
Several important contracts awarded to Multiconsult Polska
- Northern Krakow S52 Expressway, Poland of NOK 50 million
- C-E 65 railway line, Poland of NOK 23 million
- A1 Motorway Kamieńsk Radomsko, Poland of NOK 22 million
Order intake in 4Q 2018
Highlights
- Order intake NOK 1 480.4 million, up 44.2 % y-o-y
- Continued strong tender pipeline, especially within Transportation
- Several new, large contracts have been awarded in the period
Key order intake
- New water supply Oslo
- Northern Krakow S52
- Aarhus University Hospital
- C-E 65 railway line
- GET FiT, KfW Zambia
Order backlog development and backlog per business area
Organisation
- Changes in management
- New CEO Grethe Bergly from 1 March 2019
- New EVP and Deputy CEO Rune Hardersen from 1 March 2019
- New EVP Human Resources and Corporate Communication Kari Nicolaisen from 1 April 2019
multiconsult.no
- New CFO Hans-Jørgen Wibstad from 1 June 2019 at the latest
- Extract of awards to Multiconsult and employees in 4Q
- Multiconsult awarded "Eco-Lighthouse of the Year 2018" (Årets Miljøfyrtårn)
- Åshild Huseby og Marie Eliassen awarded "Nyskapningsprisen" for master thesis
- Organisation
- Successful employee share purchase programme with 21% participation
- 2 934 employees at 31 December 2018
- Group turnover at 10.2 %
FINANCIAL REVIEW
Anne Harris, CFO
Financial highlights 4Q 2018
Financial highlights FY 2018
- Net operating revenue up 11.4 % to NOK 3 334.8 million
- ‒ Organic growth 4.0 %*
- ‒ Billing ratio at 70.2 %
- ‒ Net project write-downs (2.0 %)
- ‒ 1 less working day calendar effect y-o-y
• Operating expenses
- Higher employee benefit expenses y-o-y due to acquisitions and ordinary salary adjustment
- Provision for legal claims and business development cost for international energy impact other operating expenses
*Adjusted for calendar effect
EBIT Bridge Y-O-Y
Segments FY 2018
Greater
Oslo Area |
FY 2018 |
FY 2017 |
Change |
| EBIT MNOK |
57.5 |
64.6 |
-11.0 % |
| EBIT margin % |
3.7 % |
4.9 % |
-1.2 pp |
Billing
ratio |
70.1 % |
67.0 % |
3.1 pp |
| Number of employees |
1 176 |
1 179 |
-0.3 % |
| International |
FY 2018 |
FY 2017 |
Change |
| EBIT MNOK |
8.1 |
17.3 |
-53.1 % |
| EBIT margin % |
4.0 % |
9.7 % |
-5.7 pp |
Billing
ratio |
72.2 % |
71.5 % |
0.7 pp |
| Number of employees |
284 |
216 |
31.5 % |
| Regions Norway |
FY 2018 |
FY 2017 |
Change |
| EBIT MNOK |
50.1 |
13.0 |
285.3 % |
| EBIT margin % |
4.7 % |
1.3 % |
3.4 pp |
Billing
ratio |
70.4 % |
67.3 % |
3.1 pp |
| Number of employees |
854 |
841 |
1.5 % |
LINK
arkitektur |
FY 2018 |
FY 2017 |
Change |
| EBIT MNOK |
13,1 |
25.5 |
-48.6 % |
| EBIT margin % |
2.5 % |
5.2 % |
-2.7 pp |
Billing
ratio |
72.7 % |
72.4 % |
0.3 pp |
| Number of employees |
489 |
475 |
2.9 % |
From 2018, Multiconsult changed its principles for group overhead allocation following the new legal structure. Not allocated costs FY 2018 were NOK 29.8 million (NOK 2.4 million FY 2017).
Operating revenues by business area FY 2018
Cash flows FY 2018
- Solid net cash flow from operations
- Change in working capital
- Increased trade payables
- Trade receivables increase in line with operating revenues
- Work in progress reduced
- Investments include
- Ordinary asset replacement
- Financing activities
- Decreased interest bearing debt
Industry profitability challenge
After four consecutive years of wages increasing more than prices, we have started to see a higher increase in billing rates
INDEXED DEVELOPMENT WAGE AND BILLING RATE
Source: RIF; Multiconsult; Arkitektbedriftene
Note: Billing rate is for Multiconsult Norway. Wage assumes a mix of 25% architects and 75% engineers (RIF), where 60% of the engineers are civil eng.
Outlook
- The overall market outlook continues to show positive development across all business areas
- Especially strong pipeline within Transportation
- Continued strong competition on large projects
- Strong outlook and pipeline has recently resulted in improved market rates in Norway
- Increased employee costs in Norway are not fully reflected in billing rates
- Strong combination of professional capability and increasing order backlog
- Intensified focus on improving profitability across the group according to GO
- Project execution and profitability
- Sales
- Billing ratio
- Efficiency gains
- Portfolio review
FINANCIAL CALENDAR
| Annual report 2018 |
4 Apr 2019 |
General
Meeting |
25 Apr 2019 |
| 1Q 2019 results |
23 May
2019 |
| 2Q 2019 results |
29
Aug 2019 |
| 3Q 2019 results |
7 Nov 2019 |
Q&A
FOURTH QUARTER 2018 RESULTS | Lars Opsahl, acting CEO Anne Harris, CFO