Veidekke (VEI) Autumn Market Update 2024 Presentation summary

Market overview and macroeconomic environment

• Scandinavian contracting market in 2023 was valued at ~NOK 1,035 billion, with civil engineering, apartments, and commercial buildings as major segments.

• Activity dropped in 2023 and is forecast to decline by 14% in 2024, but an 8% total growth is expected over 2025–2026, recovering about half the decline by end-2026.

• Civil engineering is expected to maintain robust activity, while construction is more affected by previous interest rate hikes and inflation.

• Scandinavian countries maintain strong public finances, positive trade balances, and high global competitiveness rankings.

• Household purchasing power is rising, job security remains high, and interest rates are falling, supporting future demand.

Demographics, municipal finances, and regulatory trends

• Population growth is slowing, especially in Sweden and Denmark, impacting demand for schools and increasing need for elderly care facilities.

• Municipal investment capacity is pressured by rising costs and debt, shifting priorities toward water, sewerage, and refurbishment over new public buildings.

• The EU’s new Building Directive (EPBD) requires zero-emission standards for new buildings by 2030 and significant upgrades to existing stock, driving rehabilitation and newbuild incentives.

Contracting market trends by segment

• Order intake for new apartments and small houses in Norway and Sweden fell 16% and 12% respectively in H1 2024, but moderate improvement is expected, especially in Sweden.

• Commercial building order intake dropped 13% in Norway and 33% in Sweden in H1 2024, with industrial and warehouse segments most affected.

• Public building starts increased in Norway due to hospital projects, while education sector starts fell; care sector and refurbishment are expected to see growth.

• Civil engineering and infrastructure markets remain strong, supported by high government investment, especially in transport and defence.