AF Gruppen (AFG) Q2 2024 earnings summary

Executive summary

• Q2 2024 saw weak results, mainly due to a NOK 240 million downward adjustment of a Dutch offshore project, with varying performance across business areas and a collectively weak result; Civil Engineering and Energy & Environment delivered strong results, while Offshore posted a significant loss; safety and sick leave metrics improved.

Financial highlights

• Q2 revenue was NOK 7,651 million, down 3% from Q2 2023; YTD revenue NOK 14,838 million, down 3% from last year.

• Earnings before tax in Q2 were NOK 21 million, sharply down from NOK 292 million last year, mainly due to offshore write-downs; YTD EBT NOK 207 million vs. NOK 305 million.

• Q2 profit margin was 0.3% (3.7% last year); YTD margin 1.4% (2.0%).

• Cash flow from operations in Q2 was NOK 661 million, up from NOK 227 million; YTD NOK 789 million vs. NOK 203 million.

• Order intake in Q2 was NOK 5,629 million, down from NOK 10,877 million; order backlog at quarter-end was NOK 38,253 million (down from NOK 44,693 million).

Outlook and guidance

• Construction costs are expected to remain high due to increased labour and material costs, stricter climate regulations, and higher electricity and CO₂ taxes.

• No significant decrease in construction costs is anticipated in the near future; industry must focus on productivity and collaboration to control costs.

• High interest rates and geopolitical uncertainty continue to impact activity in Norway and Sweden; Norwegian policy rate held at 4.5%, Swedish rate cut to 3.5%.

• Civil engineering market expected to remain stable in Norway and slightly decrease in Sweden; construction market in Norway forecast to decline 4.3% in 2024, with growth expected in 2025.

• Energy efficiency and environmental services are seeing growing demand; offshore wind and electrification present new opportunities.