STOCKHOLM, Nov. 10, 2020 /PRNewswire/ -- Today, 10 November 2020, NRC Group has released its
financial results for the third quarter of 2020.
The result presentation is available on the following webcast
link:
https://channel.royalcast.com/nrcgroup/#!/nrcgroup/20201109_1
A Q&A session will be held at 10.00
AM (CET), and investors, analysts and journalists are
welcome to participate.
Participants dial-in numbers:
NO: +47 2350 0296
SE: +46 (0)8 5065 3942
FI: +358 (0)9 7479 0404
DK: +45 3515 8121
UK: +44 (0)330 336 9411
US: +1 929 477 0402
Below you will find highlights and a summary from the
report.
REVENUE
- NOK 1.96 billion
- 6% growth due to currency effects
EBITA*
- NOK 88 million
- Strong profitability in Finland
ORDERS
- Order intake of NOK 1.2
billion
- Order backlog of NOK 6.8
billion
LIQUIDITY
- Solid cash flow from operations of NOK
129 million
- Cash position of NOK 606
million
* Before other income and expenses (M&A expenses)
Comments on third quarter 2020 results
Third quarter revenue was NOK 1,956
million compared to NOK 1,850
million reported for the same period of 2019. The revenue
growth was 6% in the quarter due to positive currency effects.
Group EBITA* was NOK 88 million
compared to NOK 105 million for the
same period last year. The EBITA* margin was 4.5%.
Revenue in Norway was
NOK 541 million compared to
NOK 683 million in the third quarter
of 2019. The organic growth was -21%. The negative growth is mainly
explained by lower activity in Civil construction due to lower win
rate in tenders this year. EBITA* was NOK 16
million, compared to NOK 52
million in the same period of 2019. EBITA* margin was 3.0%,
down from 7.6% in the third quarter last year. Lower revenue in
Civil construction reduced the overall margin. In addition, the
EBITA margin in parts of the Environmental division was lower than
expected.
Revenue from the Swedish operation amounted to NOK 583 million for the quarter compared to
NOK 460 million in the same period of
2019. The organic growth was 13% mainly driven by Rail
construction. Several of the zero margin projects, following the
project adjustments in Q4 2019, are in the final completion stage.
Due to higher than expected production costs, additional
write-downs of NOK -35 million are
made in the quarter. Lower overhead costs and positive development
in other projects off-set parts of the write-downs. EBITA* was
NOK -7 million compared to
NOK 2 million in 2019. The EBITA*
margin in the third quarter was -1.2%.
Finland had revenue of
NOK 831 million compared to
NOK 712 million in the third quarter
of 2019. The organic growth was 8% in the quarter mainly driven by
high activity in the light rail projects. The EBITA* was
NOK 84 million compared to
NOK 55 million in the same period of
2019. EBITA* margin was 10.1% in the quarter, an increase from 7.8%
last year, mainly explained by improved margins in the light rail
projects. In the second quarter, the profitability was negatively
affected by too high production overhead due to overcapacity as the
activity level was lower than expected. Measures to reduce costs
and to increase flexibility in the cost base are being implemented
and are expected to have full effect from the second quarter of
2021.
Group operating profit (EBIT) for the quarter was NOK 70 million compared to NOK 80 million last year. EBIT for the third
quarter of 2020 includes M&A expenses (other income and
expenses) of NOK 5 million. Net
financial items amounted to NOK 23
million for the quarter, compared to NOK 17 million for the same period last year. The
net finance expense increased due to higher interest rates and
currency effects. The Group has a 20% interest in a joint venture
sharing risks and rewards of two larger projects with Astaldi and
Gülermak in connection with the Station Haga in Gothenburg. The projects are complex with
substantial risk, hence net income from the associated company has
been reported at zero.
The order backlog amounted to NOK 6,835
million at 30 September. Third-quarter order intake was
NOK 1,193 million, split on announced
contracts of NOK 341 million and
unannounced order intake of NOK 852
million.
In Norway, new orders included
appointed contracts of NOK 35 million
by Statnett, for ground and construction work in Skien and of
NOK 39 million, for ground and
construction work at Sjursøya in Oslo. New orders in Finland included a maintenance contract in
Central Finland valued at
EUR 25 million. The work commences in
February 2021 and is scheduled for
completion in November 2025, with an
additional two-year option period.
Tendering activity is high in Norway and Sweden. The Group has identified an
addressable tender pipeline of approximately NOK 16 billion for the next nine months. This
compares to a NOK 19 billion tender
pipeline three months ago. The tender pipeline in Finland improved with approximately
NOK 1 billion compared to the tender
pipeline three months ago. In Sweden, the tender pipeline for maintenance is
reduced by NOK 2.5 billion as
Storstockholms Lokaltrafik (SL) has decided to postpone tenders due
to the financial impact of Covid-19. The tender pipeline in rail
construction is still strong. In Norway, the tender pipeline has declined with
NOK 1.5 billion compared to three
months ago, mainly due to reduction of larger rail construction
tenders, but still a solid tender pipeline.
In October, the Norwegian parliament proposed a total budget for
2021 of NOK 26.5 billion, up close to
20% from revised budget for 2020, including an increase of
NOK 4.6 billion to rail investment
projects and a NOK 500 million
increase to maintenance and renewal spending. The increase in
investment projects is mainly targeted towards InterCity projects
already awarded. The maintenance backlog is expected to increase
further to NOK 23 billion at the end
of 2021 as renewal and maintenance spending of NOK 3.5 billion yearly are required to offset
actual wear on existing infrastructure. These factors indicate
continued growth in railway infrastructure investments and activity
in Norway. Start-up of several new
larger infrastructure projects around the greater Oslo-area are expected to support continued
high activity in the civil- and environment market.
The Swedish national budget proposed SEK
30.4 billion for rail investments and maintenance spending
for 2021, with a SEK 2.9 billion
increase allocated to investment projects. Most of the increase is
targeted to already on-going projects. The government has also
proposed a yearly increase in maintenance spending of SEK 500 million to keep up with the maintenance
backlog.
Central Government in Finland
announced in October a proposal for national budget in line with
NRC Group's expectations. Rail investments and maintenance spending
are at the same level next year as for 2020. Two years of a high
investment level indicates a strong outlook. Light rail investments
are expected to be at same level in 2021 as this year, mainly
related to on-going projects. NRC Group is involved in all larger
light rail projects under construction in Finland.
In February 2020, NRC Group
presented its strategy update to position NRC Group as a Nordic
leader in sustainable infrastructure. NRC Group has established a
clear strategic roadmap with the ambition of NOK 10 billion in revenues and 7% EBITA margin in
2024. This implies a return to the 2016-2017 average margins, with
the main uplift to come from internal improvements. Several
measures have been implemented to restore profitability and to
create the foundation for continued organic growth and expansion
with complementary services.
The revenue ambition reflects an extensive group-wide process
built on expected annual growth of 9% for the Nordic rail services
market, organic growth and expansion opportunities in complementary
services, and bolt-on M&As in existing segments and services.
The Group is positioned to benefit from large and growing
infrastructure markets that are supported by strong macro trends
such as sustainability, population growth and urbanisation, and
political consensus for increased investments in Norway, Sweden and Finland.
Update on Covid-19
In this quarter, NRC Group continued a sharp focus on adopting
guidelines and policies to prevent and handle COVID-19 outbreaks.
The Group monitors the development of the pandemic and its
potential impact on the industry and on business continuity. The
main risks are related to potential operational impact if outbreaks
intensify and restrictions are resumed. A global rising rate of
coronavirus infection leads to higher uncertainty. Governmental
restrictions and recommendations are intensified in Norway, Sweden and Finland, as the numbers of affected are at
highest levels since March. Restrictions related to workforce
mobility has been implemented and will lead to higher cost for the
impacted projects.
Operations depend on that customers, predominantly the public
transport agencies and the municipalities in Norway, Sweden and Finland, continue to announce and award
tenders as scheduled to enable efficient planning and execution of
projects during 2020 and 2021. Due to the financial impact Covid-19
has for SL in Stockholm, tenders
for maintenance and upgrades are on hold.
NRC Group's main priority is to keep employees safe while
maintaining operations. The Group communicate regularly and
transparently to equip teams for virtual working and safe project
execution. The Group complies with restrictions and guidelines from
relevant authorities and follow up with immediate actions when
relevant and needed.
Parts of NRC Group's activities are related to maintenance and
upgrades of existing railway infrastructure. These operations are
defined as critical to the society, and the company will prioritise
these activities in case of situations where certain resources
become scarce. NRC Group is well positioned to ensure business
continuity.
The Covid-19 pandemic has had limited operational impact for NRC
Group to date. Still, if outbreaks intensify and additional
restrictions are implemented by the governments, it will impact the
Group's day-to-day operations leading to higher production cost and
slow progress in affected projects.
Outlook
NRC Group maintains focus on implementation of the updated
strategy and improvement measures to restore profitability. The
long-term ambitions stand firm based on a positive market
outlook.
NRC Group expects revenue for the full year 2020 to be in line
with 2019. The Group revised the financial targets in second
quarter to an EBITA margin of 1.5-2.0% for 2020. Due to additional
write- downs in third quarter, it is most likely that the EBITA
margin will be in the lower end of this range. For 2021, the Group
targets an EBITA margin up towards 4% based on existing order book
and tender pipeline.
The third quarter 2020 result report and result presentation can
be found attached and will be available on the company's homepage:
www.nrcgroup.com.
For further information, please contact
Dag Fladby
Chief Financial Officer
NRC Group ASA on tel: +47-90-89-19-35
This information is subject of the disclosure requirements
pursuant to section 5-12 of the Norwegian Securities Trading
Act.
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The following files are available for download:
https://mb.cision.com/Public/15911/3234092/b4849f3a36821831.pdf
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NRC Group ASA Q3 2020
Result presentation
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https://mb.cision.com/Public/15911/3234092/bae6768678b8bcfb.pdf
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NRC Group ASA Q3 2020
Result report
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