May 20, 2020

First quarter 2020 results

Today, 20 May 2020, NRC Group has released its financial results for the first quarter of 2020.

The recorded webcast is available through the following link:!/hegnarmedia/20200520_4

A Q&A session in English will be held at 11.00 AM (CET). Participants who have questions can ask questions via the moderator.

Participants dial-in numbers:

NO: +47 2396 3688

SE: +46 850 558 351

FI: +44 333 300 9270

DK: +45 7815 0109

UK: +44 333 300 9270

US: +1 833 526 8396

Below you will find highlights and a summary from the report.


  • NOK 1.3 billion
  • Organic growth of 7%


  • NOK -54 million (NOK -54 million in Q1 19)
  • Seasonally low activity levels
  • Limited Covid-19 impact


  • Order intake of NOK 1.4 billion
  • Record high order backlog of NOK 8 billion


  • Cash flow from operations of NOK 43 million
  • Private placement of NOK 700 million completed
  • Cash position of NOK 821 million

* Before other income and expenses (M&A expenses)

Comments on first quarter 2020 results

Operational improvements in focus

First quarter revenue was NOK 1,254 million, an increase of 11% from NOK 1,130 million reported for the same period of 2019. The revenue increase is mainly driven by strong growth in Finland which included one large sale transaction of materials of approximately NOK 110 million. The organic growth was 7% adjusted for currency translation effects in the quarter. Group EBITA* was NOK -54 million compared to NOK -54 million for the same period last year. The EBITA* margin was -4.3% (-4.8%), reflecting the seasonally low activity levels and partly execution of zero margin projects following project margin adjustments in the fourth quarter of 2019. The weakening of NOK vs EUR and SEK in the quarter had a small negative impact on the results.

Implementation of improvement measures aimed at professionalising the organisation and strengthening tendering, risk assessment and project execution continued as planned in the quarter. The NOK 55 million overhead cost reduction program is on track.

Revenue in Norway was NOK 407 million compared to NOK 470 million in first quarter of 2019. The organic growth was -13%. EBITA* was NOK -14 million, compared to NOK -5 million in the same period of 2019. The operation in Civil and Environment has been slightly affected by the Covid-19 situation leading to lower efficiency and somewhat higher costs in a few projects. The result in Environment was weaker than the same quarter last year. The improvement program in Rail is going as planned. The activity level is lower compared to 2019, but financial results are improving due to the measures implemented.

Revenue from the Swedish operation amounted to NOK 311 million for the quarter compared to NOK 299 million in the same period of 2019. The organic growth was -2%. EBITA* was NOK -27 million compared to NOK -20 million in 2019. The EBITA* was affected by execution of zero margin projects following project margin adjustments in 2019. The improvement program in Sweden is going as planned.

Finland had revenue of NOK 540 million, compared to NOK 361 million in the first quarter of 2019. The organic growth was 40% in the quarter, significantly impacted by one large sale transaction of materials to FTIA amounting to approximately NOK 110 million, in addition to high activity in the alliance projects, Tampere Light Rail and Jokeri Light Rail. The EBITA* was NOK -3 million compared to NOK -13 million in the first quarter of 2019. The improvement in EBITA was driven by the alliance projects. In Maintenance the result was weaker than anticipated due to higher costs related to closure of maintenance area 1.

Group operating profit (EBIT) for the quarter amounted to NOK -77 million compared to NOK -120 million last year. EBIT for the first quarter of 2019 included M&A expenses (other income and expenses) of NOK 48 million related to the VR Track acquisition.

Net financial items for the continuing operations amounted to NOK -22 million for the quarter, compared to NOK -16 million for the same period last year. The increase mainly relates to currency losses of NOK 4 million due to significant exchange rate fluctuations in March 2020. The interest expense increased due to higher interest rates on the bond compared to the bank financing.

The order backlog amounted to NOK 8,048 million at 31 March. First-quarter order intake was NOK 1,417 million, split on announced contracts of NOK 593 million and unannounced order intake of NOK 824 million, in addition to NOK 734 million of currency adjustments due to NOK weakening vs. SEK and EUR. 

In Norway, new orders included a NOK 75 million contract for ground and railway technical works for Bane NOR on the railway connection between Oslo and Ski. In Sweden, The Swedish Transport Administration (Trafikverket) awarded NRC Group a SEK 149 million catenary contract and a SEK 100 million track renewal project. In addition, a SEK 75 million contract for ground, foundation and construction work at Almnäs was awarded by Consto AB. The Finnish Transportation Infrastructure Agency (FTIA) appointed NRC Group to two maintenance contracts with a combined value of EUR 9.3 million. 

Subsequent to the quarter, the Group was appointed to a NOK 199 million contract in Norway by Bane NOR, for preparatory works in connection with the new ERTMS signalling system on Bergensbanen, Flåmsbanen and Randsfjordbanen. In Sweden, NRC Group was awarded a SEK 65 million contract for track, electro and signal/telecom work on the railway connection between Lund and Arlöv.

Tendering activity remains high across NRC Group’s markets and the company has identified an addressable tender pipeline of approximately NOK 18 billion for the next nine months. This compares to an approximately NOK 16 billion tender pipeline three months ago.

The Norwegian market remains active with several tenders ongoing even as the Covid-19 situation creates uncertainty. While delays to some project awards have been announced, Bane NOR has received Parliament approval for a NOK 200 million increase to maintenance and renewal spending in 2020. The revised national budget also included approximately net NOK 550 million of extra allocations to existing investment projects in 2020. There is broad political support for improving the national railway system with NOK 27 billion allocated to the railway sector in 2020, up close to 5% from the revised 2019 budget. The maintenance backlog is expected to increase further to NOK 21 billion at the end of 2020 as renewal investments of NOK 3.5 billion yearly are required to offset actual wear on existing infrastructure. These factors indicate continued growth in railway infrastructure investments and activity in Norway.

Tendering activity in Sweden continued to improve in the first quarter, as expected. At the end of the first quarter, the Swedish Government approved construction start for seven railway projects in the 2020-2022 period and to start preparations for further construction projects scheduled to commence in 2023-2025. The projects are all part of the current National Transport Plan.

The Swedish national budget for 2020 forecasts SEK 13.6 billion in new investments, up 30% from 2019, and maintenance investments of SEK 10.2 billion, an increase of 1%. In 2021, new investments and maintenance spending are expected to grow by 20% and 18%, respectively. The sum of planned new investments and maintenance spending for the three coming years is estimated to exceed the average annual level for the NTP plan period.

In Finland, the expectation in the beginning of the year was that the addressable market would grow to EUR 0.89 billion in 2020. The main drivers for the growth was expected to be by light rail projects and an expected increase in renewal and reinvestment, based on Governmental decisions in 2019. NRC Group is already taking part in the ongoing light rail projects in the market. In addition, there will be a permanent increase of EUR 300 million allocated to basic transport infrastructure to reduce the maintenance backlog. This will be on top of the existing budget. NRC Group is estimating that EUR 100 million of the permanent increase will be allocated to rail yearly in 2020-2022. Maintenance is expected to be quite stable in 2020, with 1% growth. The updated tender pipeline in Finland does not reflect the market growth for 2020 to be in line with the estimated market growth in the beginning of the year.

In February, NRC Group presented its strategy update: creating a Nordic leader in sustainable infrastructure. The company raised NOK 700 million gross in new equity capital to support the Group’s plan to restore profitability and long-term growth.

NRC Group has built a leading Nordic position covering the entire value chain in rail construction and maintenance and complementary positions in civil construction and environmental services. The Group is positioned to benefit from large and growing infrastructure markets that are supported by strong macro trends such as sustainability, population growth and urbanisation, and political consensus for increased investments in Norway, Sweden and Finland.

After a period of strong organic and M&A driven growth and weak results in 2018 and 2019, the company has shifted its strategic focus to operational improvements to restore profitability and to lay the groundwork for continued organic growth and expansion into complementary services.

NRC Group has established a clear strategic roadmap with the ambition of NOK 10 billion in revenues and 7% EBITA margin in 2024. This implies a return to the 2016-2017 average margins, with the main uplift to come from internal improvements. For the full year 2020, NRC Group targets an EBITA margin exceeding 2.8%. For 2021, the Group targets an EBITA margin up towards 5%, before gradually realising additional improvements towards the ambition level of 7% for 2024. The NOK 10 billion revenue ambition reflects an extensive group-wide process built on expected annual growth of 9% for the Nordic rail services market, organic growth and expansion opportunities in complementary services, and bolt-on M&As in existing segments and services.

The first quarter 2020 result report and result presentation can be found attached.

For further information, please contact Dag Fladby, Chief Financial Officer, NRC Group ASA on tel: +47 90 89 19 35.

Contact us

Henning Olsen

Henning Olsen


+47 91 74 15 92


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