Solid earnings and an increase in order backlog for AF Gruppen

During the first half of the year, the order backlog grew by a whopping NOK 924 million.

AF Gruppen had revenues in Q2 of NOK 1,385 million (NOK 1,529 million). Earnings before tax were NOK 77 million (NOK 61 million), corresponding to a profit margin of 5,6%. For the first half of 2009 overall, earnings before tax were NOK 127 million (NOK 109 million). Q2 earnings per share were 3.81 (3.11) and for the first six months 6.31 (5.65). Total order backlog as at the first half of 2009 is at a record level of NOK 5,836 million (NOK 5,436 million).

AF Gruppen continues its targeted efforts in the area of health, safety and the environment. As at Q2 2009, the LTI rate was 3.8 (2.9) for the Norwegian portion of operations, while sick leave was 3.9% (4.1%).

Strengthened civil engineering business and better margins in Building
The market outlook is different for AF Gruppen's five business areas.

Civil Engineering saw high activity levels and acceptable quarterly and half-year earnings. In Q2 the business area won several major construction contracts. AF expects expansion in the road and bridge construction market and has beefed up the organisation to be even better equipped to win and carry out major contracts.

Good business in the Oslo area ensured solid half-year earnings for Building. The market continues to be characterised by a slowdown in construction and keen competition for new contracts.

Central and local government infrastructure initiatives are expected to make a positive contribution to activities levels for both Civil Engineering and Building.

Property continues to experience a difficult market. In Q2 housing sales rose. A moderate to positive trend is expected in housing sales for the remainder of 2009.

Full order books in Environment
In Environment, the offshore business saw high activity levels and delivered solid earnings. AF Environmental Base Vats has been expanded, and the new facility went into operation in July. The facility is currently Europe’s most modern reception facility for recycling offshore installations. AF’s offshore unit has major projects that will be under way throughout 2009.

Earnings in Environment are marked by faltering earnings in land-based activities, primarily on account of the decline in the construction market. Changes have been made to the organisation to adapt to the current situation. In May, AF was awarded a major contract to remove the Russian cruiser Murmansk.

Interest in AF’s energy services
Results in Energy were affected by the difficult financial market, resulting in a lower than normal order intake in the first half of the year. However, there appears to be considerable interest in AF’s energy concept, and a growing volume of contracts is expected in the second half of 2009.

“AF Gruppen delivered solid quarterly and half-year earnings. This is evidence that AF has a workforce that also performs in a tougher market. A substantial increase in the order backlog shows that we are also competitive. The market outlook continues to be clouded by uncertainty and varies greatly within the different market segments. In today’s market as well there are ample opportunities, and the venerable lesson that ‘thoroughness and hard work pay off’ is as true as ever”, says Pål Egil Rønn, CEO of AF Gruppen.

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Quarterly report Q2 2009, pdf