Third quarter profits drop for NCC
By Becca Wilkins17 November 2008
NCC Group recorded third quarter pre-tax profits of SEK 787 million (€ 79 million), a -9% decrease on the SEK 866 million (€ 87 million) recorded during the same period last year.
Net sales for the group totalled SEK 13,9 billion (€ 1,39 billion) - a -1,6 % decrease on the SEK 14,1 billion (€ 1,4 billion) recorded in the same period in 2007.
According to NCC Group's CEO, Olle Ehrlén, demand was favourable in the Nordic construction market during the first half of 2008, but weakened during the third quarter.
He added, "To a greater extent, the market for new housing has stagnated in the Nordic and Baltic countries, due to the global financial crisis."
NCC construction Sweden recorded a -18% decrease in its third quarter pre-tax profits which totalled SEK 270 million (€ 27 million) compared to SEK 330 million (€ 33 million) during the same period last year. The company's net sales were up by +4 % totalling SEK 5,8 billion (€ 583 million) compared to SEK 5,6 billion (€ 561 million) last year.
Third quarter pre-tax profits for the company's Danish construction business saw an improvement from a SEK -17 million (- € 1,7 million) loss in 2007 to a SEK -3 million (- € 300000) loss. Net sales meanwhile were down by -25% to SEK 961 million (€ 96 million) from SEK 1,2 billion (€ 129 million) during the same period in 2007.
Meanwhile NCC Construction Finland recorded third quarter pre-tax profits of SEK 38 million (€ 3,8 million), which when looking at last year's results - SEK 99 million (€ 9,9 million) - is a decrease of - 61%. Net sales almost matched the third quarter last year - a total of SEK 1,7 billion (€ 172 million).
The Group's Norwegian activities saw a decrease of -40% in the third quarter with pre-tax profits down to SEK 33 million (€ 3,3 million) compared to SEK 55 million (€ 5,5 million) in 2007. Meanwhile, total sales in the third quarter were up by +1,4% to SEK 1,55 billion (€ 155 million), almost matching last year's total of SEK 1,52 billion (€ 153 million).
NCC in Germany recorded net sales of SEK 540 million (€ 54 million) - a -17,5% decrease on last year's SEK 655 million (€ 65 million). Third quarter pre-tax losses of SEK -71 million (- € 7,1 million) have been recorded by the company compared with SEK 23 million (€ 2,3 million) profits in 2007.
The company's property development business recorded pre-tax profits for the quarter of SEK 92 million (€ 9,2 million), a decrease of -9,8% when looking at the SEK 102 million (€ 10 million) recorded during the same period in 2007. Net sales were down by -56%, totalling SEK 293 million (€ 29 million) compared to SEK 658 million (€ 66 million) in 2007.
Meanwhile, NCC Roads ended the third quarter with net sales of SEK 3,7 billion (€ 376 million) - a +19% increase on the SEK 3,2 billion (€ 317 million) recorded during the same quarter last year. Meanwhile, its third quarter profits were down - 5,3% to SEK 389 million (€ 39 million) from SEK 411 million (€ 41 million) in 2007.
In a statement from the NCC Group it said the market outlook for 2009 is negative.
"The civil engineering market is expected to show some growth, but is not expected to offset weaker markets in buildings, housing and commercial properties," Mr Ehrlén said.
"Due to the decline in market conditions, a gradual adaptation of the organisation, operations and expenses is taking place in all of the Group's markets. As of January 1 2009, NCC's housing operations will be combined into a single business area in order to increase their efficiency and strengthen them in a weakening market," he added.
At the end of last month NCC also cut 1700 jobs due to the economic slowdown."Additional cutbacks will have to be made in the year ahead, although the extent of these cutbacks is difficult to assess in the current market conditions," the Group's CEO said.