Veidekke

Earnings Release • Feb 7, 2019

Veidekke ASA: Fourth-quarter and full-year 2018 results

Veidekke ASA: Fourth-quarter and full-year 2018 results

Veidekke achieved revenue of NOK 10.5 billion in the fourth quarter, and a pre

-tax profit of NOK 341 million. The Q4 order inflow of NOK 9.2 billion brought

the year-end order book to NOK 34.6 billion. In 2018 as a whole, the group

generated sales revenue of NOK 35.6 billion and a pre-tax profit of NOK 591

million. The annual profit per share amounts to NOK 4.0 (IFRS). Based on the

group's robust financial position, strong order book and positive market

outlook, the board is proposing an unchanged ordinary dividend of NOK 5.0 per

share for the financial year 2018.

"Veidekke boosted sales in the fourth quarter, but profits were somewhat weaker

than last year. While non-residential activity levels were satisfactory in all

three countries, the low number of new residential building starts in earlier

quarters resulted in somewhat lower production. The property development

operation delivered a strong profit in the current market, thanks to ongoing

residential sales and development gains on sales of residential and commercial

projects," says Veidekke Group CEO Arne Giske.

"Looking at 2018 as a whole, Veidekke achieved high growth, and the year-end

order book is robust. Our annual result and profitability, however, were

significantly weaker than we would like, and we have implemented a number of

measures which we expect to have a clear positive impact on future results and

profitability. Our market prospects are positive, and our financial position is

good, and we have great faith in the group's development going forward. This is

further confirmed by the board's proposal to maintain a dividend of NOK 5.0 per

share for the financial year 2018," says Giske.

"Two Veidekke employees died in workplace accidents on 20 November and 13

December 2018. Safety has the highest priority for Veidekke, and we recognise

that keeping our staff safe is a daily battle, fought at each individual

workplace. These accidents and a general increase in the number of recorded

injuries in 2018 underline the need for a constant safety focus and intensified

preventive efforts," says Arne Giske.

Veidekke achieved robust growth in the fourth quarter of 2018, with revenues

totalling NOK 10.5 billion, compared to NOK 8.7 billion in Q4 2017. The increase

is attributable to the Norwegian and Swedish building construction operations.

The achieved growth was mainly organic, but also stems from business

acquisitions in 2018.

Revenue increased by 13% in 2018, to NOK 35.6 billion from NOK 31.4 billion in

2017. This growth was powered by the construction operation, with higher

revenues being achieved in all three countries. The property development

operation suffered a fall in revenue in 2018 due to lower residential sales and

few building starts. The revenues of the industrial operation were on a par with

The pre-tax profit for the quarter amounted to NOK 341 million, compared to NOK

381 million in Q4 2017. In the property development operation, development gains

from sales of both residential and commercial projects contributed to a

satisfactory quarterly performance. The construction operations generated

profits on a par with last year, although the profit margin was lower. The

fourth quarter is generally a low season in the industrial operation, as

reflected in the profit performance. The drop compared to last year is primarily

due to the inclusion of a NOK 70 million sale gain in the 2017 fourth-quarter

results.

The 2018 pre-tax profit totalled NOK 591 million, compared to NOK 1,311 million

in 2017. Profits were primarily impacted by project write-downs of NOK 550

million linked to the Norwegian civil engineering operation, which were

recognised in Q2 2018. The underlying profit for 2018 - excluding the write

-downs - totalled NOK 1,141 million. Reduced sales and fewer new residential

building starts in Sweden negatively impacted the profits of the property

development operation, while increased raw material prices and lower capacity

utilisation resulted in a poor profit performance by the industrial operation.

The Q4 order intake of NOK 9.2 billion brought the order book to NOK 34.6

billion, up from NOK 33.8 billion at the end of Q3 and NOK 32.6 billion one year

ago. Approximately NOK 23 billion of the order book will be converted into

revenue during the course of 2019.

To improve profitability, Veidekke reorganised its operational businesses in the

second half of the year, splitting the Norwegian construction operation into a

building construction unit and a civil engineering unit, gathering the group's

Scandinavian residential, commercial and project development activities under

one executive vice president and making the industrial operation a separate

business area under the direct supervision of the Group CEO. Moreover, measures

have been implemented to reduce capital use and improve project risk management.

For more information, please contact:

· Group CEO Arne Giske, tel. +47 905 89 526, arne.giske@veidekke.no.

· CFO Jørgen G. Michelet, tel. +47 917 43 856, jorgen.michelet@veidekke.no.

· Executive Vice President Communications and Public Affairs Lars Erik Lund,

tel. +47 413 31 369, lars.lund@veidekke.no.

For press images, see www.flickr.com/photos/veidekke

Subscribe to notices from Veidekke (http://veidekke.com/no/borsmeldinger/abonner

-pa-meldinger/)

This information is disclosable pursuant to section 5-12 of the Securities

Trading Act.

Veidekke is one of Scandinavia's largest construction and property development

companies. The company undertakes all types of building construction and civil

engineering contracts, develops residential projects, maintains roads, and

produces asphalt and aggregates. The company is known for its involvement and

local knowledge. Its annual turnover is NOK 36 billion, and half of its 8,600

employees own shares in the company. Veidekke is listed on the Oslo Stock

Exchange and has always posted a profit since it was founded in 1936.