interim report january 1 – september 30, 2018 - ncc · tomas carlsson. ceo . mattias lundgren....

Tomas CarlssonCEO

Mattias LundgrenCFO

Interim reportJanuary 1 – September 30, 2018

2018-10-25 NCC AB1

• Business review completed

• Q3 result impacted by revaluations of SEK 1,565 M

• Preliminary Q3 result‒ Net sales SEK 14,269 M (13,075)‒ EBIT SEK -1,108 M (364)

• Action plan initiated

Capital Markets Meeting October 16

2018-10-25 NCC AB2

Need for change but healthy core

2018-10-25 NCC AB3

• Healthy core in NCC

• Uneven performance throughout the group

• Market conditions generally good

• Challenging areas in NCC identified

• Risk reduced across the portfolio

• Low impact on cash flow

Insights

A lower risk profile and more structured process for estimates and decisions

Managing identified back-log.Structural initiatives to improve project management and cost control going forward

More prudent approach to claims and warranties

Decision to exit segments and markets

Risk profile in tendering processes

Project management and cost control

Estimations of claim outcomes and warranty provisions

Revaluation ofproperty assets

3

1

2

4

2018-10-25 NCC AB4

Summary: Plan to improve profitability

Organisation and team

Turn-around

Exit or divest non-performing business

Effective organization – strong team

Civil Norway, Building Nordics, single departments in other Business Areas

Road services, some businesses in Industry, property and land, rightsizing office locations

1

3

2

Improved processes and trainingWork towards a common operational model. Structured processes for follow-up of tenders and project. Training.

4

2018-10-25 NCC AB5

Q3 2018

Orders received

SEK 12.7 BN(12.7)

Order backlog

SEK 56.6 BN (52.2)

Net sales

SEK 14.3 BN (13.1)

EBIT

SEK -1,108 M (364)

2018-10-25 NCC AB6

Jan-Sep 2018

Orders received

SEK 44.1 BN (40.6)

Order backlog

SEK 56.6 BN (52.2)

Net sales

SEK 39.5 BN (38.2)

EBIT

SEK -1,020 M (1,118)

2018-10-25 NCC AB7

NCC Infrastructure

2018-10-25 NCC AB8

Higher order backlogNCC Infrastructure

0

5

10

15

20

25

30

Orders received Order backlog

Q3 2017 Q3 2018SEK BN

0

5

10

15

20

25

30

Orders received Net sales

2017 Q3 2018, R12SEK BN

2018-10-25 NCC AB9

Geographical distribution Jan – Sep 2018NCC Infrastructure

Orders received Net sales

Sweden 76% (75)

Finland 2% (2)

Sweden 73% (81)

Norway 19% (12)

Denmark 5% (5)

Finland 3% (2) Norway 16%

(18)

Denmark 6% (5)

2018-10-25 NCC AB10

2%

4%

11%

15%

20%

21%

27%

Railways

Other

Operation andmaintenance

Industry

Energy & WaterTreatment

Roads

Groundworks

Product mix Jan - Sep 2018NCC Infrastructure

2%

9%

11%

12%

14%

17%

35%

Other

Roads

Energy & WaterTreatment

Industry

Operation andmaintenance

Groundworks

Railways

Orders received Net sales

(29)

(24)

(12)

(13)

(14)

(5)

(9)

(28)

(10)

(17)

(15)

(16)

(5) (3)

2018-10-25 NCC AB11

2018-10-25 NCC AB12

• 4 kilometers of new track running parallel with the existing track, a 380-meter concrete tunnel and a number of bridges and viaducts

• Customer: Bane NOR• Order value: SEK 1.7 billion

Project exampleVenjar–Eidsvoll railway north of Oslo, Norway

• Concreting works on the Loenga-Ekebergåsen line

• Customer: Bane NOR• Order value: SEK 275 million

2018-10-25 NCC AB13

Project example Expansion of the Follo Line, Norway

NCC Building

2018-10-25 NCC AB14

Healthy order backlogNCC Building

0

5

10

15

20

25

30

35

Orders received Order backlog

Q3 2017 Q3 2018SEK BN

0

5

10

15

20

25

30

35

Orders received Net sales

2017 Q3 2018, R12SEK BN

2018-10-25 NCC AB15

Sweden 60% (57)

Geographical distribution Jan - Sep 2018NCC Building

Orders received Net sales

Finland 17% (22)

Sweden 54% (69)Norway 6%

(5)

Denmark 12% (12)

Finland 28% (14) Norway 7%

(8)

Denmark 16% (13)

2018-10-25 NCC AB16

Product mix Jan - Sep 2018NCC Building

Orders received Net sales

2%

4%

6%

6%

8%

9%

11%

23%

31%

Retail

Industry / Logistics

Other

Public Buildings

Educational

Health Care

Offices

Refurbishment /Conversion

Residential

1%

4%

7%

8%

8%

8%

11%

26%

27%

Retail

Offices

Health Care

Other

Industry / Logistics

Educational

Public Buildings

Residential

Refurbishment /Conversion (38)

(21)

(8)

(7)

(4)

(6)

(3)

(8)

(3)

(6)

(7)

(2)

(25)

(8)

(34)

(7)

(10)

(3)

2018-10-25 NCC AB17

Project exampleAttractive apartments in Hellerup, Denmark

• 50 apartments in an attractive location in Hellerup

• Customer: Danica Pension• Order value: SEK 520 million

2018-10-25 NCC AB18

• Classrooms, kitchen, outdoor facilities and sports hall

• Customer: Norrevo Fastigheter• Order value: SEK 165 million

2018-10-25 NCC AB19

Project exampleSchool in Norrköping, Sweden

NCC Industry

2018-10-25 NCC AB20

Lower volumes in Q3

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Q12015

Q2 Q3 Q4 Q12016

Q2 Q3 Q4 Q12017

Q2 Q3 Q4 Q12018

Q2 Q3

Stone material sold, thousands of tons

0

500

1,000

1,500

2,000

2,500

3,000

Q12015

Q2 Q3 Q4 Q12016

Q2 Q3 Q4 Q12017

Q2 Q3 Q4 Q12018

Q2 Q3

Asphalt sold, thousands of tons

2018-10-25 NCC AB21

Solid base, strongest parts Sweden and AsphaltNet sales Jan-Sep 2018

Product mix Geographical

Stone material 22% (23)

Foundation 11%(12)

Sweden 55%(56) Norway 17%

(14)

Denmark 19%(18)

Finland 9%(12)

2018-10-25 NCC AB22

Asphalt and paving 67%(65)

NCC Property Development

2018-10-25 NCC AB23

2018-10-25 NCC AB24

Profit recognized projects

Project Type LocationLettable area,

sqm.

Alberga E Office Helsinki, Finland 5,800

Mölndal Galleria, 50% Retail Gothenburg, Sweden 13,100

Arendal 3 Logistics Gothenburg, Sweden 6,800

Property portfolioLeasable space, sqm, in ongoing or completed projects not recognized in profit

0

50,000

100,000

150,000

200,000

Q12016

Q2 Q3 Q4 Q12017

Q2 Q3 Q4 Q12018

Q2 Q3

Sweden

Norway

Denmark

Finland

No. of projects

18 17 18 19

16

1918

22 21 21

2018-10-25 NCC AB25

18

6,400 sqm leased in the quarter Leased floor space, sqm

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Q12016

Q2 Q3 Q4 Q12017

Q2 Q3 Q4 Q12018

Q2 Q3

Remaining unlet area

Let during quarter

Previously let area

Let during quarter(% of available unletarea)

2018-10-25 NCC AB26

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q12016

Q2 Q3 Q4 Q12017

Q2 Q3 Q4 Q12018

Q2 Q3

2018-10-25 NCC AB27

Property portfolio

Letting ratio

Completion ratio

Project exampleBromma Blocks in Bromma, Sweden

• Approx. 50,000 sqm offices, retail and hotel

• Approx. 20,000 sqm leased to Maxi ICA supermarket and a Biz Apartment hotel

• Investment of SEK 2.5 billion• Completion 2021

2018-10-25 NCC AB28

Mattias LundgrenCFO

2018-10-25 NCC AB29

Income statement

SEK MJul-Sep

2018Jul-Sep

2017Oct 17-Sep 18

Jan-Dec 2017

Net sales 14,269 13,075 55,786 54,441

Gross profit -402 908 1,949 3,981

Selling and administrative expenses -661 -550 -2,993 -2,933

Cost ratio 4.6% 4.2% 5.4% 5.4%

Other -46 4 -20 26

EBIT -1,108 364 -1,063 1,075

Financial items -24 -25 -79 -91

EBT -1,133 339 -1,142 983

Tax 179 -55 229 -106

Profit for the period -955 283 -913 877

2018-10-25 NCC AB30

SEK MJul-Sep

2018Jul-Sep

2017Jan-Dec

2017

NCC Infrastructure -883 -65 -198

NCC Building -107 89 409

NCC Industry 283 409 577

NCC Property Development -326 -9 601

Other and eliminations -75 -62 -314

EBIT -1,108 364 1,242

EBIT per business area

2018-10-25 NCC AB31

SEK MJul-Sep

2018Jul-Sep

2017

NCC HQ etc. -122 12

Internal gains 13 -10

Other Group adjustment 34 -64

Other and eliminations -75 -62

NCC Infrastructure

458

225

5 3 36Claims/warranties Write downs Restructuring

costsRevaluationof property

Other revaluations

SEK M

2018-10-25 NCC AB32

SEK MJul-Sep

2018Jul-Sep

2017Oct 17-Sep 18

Jan-Dec2017

Net sales 4,515 4,472 19,914 18,490

EBIT -883 -65 -980 -198

Of whichrevaluation -727 -150 -727 -150

EBITmargin, % -19.6 -1.4 -4.9 -1.1

NCC Building

191

1490

Claims/warranties Write downs Restructuringcosts

Revaluationof property

Otherrevaluations

SEK M

2018-10-25 NCC AB33

SEK MJul-Sep

2018Jul-Sep

2017Oct 17-Sep 18

Jan-Dec2017

Net sales 6,101 5,319 26,214 24,622

EBIT -107 89 371 409

Of which revaluation -295 - -295 -

EBITmargin, % -1.8 1.4 1.4 1.7

NCC Industry

440

30

68

Claims/warranties Write downs Restructuringcosts

Revaluationof property

Otherrevaluations

SEK M

2018-10-25 NCC AB34

SEK MJul-Sep

2018Jul-Sep

2017Oct 17-Sep 18

Jan-Dec 2017

Net sales 4,301 4,051 12,931 12,393

EBIT 283 409 338 577

Of which revaluation -115 - -115 -

EBITmargin, % 6.6 10.1 2.6 4.7

RoCE, % 6.9 13.1

NCC Property Development

0 0 0

363

Claims/warranties Write downs Restructuringcosts

Revaluationof property

Otherrevaluations

SEK M

2018-10-25 NCC AB35

SEK MJul-Sep

2018Jul-Sep

2017Oct 17-Sep 18

Jan-Dec 2017

Net sales 397 168 838 2,567

EBIT -326 -9 -374 601

Of which revaluation -363 - -363 -

EBITmargin, % neg neg neg 23.4

RoCE, % neg 15.7

Q12015

Q2 Q3 Q4 Q12016

Q2 Q3 Q4 Q12017

Q2 Q3 Q4 Q12018

Q2 Q3-3

-2

-1

0

1

2

3

4

5Cash flow before financing

Cash flow

SEK MJul-Sep

2018Jul-Sep

2017Jan-Dec

2017From operating activities 142 477 1,664

From property projects -55 -269 478

Other working capital -508 468 17

Investing activities -152 -233 -797

Cash flow before financing -574 443 1,361

SEK BN

R12

2018-10-25 NCC AB36

Group financial objectives

2018-10-25 NCC AB37

Reduced number of objectives

Operating Margin

≥ 4.0%

Net Indebtedness

< 2.5 x EBITDA

Dividend policy ≥ 40% of profit after tax

Return on Equity

≥ 20%

2018-10-25 NCC AB38

EBIT margin

-3%

-2%

-1%

0%

1%

2%

3%

4%

2017 Q3 2018, R12

Target ≥4%

All comparative figures for 2017 according to IFRS15

2018-10-25 NCC AB39

Net indebtness* / EBITDA

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2017 Q3 2018, R12

Restriction <2.5 timesnet indebtedness* / EBITDA

Times

* Excl. pension liability

2018-10-25 NCC AB40

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

2017 Q3 2018, R12

Return on shareholders’ equity

Target ≥20%

2018-10-25 NCC AB41

Tomas CarlssonCEO

2018-10-25 NCC AB42

• Large infrastructure projects in Norway and Sweden

• Still a generally strong demand in building

• Demographies drives demand for schools, hospitals and elderly care around our cities

• Growing cities and population growth

• Nordic economies stable with reasonable growth projections

2018-10-25 NCC AB43

Strong positive drivers in the market

• Build on our strong and healthy core

• Focus on projects, customers and geographieswhere NCC can deliver value

• Lower risk profile in the projects– not less ambitious in our business

• Clear main objectives: Restore profitability and better consistency

2018-10-25 NCC AB44

New baseline

2018-10-25 NCC AB45

Contact information and calendar

Chief Financial OfficerMattias LundgrenTel: +46 (0)70-228 88 81mattias.l.lundgren@ncc.se

IR Manager Johan BergmanTel: +46 (0)70-354 80 35johan.bergman@ncc.se

Financial Calendar 2019

January 30 Year end report 2018

April 9, 2019 Annual General Meeting

April 29, 2019 Interim report Jan-Mar

July 19, 2019 Interim report Jan-Jun

October 28, 2019 Interim report Jan-Sep

2018-10-25 NCC AB46