AF Gruppen with low profitability in the second quarter of 2024

Revenues for the second quarter totalled NOK 7,651 million (7,853 million) and amounted to NOK 14,838 million (15,246 million) for the first half of the year. Profit before tax was NOK 21 million (292 million) in the second quarter and NOK 207 million (305 million) for the first half of the year. This resulted in a profit margin of 0.3% (3.7%) for the second quarter and 1.4% (2.0%) for the first half of the year. AF Gruppen had an order intake of NOK 5,629 million (10,877 million) in the second quarter and an order backlog of NOK 38,253 million (44,693 million) at the end of the quarter. 

“AF Gruppen maintained a high level of activity in the quarter, but the result is impacted by downward adjustments made to the estimated results for one of the Group’s offshore projects. The quarter includes several strong performances, especially in the areas of Civil Engineering and Energy and Environment. It is gratifying to see continued positive trends in safety performance and sick leave,” says Amund Tøftum, CEO of AF Gruppen. 

Net operating cash flow was NOK 661 million (227 million) in the second quarter of 2024 and NOK 789 million (203 million) for the first half of the year. As at 30 June 2024, AF Gruppen had net interest-bearing liabilities of NOK 979 million (1,582 million). Earnings per share amounted to NOK -0.07 (NOK 1.72) during the second quarter, and NOK 1.23 (NOK 1.69) 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 0.4 (0.7). For the first six months of 2024 the LTI rate was 0.6 (1.1).

AF works in a systematic and targeted manner to avoid work-related absence. Sick leave in the second quarter was 3.6% (3.9%), and for the first six months of 2024 was 4.1% (4.2%).

“In recent years, the construction industry has experienced a high level of uncertainty regarding market forces that affect activity and employment for most players in the industry. To stimulate increased activity and profitability, the whole industry must work together to strengthen interaction, innovation and productivity throughout the value chain,” says Tøftum.

Selected highlights from the quarter:

• Civil Engineering significantly increased activity in the 2nd quarter with a revenue growth of 59% compared to the same quarter last year. AF Anlegg had another quarter of record-high revenue and delivered good results. The unit has a solid project portfolio with several major projects in production, and there is a high level of activity and good operational performance in the projects in general. Målselv Maskin & Transport, Stenseth & RS and VSP reported very good results for the 2nd quarter.
• Construction saw a decline in revenue of 15% in the 2nd quarter compared with the same quarter last year. AF Bygg Østfold, Strøm Gundersen, Strøm Gundersen Vestfold and Haga & Berg delivered very good results for the quarter, while AF Byggfornyelse and ÅBF reported good results.
• Betonmast reported a weak result for the quarter. Betonmast Røsand, Innlandet and Østfold units delivered good results for the quarter. Betonmast Romerike and Buskerud-Vestfold reported results somewhat below expectations and Betonmast Asker og Bærum delivered results below expectations. Betonmast Boligbygg, Oslo and Trøndelag reported weak results this quarter.
• Property reported a weak result for the quarter. A challenging property market with high interest rates and uncertain market sentiment continues to contribute to low sales figures. Sales contracts for 21 (16) homes were signed in the quarter, of which AF’s share is 10 (7). In the 2nd quarter, a total of 132 homes were handed over, mainly in the projects Skårersletta MIDT and Bekkestua Have. There were a total of 41 (4) completed unsold units at the end of the quarter, of which AF's share was 21 (1). There were three residential property projects in the production stage at the end of the quarter. A total of 589 units are in production, of which AF’s share is 246. This gives a sales ratio of 68% for commenced projects.
• Energy and Environment increased its level of activity by 19 % in the second quarter, compared with the same quarter last year, and reported good profitability. AF Energi has significantly increased activity compared to the same quarter last year. A high level of activity and good operational performance in many projects contributed to a good result for the 2nd quarter. AF Energi completed the purchase of 70% of the shares in ETA Norge, a contractor in bioenergy, during the quarter. AF Decom had a high level of activity compared with the same quarter last year and delivered good results for the 2nd quarter.
• There are still significant variations in the results from Sweden. AF Prefab i Mälardalen delivered very good results for the 2nd quarter, while Kanonaden and AF Härnösand Byggreturer reported good results. The former Betonmast Sweden companies had negative results also this quarter. AF Anläggning Väst has now been discontinued.
• The Offshore business area delivered a negative result for the quarter. Further downward adjustments have been made to the estimated results for one project in AF Offshore Decom carried out on the Dutch continental shelf. The estimate was revised down by NOK 240 million excl. VAT. This project was also mentioned and had a downward adjustment in the second half of 2023. Aeron has increased activity compared to the same quarter last year and reported good profitability for the quarter.