Consti Plc Interim Report for January – September 2021
CONSTI PLC INTERIM REPORT 27 OCTOBER 2021, at 8.30 a.m.
Consti Plc
Interim Report for January –
September
2021
NET SALES GREW, PROFITABILITY
IMPROVED
7–9/2021
highlights (comparison figures in
parenthesis
7–9/2020):
- Net sales EUR 76.0 (68.2) million;
growth 11.4%
- EBITDA EUR 4.0 (3.2) million and
EBITDA margin 5.3% (4.8%)
- Adjusted operating result (EBIT) EUR
3.1 (2.6) million and Adjusted EBIT margin 4.1% (3.9%)
- Operating result (EBIT) EUR 3.1 (2.5)
million and EBIT margin 4.1% (3.6%)
- Order backlog EUR 217.9 (189.4)
million; growth 15.0 %
- Order intake EUR 40.0 (31.0) million;
growth 28.9%
- Free cash flow EUR 3.6 (4.6)
million
- Earnings per share EUR 0.29
(0.21)
1–9/2021
highlights (comparison figures in
parenthesis
1–9/2020):
- Net sales EUR 206.2 (196.5) million;
growth 4.9%
- EBITDA EUR 5.2 (7.7) million and
EBITDA margin 2.5% (3.9%)
- Adjusted operating result (EBIT) EUR
6.5 (6.0) million and Adjusted EBIT margin 3.2% (3.0%)
- Operating result (EBIT) EUR 2.7 (5.3)
million and EBIT margin 1.3% (2.7%)
- Order intake EUR 208.3 (160.0)
million; growth 30.2%
- Free cash flow EUR -0.7 (14.7)
million
- Earnings per share EUR 0.18
(0.43)
Guidance on the Group outlook for
2021:
The Company estimates that its operating result for 2021 will be in
the range of EUR 4-8 million.
KEY FIGURES (EUR 1,000) |
7-9/2021 |
7-9/2020 |
Change % |
1-9/2021 |
1-9/2020 |
Change % |
1-12/2020 |
Net sales |
75,984 |
68,202 |
11.4 % |
206,168 |
196,548 |
4.9 % |
274,646 |
EBITDA |
4,033 |
3,249 |
24.1 % |
5,188 |
7,711 |
-32.7 % |
11,440 |
EBITDA margin, % |
5.3 % |
4.8 % |
|
2.5 % |
3.9 % |
|
4.2 % |
Adjusted operating result (EBIT) |
3,124 |
2,631 |
18.7 % |
6,524 |
5,955 |
9.5 % |
9,478 |
Adjusted EBIT margin, % |
4.1 % |
3.9 % |
|
3.2 % |
3.0 % |
|
3.5 % |
Operating result (EBIT) |
3,124 |
2,454 |
27.3 % |
2,694 |
5,283 |
-49.0 % |
8,237 |
Operating result (EBIT) margin, % |
4.1 % |
3.6 % |
|
1.3 % |
2.7 % |
|
3.0 % |
Profit/loss for the period |
2,233 |
1,694 |
31.8 % |
1,427 |
3,533 |
-59.6 % |
5,675 |
Order backlog |
|
|
|
217,895 |
189,402 |
15.0 % |
177,857 |
Free cash flow |
3,608 |
4,599 |
-21.6 % |
-678 |
14,692 |
|
18,334 |
Cash conversion, % |
89.4 % |
141.5 % |
|
n/a |
190.5 % |
|
160.3% |
Net interest-bearing debt |
|
|
|
18,635 |
7,383 |
152.4 % |
4,737 |
Gearing, % |
|
|
|
62.6 % |
23.6 % |
|
14.1 % |
Return on investment, ROI % |
|
|
|
9.3 % |
14.1 % |
|
13.6 % |
Number of personnel at period end |
|
|
|
998 |
959 |
4.1 % |
927 |
Earnings per share, undiluted (EUR) |
0.29 |
0.21 |
38.1 % |
0.18 |
0.43 |
-58.1 % |
0.70 |
|
CEO Esa
Korkeela’s
comment
“During the third quarter of 2021, our net sales were 76.0
(68.2) million euro. Our net sales grew 11.4 percent to the
comparison period.
Our adjusted operating result (EBIT) for July-September before
items affecting comparability was 3.1 (2.6) million euro, which is
4.1 (3.9) percent of our net sales. Operationally the third quarter
advanced as expected and our projects largely progressed as
planned. Our operating result (EBIT) for the third quarter was 3.1
(2.5) million euro, which is 4.1 (3.6) percent of our net sales.
All our business areas improved their profitability in
July-September from the comparison period. Construction material
price increases and material availability did not have a
significant impact on our business during January-September. The
impact was limited due to the labour-intensive nature of
renovation, the timing of procurement in our ongoing projects, and
the contract models in our project portfolio.
During July-September, our order intake was 40.0 (31.0) million
euro, which means an increase of 28.9 percent from the comparison
period. Our order intake in January-September increased by 30.2
percent from the comparison period and amounted to 208.3 (160.0)
million euro. Our order backlog at the end of the reporting period
increased by 15.0 percent from the comparison period and was 217.9
(189.4) million euro. The good order intake during the ongoing
year, the strengthened order backlog, and the growth in net sales
are good indications of how well our customers have received our
new strategy focusing on customer orientation, sustainability, and
the expansion into the new construction services.
During the reporting period, we completed our first acquisition
in accordance with our new strategy by acquiring the share capital
of RA-Urakointi Oy, which operates in Uusimaa. RA-Urakointi Oy is a
company specialising in the repair of apartments and row houses.
Its service offering includes facade repairs and seams as well as
various microbial and bathroom repairs. Our strategic goal has been
to meet the increased demand in the housing company market. The
acquisition will strengthen our expertise, especially in special
contracting and in meeting the renovation needs of row houses.
One of our strategic goals is controlled and profitable growth
in attractive building technology segments. To accelerate the
implementation of the strategy and increase our efforts, especially
in the growth of our service business in building technology, we
appointed Heikki Pesu as Business Area Director of Building
Technology and as a member of Consti Oyj's Management Team during
the reporting period.
The market environment for construction and building technology
services remained at an adequate level during the third quarter.
The coronavirus pandemic (COVID-19) did not have a significant
impact on our ability to carry out our projects during the
reporting period. The pandemic continues to have a negative effect
on the demand for renovation and modification work in commercial
premises, but the market is gradually recovering. On the other
hand, the rapid rise in construction costs and problems with the
availability of construction materials have increased uncertainty
in the market environment. Although the rise in input prices is
expected to slow down towards the end of the year, construction
cost development and availability problems may have a negative
impact on the ability to advance ongoing projects according to
plans and on the demand situation.
Our strong order backlog puts us in a good position to continue
positive solid development in the last quarter of the year as
well.”
Operating environment
Construction market 2021-22
In its October report, the Confederation of Finnish Construction
Industries RT estimates that the total volume of construction in
2021 will grow by about 1.5 percent from the previous year.
According to RT's forecast, the renovation market is expected to
grow by about one percent in 2021. RT predicts that in 2022, the
total construction volume will grow to about 2.5% and the
renovation market will grow to 2.0%.
A construction trends group led by the Ministry of Finance
assessed the development of construction trends in its Construction
2021–2022 report, which was published in September. The group
estimates that construction will grow by 0–2% this year. The report
predicts that the busiest phase of construction will take place in
the second half of 2021 and the first half of 2022. According to
the construction trends group’s forecast, construction output will
grow by 2–4 percent in 2022.
The group estimates that renovation will grow approximately 1.5%
in 2021 and the growth is expected to pick up to two percent in
2022. In 2021 and 2022 renovation growth is expected in both
residential and commercial buildings, due to improved health safety
brought about by vaccination coverage, the positive development of
the economy, low interest rates, the repair needs generated by the
lively housing and leisure housing trade, and pent-up repair
needs.
According to the Confederation of Finnish Construction
Industries RT, the rapid rise in construction costs and the
challenges related to the availability of materials and personnel
are risk factors in the construction industry’s economic
outlook.
The renovation market in general
The value of professional renovations in total was nearly 14
billion euro in 2020, with residential building renovations’ share
amounting to 8.0 billion euro. Most renovations are conducted in
apartment buildings and row houses.
Professional renovation has grown nearly continuously in Finland
for the past 20 years. Renovations’ share of all construction was
approximately 47 percent in 2020.
According to a renovation market analysis, which was conducted
for Rakennuslehti magazine by Forecon, the volume of renovation
construction tripled in Finland between 1980 and 2020. Forecon
estimates that repairs increased by approximately 3 billion euro in
the 2010s and will continue to grow by approximately 2 billion euro
in the 2020s. Growth is expected to slow down as the industry
grows, but renovations have better growth prospects than new
construction does when looking at the entire 2020s.
Public service construction, especially schools and hospitals,
has grown rapidly in recent years. New construction of schools is
estimated to continue active, but on the whole public construction
is expected to decline in upcoming years. This will have a
considerable impact on the volume development of construction.
The need for facade renovations is growing, mainly due to the
age of the building stock in Finland. Residential construction was
at its heights in the 1970s and the building technology, facades
and structures from that time now require major renovations.
However, housing companies from the 1960s have still been renovated
most when looking at the value of the renovations in proportion to
the net floor area. Housing companies from the 1960s are clearly
the largest group especially in building technology
renovations.
Building technology renovations are the fastest growing area of
renovations, including for example pipeline renovations, heating,
ventilation, cooling and electrical renovations. Forecon estimates
that in the 21st century, the growth of building technology
renovations has been about 4–5 percent per year, while renovation
growth has been about 1–2 percent per year on average. In recent
years, building technology has accounted for almost half of all
renovations in housing companies and about 40 percent of the total
renovation of the housing stock.
Structures and facades are the second largest group, making up
nearly 40 percent of all renovations. For financial reasons, facade
renovations have had to be postponed in many housing companies to
make room for pipeline renovations. According to the Finnish Real
Estate Federation’s renovation barometer, there is currently almost
the same number of facade and pipeline renovations ongoing in
housing companies. The barometer estimates that in upcoming years
renovation needs will focus increasingly on facades.
Approximately one fifth of renovations are repair and
maintenance renovations.
The demand for renovation is maintained by the large building
stock of residential buildings from the 1970s and also renovation
needs in commercial and office buildings. In the 1980s commercial
and office building construction was especially large-scale in
Finland, and in the 1990s and early 2000s more commercial and
office buildings were built than residential buildings. Premises
from that era do not necessarily meet present-day needs. In
addition, the growing amount of remote work and online shopping due
to the corona pandemic add new challenges to the efficient use of
premises.
Megatrends such as aging population, urbanisation and climate
change also add to renovation needs. Like new construction,
renovation is also estimated to continue concentrating to growth
centres and regional differences in growth are expected to
strengthen even more in future.
Climate change mitigation requires for instance improved energy
efficiency in buildings, as stipulated in the EU’s energy
efficiency directive. This is fostered for example with building
technology and facade renovations. Adaption to weather variations
caused by climate change necessitates meticulous maintenance of
facades in particular.
Outlook for the
2021
The volume of construction is estimated to grow in 2021 by about
1.5 percent from the previous year. The busiest phase of
construction is estimated to take place in the second half of 2021
and the first half of 2022. The renovation market is estimated to
grow by about one percent in 2021 and the growth is expected to
rise to 2.0 percent in 2022.
Uncertainty in the operating environment towards the end of the
year is intensified in particular by the rising costs of
construction materials and possible availability problems. The
increase in the price level and availability of construction
materials did not have a significant impact on Consti's business in
January-September. The impact was limited due to the
labour-intensive nature of renovation, the timing of procurement in
ongoing projects, and the contract models in the project portfolio.
In the fourth quarter, the impact is estimated to be somewhat
higher for ongoing projects where a rapid increase in material
costs has not been sufficiently considered at the tendering phase.
In addition, the coronavirus pandemic continues to cause
uncertainty in the operating environment.
The Company estimates that its operating result for 2021 will be
in the range of EUR 4-8 million
Press conference
Microsoft Teams meeting for analysts, portfolio managers and
media representatives, will take place 27 October 2021, at 10:00
a.m. (EET). The meeting will be hosted by CEO Esa Korkeela and CFO
Joni Sorsanen.
Financial communication in
2022
Consti Plc’s Financial Statements for 2021 will be published 4
February 2022.
The electronic version of the annual report, which includes the
full financial statements for 2021, will be published in week
11/2022.
Consti Plc’s Annual General Meeting for 2022 is scheduled to
take place on Tuesday, 5 April 2022 in Helsinki.
Consti Plc shall publish three interim reports during 2022:
- Interim report 1-3/2022 published
29 April 2022
- Half-year financial report
1-6/2022 published 22 July 2022
- Interim report 1-9/2022 published
27 October 2022
CONSTI PLC
Further information:
Esa Korkeela, CEO, Consti Plc, Tel. +358 40 730 8568Joni
Sorsanen, CFO, Consti Plc, Tel. +358 50 443 3045
Distribution:
Nasdaq Helsinki Ltd.Major mediawww.consti.fi
Consti is a leading Finnish company concentrating on renovation
and technical services. Consti offers comprehensive renovation and
building technology services and selected new construction services
to housing companies, corporations, investors and the public sector
in Finland’s growth centres. Company has four business areas:
Housing Companies, Corporations, Public Sector and Building
Technology. In 2020, Consti Group’s net sales amounted to 275
million euro. It employs approximately 1000 professionals in
renovation construction and building technology.
Consti Plc is listed on Nasdaq Helsinki. The
trading code is CONSTI. www.consti.fi
- Consti Interim Report 1-9 2021
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