Veidekke — Management Reports 2017

Sep 27, 2017

Veidekke's Economic Activity Report: A levelling off after three years of strong growth

Veidekke's Economic Activity Report: A levelling off after three years of strong growth

After three years of clear upswing, there are now signs of a

levelling off in the Scandinavian construction and civil

engineering market, mainly as a result of a change of pace

in the housing market in Oslo and the Stockholm region.

"A slight cool down in the housing market after record

growth in 2016 might be positive, from a long-term

industrial perspective. The overall construction and civil

engineering market in Scandinavia remains strong, despite

the expected slowdown in growth in 2018 and 2019, and the

outlook for the civil engineering market in particular looks

bright," says Kristoffer Eide Hoen, Director of Analysis at

Veidekke ASA.

Norway: Continued strong market, despite a levelling off in

the residential segment

The Norwegian construction and civil engineering market is

looking strong going forwards, even though the housing

market is now at a turning point that will eventually result

in a decrease in production volumes.

"The contractors are still seeing increasing production

volumes and order backlogs, but the decline in sales of new

homes will lead to a decrease in production volumes in three

to four quarters' time. In light of the great significance

of the residential segment in the industry as a whole, we

expect to see the first downturn in overall construction and

civil engineering production volumes since 2009 in 2019,"

Eide Hoen explains.

Sweden: Overall, a strong market until the end of 2019,

although growth will slow down

There is still high optimism in the Swedish construction and

civil engineering industry, and orders are strong.

Both the private and the public sector have offensive

investment plans, and the demand for homes remains good.

However, sales of new homes have normalised after a strong

2016, leading to slightly fewer housing starts going

forwards.

"After several years of exceptionally strong growth, a

slight slowdown in 2018 and a gentle decline in activity in

2019 will probably be good for the industry as a whole. We

expect the production growth in the residential segment to

swing to a moderate slowdown at the beginning of 2019,"

continues Eide Hoen.

Denmark: Growth from a low level

The Danish construction and civil engineering market is in

an upswing, but is still primarily driven by the growth in

the residential segment.

"We expect the growth rate in the residential segment to

remain high through to the end of 2019. In addition, the

vacancy rate for offices and wholesale and retail trade is

on a downward trend, which is very positive. It looks like

the Danish construction market is finally starting to pick

up," concludes Kristoffer Eide Hoen.

For more information, please contact:

Kristoffer Eide Hoen, Director of Analysis, Veidekke ASA,

tel. (+47) 976 75 434, kristoffer.eide.hoen@veidekke.no

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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 30 billion, and around half of its 7,400 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.