High level of activity and record high order backlog

Revenues for the second quarter totalled NOK 7,853 million (NOK 8,292 million) and amounted to NOK 15,246 million (NOK 15,101 million) for the first half of the year. Profit before tax was NOK 292 million (426 million) in the second quarter and NOK 305 million (635 million) for the first half of the year. This resulted in a profit margin of 3.7% (5.1%) for the second quarter and 2.0% (4.2%) for the first half of the year. AF Gruppen had an order intake of NOK 10,877 million in the second quarter and an order backlog of NOK 44,693 million (42,003 million) at the end of the quarter. 

"We are maintaining a high level of activity and have a solid order intake, especially within the Civil Engineering business area. It is also gratifying that we are delivering good results within Civil Engineering, as well as within Energy and Environment. The Construction business area had a solid margin improvement from the first quarter," says Amund Tøftum, CEO of AF Gruppen. 

Net operating cash flow was NOK 227 million (619 million) in the second quarter of 2023 and NOK 203 million (NOK 1,226 million) for the first half of the year. As at 30 June 2023, AF Gruppen had net interest-bearing liabilities of NOK 1,582 million (-145 million). Earnings per share amounted to NOK 1.72 (NOK 2.67) during the second quarter, and NOK 1.69 (NOK 4.07) for the first half of the year.

AF imposes the same strict safety requirements on all its partners and suppliers as it does on its own employees. AF’s subcontractors are included in the injury statistics. The LTI rate for the second quarter was 0.7 (1.7). For the first six months of 2023 the LTI rate was 1.1 (1.3).

AF works in a systematic and targeted manner in order to avoid work-related absence. Absence due to illness in the second quarter was 3.9% (4.1 %), and for the first six months of 2023 4.2% (4.8%).

“Innovation is one of four strategic initiatives in our corporate strategy. Digital solutions and AI provide better support for decision-making and more efficient project execution. We both develop innovative solutions ourselves and invest in venture companies that can help shape our industry. We have been actively using AI for several years and are very positive about the opportunities this represents for the construction industry," says Tøftum.

Selected highlights from the quarter:

• Civil Engineering had a high level of activity in the quarter and delivered a good result. AF Anlegg had two major projects in production and several major projects in the start-up phase at the end of the quarter.  E6 Rentvannstunnel in Oslo and Bergtunnlar Lovö in Stockholm both have a high level of activity and good operations.  The projects E1 Vannbehandlingsanlegg at Huseby in Oslo, the Cable Tunnel between Sogn and Ulven in Oslo, E6 Storhove-Øyer, and Mo i Rana airport are in the start-up
  phase.  Målselv Maskin & Transport had strong revenue growth and a very good result in the second quarter. Stenseth & RS reported a good result.
• The Construction business area maintained a high level of activity, with improved results and margins when compared with the same quarter last year. AF Bygg Østfold, Strøm Gundersen, Strøm Gundersen Vestfold and Haga & Berg had very good results in the quarter, while AF Håndverk and Åsane Byggmesterforretning reported good results.  The Construction business area had a significant order intake and five contracts were reported to the stock exchange during this quarter.
• Betonmast reports a result below expectations in the 2nd quarter, with improved profitability compared to the same quarter last year. There was a wide variation in the earnings of the units.  The Betonmast Trøndelag, Romerike, Røsand and Asker and Bærum units delivered good results in the quarter.
• Property consists of two operating units, AF Eiendom and LAB Eiendom, with a local presence in Greater Oslo and the Bergen region respectively. Sales contracts for 16 (64) homes were signed in the quarter, of which AF’s share is 7 (29).  So far this year, sales contracts have been signed for 36 (121) homes, of which AF’s share is 17 (54).  There were six residential property projects in the production stage at the end of the quarter.  A total of 885 units are in production, of which AF’s share is 410.  This gives a sales ratio of 75% for commenced projects.
• Energy and Environment had a higher level of activity in the second quarter, and overall achieved a good result that was on par with the same quarter last year.  AF Decom, which demolishes and sorts different materials for recycling, maintained its level of activity in the second quarter when compared with the same quarter last year. The unit delivered a result that was somewhat below expectations.  AF Energi reported significant revenue growth during the quarter.  A high level of activity and good operational performance in the projects contributed to a good second quarter result for AF Energi.
• In total, the Sweden business area delivered a positive result for this quarter, however there was still a large gap between the best and weakest performances.  Kanonaden, AF Prefab in Mälardalen and AF Härnösand Byggreturer reported both revenue growth and very good results for this quarter.  AF Bygg Syd and HMB made good profit contributions, however margins for the quarter were somewhat below expectations.  Other construction units deliver negative results also for the 2nd quarter.
• The Offshore business area delivered a good result for the quarter. AF Offshore Decom demolishes and facilitates the recycling of offshore installations, and delivered good profitability, with a high level of activity at the Environmental Base at Vats during the second quarter.  Aeron had a high level of activity during the quarter and very good profitability.