Post on 23-Sep-2020
Lars Nilsen, CEOBWG Homes ASA
Presentation at SEB Enskilda, Copenhagen 9 January 2008The leading Nordic residential developer
Agenda
Company overview
Financials
Norwegian operation
Swedish operation
The market situation
Key drivers and trends
Focus 2008 - 2009
PAGE 2 BWG HOMES PRESENTATION
PAGE 3 BWG HOMES PRESENTATION
BWG Homes – a Nordic player
The business:• Affordable quality housing in least cyclical markets• Broad diversity in project portfolio• Residential projects in the outskirts of urban areas• Continously streamlining of the construction processes• Long-term profitability at moderate risks
Operations in Norway and Sweden
Builds approx. 2,300 houses yearly
1,360 employees including 885 carpenters and production workers
PAGE 4 BWG HOMES PRESENTATION
BWG Homes: Organisational structure
Myresjöhus Myresjöhus SmålandsVillanSmålandsVillan
Block Watne AS Block Watne AS BWG Homes ABBWG Homes AB
BWG Homes ASABWG Homes ASA
Hetlandhus ASHetlandhus AS
PAGE 5 BWG HOMES PRESENTATION
Financials per 30.09 2007
NOK million 30.09.07 30.09.06 Y/Y 2006Operating revenue – Group 2 342 2 156 8.6%
10.3%7.0%
3.7%15.2%
-12.3%
Segment Norway 1 194 1 0823 0591 5281 529
399249157
13.0%16.3%
Segment Sweden 1 148 1 073
EBIT – Group 281 271Segment Norway 181 158Segment Sweden 99 113
EBIT margin – Group 12.2% 12.5%Segment Norway 15.2% 14.5%
10.3%Segment Sweden 8.7% 10.6%
Pro forma figures as if the Prevesta AB transaction was completed per 1 January 2006
PAGE 6 BWG HOMES PRESENTATION
Financials Q3 2007:Revenues: + 1.0 % EBIT: + 12.1 %
0
100
200
300
400
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600
700
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1Q 2Q 3Q 4Q
2006 2007
Revenue Q3-2007: NOK 701 million. Revenue pro forma Q3-2006: NOK 693 million.
0
20
40
60
80
100
120
140
Q106 Q206 Q306 Q406 Q107 Q207 Q3070 %2 %4 %6 %8 %10 %12 %14 %16 %18 %20 %
EBIT EBIT margin
EBIT Q3-2007: NOK 82 million, 11.7% margin. EBIT pro forma Q3-2006: NOK 73 million, 10.6% margin.
The Norwegian operation
PAGE 8 BWG HOMES PRESENTATION
The Norwegian operation:Block Watne in brief
Residential project development at affordableprices in the outskirts of larger cities and pressure areas
The strongest brand in the Norwegian market
No downtown construction or vacation homes
Construction at the building site using proven and cost-effective methods
Builds approx. 1,100 houses yearly, and has built in excess of 85,000 houses
Single home portfolio of 45 house models
717 employees; including 480 carpenters
PAGE 9 BWG HOMES PRESENTATION
The Norwegian operation:Residential projects represent 86 % of revenues
86 %
6 %8 %
Residential projects
Customers withown landProfessionalcustomers
Share of revenues 2007
Marketing and sales Marketing and sales
Acquisitionof land
Acquisitionof land
Project development
Project development ConstructionConstructionProject
ideaProject
idea DeliveryDelivery
Project planningProject planning
24 %
13 %
63 %
Under development
In acquisition
Ready for sale
Land bank capacity 12,000 units
PAGE 10 BWG HOMES PRESENTATION
Interior 2Interior 2Interior 1Interior 1Exterior and roofingExterior and roofing
The Norwegian operation:Highly standardised four phased building process
Specialised two-man carpenter teams in each phase
Only wood-based production executed by own production staff
Employed carpenters and production staff
Piece-rate performance based compensation of carpenters
All infrastructure and concrete contracted project by project
FramingFraming
PAGE 11 BWG HOMES PRESENTATION
Low end/Special need
Affordable quality
housing
Highend
Private individuals buying the house/ apartment as their primary home
Outskirts of the larger cities in
south of Norway –the most
populated areas
The Norwegian operation:Focus on volume markets
PAGE 12 BWG HOMES PRESENTATION
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
2001
2001
2002
2002
2003
2003
2004
2004
2005
2005
2006
2006
2007
E
2007
E
2008
E
2008
E
2009
E
2009
E
BW areasApartmentsMulti unit housesDetatched houses
Housing starts in Norway 2001 – 2009E
Block Watne key market segments
“BW areasr”: Norge excl. Oslo, Drammen, Tønsberg, Kristiansand, Stavanger, Bergen, Trondheim and Nord-Norge. Source: Prognosesenteret
City centre apartments
Block Watne market position:Stable market combined with large volumes
PAGE 13 BWG HOMES PRESENTATION
The ten largest players in Norway in 2006
Rank Company Market share Ownership1 Mesterhus 6.2 % Chain
Chain
Chain
Chain
Chain
BWG Homes ASA
Selvaag Gruppen
Skanska AB
10 Systemhus Norge 1.9 % Chain
Total 10 largest 34.6 %
2 Nordbohus 5.0 %
3 Blink 3.4 %
4 Byggmann Gruppen 3.3 %
5 Norgeshus 3.3 %
6 Block Watne 3.2 %
7 Selvaagbygg 2.9 %
8 Skanska Bolig 2.8 %
% of a total of 33,000 started homes in 2006. Source: Prognosesenteret
The Swedish operation
PAGE 15 BWG HOMES PRESENTATION
The Swedish operation:BWG Homes AB in brief
Developing and production of prefabricated single and multi family homes
Two strong brands – Myresjöhus and SmålandsVillan
No downtown construction or vacation homes
Modern production facilities in Myresjö, Vrigstadand Sundsvall producing volume panels and box units
Builds approx. 1,200 houses yearly, and has built in excess of 80,000 houses
Single home portfolio of 50 Myresjöhus house models and 7 SmålandsVillan house models
643 employees, incl. 405 production workers
PAGE 16 BWG HOMES PRESENTATION
Size m2:
House models:
101-239
50
82-120 (up to 200 incl. loft)
7
Target customer: Middle-income families
Couples age 30-45
Often second-time buyers
Concept: Panel-based production, allowing a high degree of customisation
SEK 1.8 mill (excl. land and VAT)Average price:
Moderate-income families
Couples age 25-40
First-time buyers
Standardized box-unit production with a limited degree of customisation, but very competitive prices
SEK 1.0 mill (excl. land and VAT)
Myresjöhus and SmålandsVillan:Complementary brands
PAGE 17 BWG HOMES PRESENTATION
The Swedish operation:Focus on the outskirts of the larger cities
80 % of Myresjöhus customers with own land choose turn key contracts
SmålandsVillan: 98 % to customers with own land
Low end/Special need
Myresjöhus“freedom of choice”
Highend
SmålandsVillan“standardization”
45 %
15 %
40 %
Residential projects
Customers withown landProfessionalcustomers
Myresjöhus projects:
All infrastructure, concrete and finish contracted project by project
PAGE 18 BWG HOMES PRESENTATION
Housing starts in Sweden 1992 – 2010
Source: Prognosesenteret
5 000
10 000
15 000
20 000
25 000
30 000
35 000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Detatched housesMulti unit housesTotal
PAGE 19 BWG HOMES PRESENTATION
The Swedish residential house building market:Housing starts 1960 - 2005
Source: SCB
010 00020 00030 00040 00050 00060 00070 00080 00090 000
100 000110 000
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005Detatched houses Multi unit houses Total
PAGE 20 BWG HOMES PRESENTATION
A leading position in the Swedish single family homes’ market segment
Source: Byggfakta 2007-11. Market shares based on number of building permit applications. Excluding the large construction companies that focus on apartment buildings
Market share
Other35.6%
Custom stick22.1%
Älvsbyhus8.7%
Myresjöhus + SmålandsVillan11.7%
Trivselhus7.0%
Fiskarheden5.0%
Eksjöhus3.1%
Hjältevadshus3.1%
LB-Hus3.7%
The market situation and key drivers
PAGE 22 BWG HOMES PRESENTATION
The current market situation
Recent interest hikes in Norway and Sweden have had a larger impacton the households’ investment behaviour than normally expected, due to volatile markets as a result of US subprime and internationalfinancial issues
Potential buyers prefer to sell their current home before buying a newone
Increased number of used and new homes for sale
Short term pressure on prices on used homes is expected
Pressure on prices on apartments in high pressure/down town areas is expected due to inflated production costs and oversupply
This situation will exist until the market situation is normalized throughabsorption at market prices
PAGE 23 BWG HOMES PRESENTATION
The market situation – positive factors
A build-up of consumer reserve will eventually enter the market as buyers
A decrease of new apartment projects primarily located in down town areas in Norway and Sweden, is expected
Norway: Building costs demand very high sales prices and result in a decreased customer base.Sweden: Governmental support incentives for apartment building arediscontinued.
Decreased pressure on price on materials and sub-contractors ?
Further interest level increases are not expected in neither Norway nor Sweden. Interest rates going forward at reasonable levels
Employment rate expected stable in 2008 and 2009
Expectations for a stable and stronger market within the ”affordable” segment due to positive macro figures
PAGE 24 BWG HOMES PRESENTATION
Norway and Sweden:Macro factors and key drivers
Macroeconomy
Macroeconomy
GDP 2008E: 3.6 (N), 3.8 (S) 2009E: 2.4 (N), 3.1 (S)
Inflation 2008E: 3.25 (N), 2.5 (S) 2009E: 2.25 (N), 2.8 (S)
Labourimmigration
Labourimmigration
Net immigration Norway:2006: 24,000, 2007E: 37,150Net immigation Sweden:2006: 51,000, 2007E: 55,000
ReplacementsReplacementsApprox. units/year:15 000 (N)20 000 (S)Increasing need
EmploymentEmploymentUnemployment rate:2008E: 2.6 (N), 3.9 (S) 2009E: 2.6 (N), 3.6 (S)
Interestrates
Interestrates
2008E: 5.25 (N), 4.75 (S) 2009E: 5.25 (N), 4.75 (S)
“Boy meetsgirl”
“Boy meetsgirl”
The “need factor”Stabilizing towards
economy
Sources: Statistics Norway, Statistics Sweden, Konjunkturinstitutet, Prognosesenteret
PAGE 25 BWG HOMES PRESENTATION
0
5000
10000
15000
20000
25000
30000
35000
40000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
E2007
E2008
E2009
NorwaySweden
• Level of construction in Sweden still low in a historical context and relative to neighbouring countries
• Homes built per 1 000 inhabitants 2007:
• Sweden: 4.2• Norway: 6.0
Source: Prognosesenteret – Norway, Sweden
Operations in two differing markets reduce the group’s cyclical exposure
Total housing starts in Norway and Sweden 1992 - 2009E
PAGE 26 BWG HOMES PRESENTATION
Monthly development in sales:Norway 2006, 2007 Sweden 2006, 2007
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1 2 3 4 5 6 7 8 9 10 11 12
2006 2007
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1 2 3 4 5 6 7 8 9 10 11 12
2006 2007
MNOK MNOK
Segment Norway – down 14.7 % per December 2007 Segment Sweden – up 23.9 % per December 2007
PAGE 27 BWG HOMES PRESENTATION
Positioning being the key:Diversified projects in the outskirts of city centres
Macro-economic factors arepositive
Focus on the ”affordable homes” segment as it tends to be less affected by market fluctuations
Average sales price per m² in Block Watne residential projects: NOK 20,000
Average cost price per m² in downtown apartment construction: NOK 30,000 – 40,000 Low end/Special need
Myresjöhus
Highend
SmålandsVillanHetlandhus
Block Watne
Affordable homes,attractive living
Standardization,value for money
PAGE 28 BWG HOMES PRESENTATION
Focus 2008 and 2009
Utilization of production efficiency and capacity • Further standardization of SmålandsVillan• Introduce highly production efficient models within
Myresjöhus• Introduce Hetlandhus in Norway based on
SmålandsVillan in the first half of 2008.Highly standardized product in the “value for money” segment
• Utilize synergies in 2008 and 2009
Increase residential project development• Myresjöhus, from 45% to 70%, within 2010• SmålandsVillan, from 0% to 20%, within 2009
Solid order backlog. BWG Homes can sustain fluctuations in sales
Sales activities intensified
Controlled growth and strong margins are expected
PAGE 29 BWG HOMES PRESENTATION
Thank you for your attention!
Appendix
PAGE 31 BWG HOMES PRESENTATION
Listed at Oslo Børs March 2006:Shareholder Information
CEO Lars Nilsen has 36% holding through his companies
10 LARGEST SHAREHOLDERS PER 07.01.2008 % TOTAL
Lani Industrier AS 30.62%Lani Development AS 5.22%Pareto Aksje Norge 5.06%Bank of New York, Brussels Br, S/A Alpine 3.53%Vital Forsikring ASA 3.17%Industri Kapital 2004, II 2.53%
Bank of New York, Brussels Br, S/A Equity 2.20%
Industri Kapital 2004, I 2.09%
Industri Kapital 2004, III 2.31%
Pareto Aktiv 2.16%
PAGE 32 BWG HOMES PRESENTATION
Sales to end customersSales to end customers
Value chain:Comparison of the three brands
Own sales forceProject partnersAgents29 sales offices/ agents
Own sales force22 regional offices
Agents32 sales offices/ agents
( )
( )
On-site constructionOn-site constructionPrefabricationPrefabricationAcquisition of
landAcquisition of land
Land developmentLand development