AF Gruppen (AFG) reported a 27 per cent increase in revenues to NOK 6 607
million for the 1st quarter of 2020, compared with the same quarter last year.
Earnings before tax were NOK 206 million. 

Revenues for the 1st quarter were NOK 6 607 million (5 214 million) and earnings
before tax were NOK 206 million (226 million). This corresponds to a profit
margin of 3.1 per cent (4.3 per cent). The group reported a historically high
order backlog of NOK 32 492 million (23 679 million) at the end of the quarter. 
The outbreak of COVID-19 has had a limited effect on the earnings for the
quarter, but it has resulted in challenging conditions in certain market
segments. There is uncertainty related to the further consequences of the
COVID-19 outbreak, which includes a weakened Norwegian krone, access to foreign
labour, the level of investment in the private sector and start-up of new
projects.

AF Gruppen is in a very strong financial position. Net operating cash flow was
NOK 499 million (257 million) for the 1st quarter of 2020. As at 31 March 2020,
AF Gruppen had net interest-bearing receivables of NOK 52 million (-189 million)
and available liquidity of NOK 3 711 million. Earnings per share for the quarter
were NOK 1.23 (NOK 1.41). 

“Building and civil engineering are of enormous importance to the creation of
value in Norway and have contributed in recent months to the visibility of
Norway’s largest, land-based industry, since we have maintained production as an
industry at a very challenging time,” says CEO Morten Grongstad of AF Gruppen. 

AF imposes the same strict requirements on all its partners and suppliers as on
its own employees. Figures from subcontractors are included in the injury
statistics. The LTI-1 rate for the 1st quarter was 1.6 (1.9). For 2019, the
LTI-1 rate was 1.2 (0.8). 

“Health, safety and the environment are our number one priority, and our goal is
that no one should get injured by working at or for AF. This quarter there was a
powerful reminder of the importance of care, safety and responsible operations
due to a fatal accident in one of our projects in Nordhordland. Such an accident
affects us as an organisation, and it is our responsibility to learn as much as
we can from the incident and implement clear measures. During this period, we
have also been exposed to risk that is to some extent beyond our control, namely
the COVID-19 outbreak. I am impressed by all our employees who have worked hard
in a challenging situation to perform important societal duties, for which we
are responsible, and exhibited good, practical infection control,” says
Grongstad. 

AF works in a systematic and goal-oriented manner to avoid work-related absence.
Our goal is overall sickness absence of less than 3.0 per cent. Sickness absence
was 4.9 per cent (3.7 per cent) for the 1st quarter, and 3.8 per cent (3.3 per
cent) for 2019. Sickness absence was somewhat higher than normal in the last
part of March due to the quarantine provisions and an increased proportion of
employees who were at home in accordance with the authorities’ orders.

“Even though many units delivered good results for the quarter, the bottom line
is not where we would like it to be. Our goal is clearly to improve our
performance throughout the year. This mostly concerns ourselves and our ability
to ensure good operational performance. Since its establishment, AF has had a
culture, willingness and ability to find new and better ways to solve tasks. AF
had a very solid financial and market position at the start of the COVID-19
outbreak, and our goal is to emerge stronger from this challenging situation,
especially because we have the best people in the industry,” says Grongstad. 

Selected highlights from the quarter: 
• The civil engineering market in Norway is still characterised by a stable,
high level of investment, from the public sector in particular. AF Anlegg has
several projects in the final phase that contributed overall to the unit’s good
earnings for the quarter. AF Anlegg has been awarded several major contracts
that will start up this year, and increased its order backlog by 30 per cent,
compared with the corresponding quarter in 2019. 
• Revenue was stable in the Building business area, and the unit achieved a
profit margin of 4.6 per cent for the quarter. Even with a high level of
activity and good order backlog, there is greater uncertainty concerning the
start-up of planned projects. This is particularly true in the residential
property market, where the sale of new residential units has slowed down, which
has entailed a more uncertain order situation for the intermediate future. 
• Betonmast became a part of AF Gruppen on 31 October 2019. Betonmast reported
revenues of NOK 1 823 million and earnings before tax of NOK 46 million for the
quarter. There was variation in the results from the different units, and an
active effort is being made to determine how Betonmast and AF Gruppen can best
exploit each other’s expertise, improve safety work and increase the creation of
value. 
• Property sold 80 (162) residential units during the quarter, 28 (55) of which
were AF’s share. Residential unit sales slowed down in March as a result of the
spread of COVID-19 and the measures implemented by the authorities. The sales
ratio for commenced projects was 86 per cent. 
• Energy and Environment reported good environmental clean-up, demolition and
recycling projects, and the environmental centres reported good profitability.
Due to provisions for losses related to a pending dispute, the unit reported
results for the quarter that were below expectations. 
• The Sweden business area achieved revenue growth of 23 per cent for the
quarter compared with the same quarter last year, and this was primarily
attributed to revenue growth for HMB and Kanonaden. There was variation in the
level of activity for the remaining Swedish operations. 
• The Offshore business area saw very challenging market conditions as a result
of the fall in oil prices and the outbreak of COVID-19 and reported weak results
for the quarter. 


For further information:
Morten Grongstad, CEO, mobile +47 991 53 905
Sverre Hærem, CFO, mobile +47 952 45 167
Knut Ekern, Director Corporate Communications, mobile +47 930 02 600
www.afgruppen.com