Today, 12 May 2021, NRC Group has released its financial results for the first quarter of 2021.
The presentation is available on the following webcast link:
A Q&A session will be held at 10.00 AM (CET), and investors, analysts and journalists are welcome to participate.
Participants dial-in numbers:
NO: +47 2100 2610
SE: +46 (0)8 5664 2753
FI: +358 (0)9 7479 0361
DK: +45 3515 8049
International: +44 (0)330 336 9126
US: +1 929-477-0448
Below you will find highlights and a summary from the report.
- NOK 1.1 billion (NOK 1.3 billion)
- NOK -59 million (NOK -54 million)
- Order intake of NOK 0.9 billion (NOK 1.4 billion)
- Order backlog of NOK 6.0 billion (NOK 8.0 billion)
- Operating cash flow of NOK 17 million (NOK 43 million)
- Cash position of NOK 551 million (NOK 821 million)
Comments on first quarter 2021 results
First quarter revenue was NOK 1,129 million compared to NOK 1,254 million for the same period of 2020. The revenue growth was -10% in the quarter mainly explained by an extraordinary sale of inventory of NOK 110 million in first quarter last year. Group EBITA* was NOK -59 million compared to NOK -54 million for the same period last year. The EBITA* margin was -5.2%.
Revenue in Norway was NOK 423 million compared to NOK 407 million in the first quarter of 2020. The organic growth was 4% in the quarter mainly explained by increased revenue in rail construction. EBITA* was NOK -17 million, com- pared to NOK -14 million in the same period of 2020. The EBITA margin was -4.0% this quarter compared to -3.5% for the same period last year.
Revenue from the Swedish operation amounted to NOK 259 million for the quarter compared to NOK 311 million in the same period of 2020. The organic growth in the quarter was -19% in local currency. The revenue was significantly lower than last year mainly due to the low order book going into 2021. The EBITA* was NOK -35 million compared to NOK -27 million in the same period of 2020, due to lower revenue and lower utilisation of machines. The EBITA* margin was -13.4% for the quarter compared to 8.8% last year.
Finland had revenue of NOK 446 million compared to NOK 540 million in the first quarter of 2020. The organic growth was -16% in the quarter in local currency. Adjusted for the additional sale of inventory of approximately NOK 110 million in first quarter last year, the revenue was approximately at same level. The EBITA* was NOK 2 million compared to NOK -3 million in the same period of 2020. EBITA* margin was 0.4% for the quarter, an increase from -0.6% last year, mainly explained by improved profitability in rail construction.
Group operating profit (EBIT) for the quarter was NOK -77 million, at same level as last year. Net financial items amounted to NOK -18 million for the quarter, compared to NOK -22 million for the same period last year. The Group has a 20% interest in a joint venture sharing risks and rewards of two larger projects with Astaldi and Gülermak in connection with the Station Haga in Gothenburg. The projects are complex with substantial risk, hence net income from the associated company has been reported at zero.
The order backlog amounted to NOK 5,961 million at end of March. First-quarter order intake was NOK 860 million, split on announced contracts of NOK 386 million and unannounced order intake of NOK 474 million including currency adjustments of NOK -245 million due to NOK strengthening vs SEK and EUR in the quarter. The unannounced order intake also includes a reversal of NOK 183 million due to a decision from the Market Court in Finland which annulled the previous decision of the appointed contract of Maintenance Area 5 (with reference to stock release 1 March 2021). The contract was valued at approximately EUR 25 million, with an estimated yearly production of EUR 5 million in the period 2021 to 2025. The decision is estimated to have limited financial effect in 2021. The FTIA is expected to re-announce the contract to the market in the third quarter this year. NRC Group Finland will operate the contract for six months after the contract is awarded.
In Norway, new orders included an appointed contract by Oslo municipality of NOK 185 million, for ground, foundation and construction work in connection with establishing a new access tunnel to the Fornebu Metro Line at Skøyen. The work commenced in April 2021 and is scheduled for completion in October 2022. New orders in Finland included renewal of existing railway yards at Törölä, Tapavainola and Rasinsuo. The contract was appointed by FTIA, valued at EUR 6.25 million. The work commenced in April 2021 and is scheduled for completion in September 2022. The FTIA also appointed NRC Group Finland to a contract at EUR 4.8 million for signal installation at Oulu station. The work will commence in May 2021 and is scheduled for completion in November 2022. In Sweden, new orders included a SEK 51 million contract of civil construction work in connection with the installation of wind turbines in Sunne. The work commenced in February 2021 and is scheduled for completion in April 2022. NRC Group Sweden was also appointed to a contract of SEK 36 million by Premium Svensk Lax AB, for ground, foundation and construction work at Säffle. The work commenced in March 2021 and the project is scheduled for completion in October 2021.
The Group has identified an addressable tender pipeline of approximately NOK 22 billion for the next nine months. This compares to a NOK 21 billion tender pipeline three months ago and NOK 18 billion at the same time in 2020.
The tender pipeline in Finland is approximately NOK 3.9 billion, a decrease of approximately NOK 1.2 billion compared to the tender pipeline three months ago, but approximately NOK 2.4 billion higher than the same period last year. The first National Transport System Plan (NTSP) in Finland has now been prepared by the Government. It covers the period from 2021-2032. The NTSP is expected to be approved by the Parliament during spring 2021.
In Sweden, the tender pipeline is approximately NOK 9.2 billion, a decrease of NOK 0.3 billion since three months ago and at same level as the same period last year. The Government in Sweden has recently presented their proposal for the National Transportation Plan (NTP) for the period 2022-2031 totalling SEK 799 billion. This is an increase of SEK 176 billion from the existing NTP. The NTP is expected to be approved in first half of 2022.
The tender pipeline in Norway is approximately NOK 9.2 billion, an increase of NOK 3.1 billion compared to the tender pipeline three months ago and an increase of approximately NOK 2.0 billion at the same time last year. The increase is mainly driven by larger pipeline in Rail construction and the tender for the first maintenance contract which will be in the market in the second half of 2021. The Government in Norway has recently presented a proposal for the National Transportation Plan for the period 2022-2033. Total investment proposal to railway infrastructure is NOK 400 billion, an increase of NOK 72 billion from existing NTP. The NTP for 2022-2033 is expected to be approved before summer in 2021.
Update on Covid-19
NRC Group continues a sharp focus on adopting guidelines and policies to prevent and handle Covid-19 outbreaks. The Group monitors the development of the pandemic and its potential impact on the industry and on business continuity. The main risks are related to potential operational impact if outbreaks intensify, and restrictions are resumed. Operations also depend on that customers, predominantly the public transport agencies and the municipalities in Norway, Sweden and Finland, continue to announce and award tenders as scheduled to enable efficient planning and execution of projects during 2021. Governmental restrictions and recommendations were intensified in all three countries as the numbers of affected has increased in first quarter and continued into second quarter in 2021. In order to limit import infection, foreigners’ access to Norway has been tightened sharply. Only those non- Norwegian citizens who are residents of Norway are permitted to enter the country. In the first quarter, persons, including Norwegian citizens and foreigners residing in Norway, must spend the entry quarantine at quarantine hotels. A limited access for qualified foreign workers specialised in concrete work, has impacted the operation in some projects. Operations in Sweden are not affected by entry restrictions as no foreign workers are used in the operation. Finland still has open borders to foreign nationals seeking entry with a few exceptions.
NRC Group’s main priority is to keep employees safe while maintaining operations. The Group communicates regularly and transparently to equip teams for virtual working and safe project execution. The Group complies with restrictions and guidelines from relevant authorities and follows up with immediate actions when relevant and needed.
Parts of NRC Group’s activities are related to maintenance and upgrades of existing railway infrastructure. These operations are defined as critical to the society, and the company will prioritise these activities in case of situations where certain resources become scarce.
The Covid-19 pandemic has had limited financial impact for NRC Group to date. Still the long-term impact for the societies and people is characterised by uncertainty due to volatility in infection rates and new restrictions.
NRC Group is strongly positioned in a growing market with a substantial tender pipeline. Recently confirmed national budgets and updated proposals of the National Transportation Plans with increasing long-term investments confirm a positive market outlook.
NRC Group continues focus on implementation of the updated strategy and improvement measures to restore profitability. For 2021, the Group expects an EBITA margin between 1.75% and 2.5%.
The first quarter 2021 result report and result presentation can be found attached and will be available on the company’s homepage: www.nrcgroup.com.
For further information, please contact Dag Fladby, Chief Financial Officer, NRC Group ASA on tel: +47 90 89 19 35.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.