Tomas CarlssonCEO
Mattias LundgrenCFO
Interim reportJanuary 1 – September 30, 2018
2018-10-25 NCC AB1
• Business review completed
• Q3 result impacted by revaluations of SEK 1,565 M
• Preliminary Q3 result‒ Net sales SEK 14,269 M (13,075)‒ EBIT SEK -1,108 M (364)
• Action plan initiated
Capital Markets Meeting October 16
2018-10-25 NCC AB2
Need for change but healthy core
2018-10-25 NCC AB3
• Healthy core in NCC
• Uneven performance throughout the group
• Market conditions generally good
• Challenging areas in NCC identified
• Risk reduced across the portfolio
• Low impact on cash flow
Insights
A lower risk profile and more structured process for estimates and decisions
Managing identified back-log.Structural initiatives to improve project management and cost control going forward
More prudent approach to claims and warranties
Decision to exit segments and markets
Risk profile in tendering processes
Project management and cost control
Estimations of claim outcomes and warranty provisions
Revaluation ofproperty assets
3
1
2
4
2018-10-25 NCC AB4
Summary: Plan to improve profitability
Organisation and team
Turn-around
Exit or divest non-performing business
Effective organization – strong team
Civil Norway, Building Nordics, single departments in other Business Areas
Road services, some businesses in Industry, property and land, rightsizing office locations
1
3
2
Improved processes and trainingWork towards a common operational model. Structured processes for follow-up of tenders and project. Training.
4
2018-10-25 NCC AB5
Q3 2018
Orders received
SEK 12.7 BN(12.7)
Order backlog
SEK 56.6 BN (52.2)
Net sales
SEK 14.3 BN (13.1)
EBIT
SEK -1,108 M (364)
2018-10-25 NCC AB6
Jan-Sep 2018
Orders received
SEK 44.1 BN (40.6)
Order backlog
SEK 56.6 BN (52.2)
Net sales
SEK 39.5 BN (38.2)
EBIT
SEK -1,020 M (1,118)
2018-10-25 NCC AB7
NCC Infrastructure
2018-10-25 NCC AB8
Higher order backlogNCC Infrastructure
0
5
10
15
20
25
30
Orders received Order backlog
Q3 2017 Q3 2018SEK BN
0
5
10
15
20
25
30
Orders received Net sales
2017 Q3 2018, R12SEK BN
2018-10-25 NCC AB9
Geographical distribution Jan – Sep 2018NCC Infrastructure
Orders received Net sales
Sweden 76% (75)
Finland 2% (2)
Sweden 73% (81)
Norway 19% (12)
Denmark 5% (5)
Finland 3% (2) Norway 16%
(18)
Denmark 6% (5)
2018-10-25 NCC AB10
2%
4%
11%
15%
20%
21%
27%
Railways
Other
Operation andmaintenance
Industry
Energy & WaterTreatment
Roads
Groundworks
Product mix Jan - Sep 2018NCC Infrastructure
2%
9%
11%
12%
14%
17%
35%
Other
Roads
Energy & WaterTreatment
Industry
Operation andmaintenance
Groundworks
Railways
Orders received Net sales
(29)
(24)
(12)
(13)
(14)
(5)
(9)
(28)
(10)
(17)
(15)
(16)
(5) (3)
2018-10-25 NCC AB11
2018-10-25 NCC AB12
• 4 kilometers of new track running parallel with the existing track, a 380-meter concrete tunnel and a number of bridges and viaducts
• Customer: Bane NOR• Order value: SEK 1.7 billion
Project exampleVenjar–Eidsvoll railway north of Oslo, Norway
• Concreting works on the Loenga-Ekebergåsen line
• Customer: Bane NOR• Order value: SEK 275 million
2018-10-25 NCC AB13
Project example Expansion of the Follo Line, Norway
NCC Building
2018-10-25 NCC AB14
Healthy order backlogNCC Building
0
5
10
15
20
25
30
35
Orders received Order backlog
Q3 2017 Q3 2018SEK BN
0
5
10
15
20
25
30
35
Orders received Net sales
2017 Q3 2018, R12SEK BN
2018-10-25 NCC AB15
Sweden 60% (57)
Geographical distribution Jan - Sep 2018NCC Building
Orders received Net sales
Finland 17% (22)
Sweden 54% (69)Norway 6%
(5)
Denmark 12% (12)
Finland 28% (14) Norway 7%
(8)
Denmark 16% (13)
2018-10-25 NCC AB16
Product mix Jan - Sep 2018NCC Building
Orders received Net sales
2%
4%
6%
6%
8%
9%
11%
23%
31%
Retail
Industry / Logistics
Other
Public Buildings
Educational
Health Care
Offices
Refurbishment /Conversion
Residential
1%
4%
7%
8%
8%
8%
11%
26%
27%
Retail
Offices
Health Care
Other
Industry / Logistics
Educational
Public Buildings
Residential
Refurbishment /Conversion (38)
(21)
(8)
(7)
(4)
(6)
(3)
(8)
(3)
(6)
(7)
(2)
(25)
(8)
(34)
(7)
(10)
(3)
2018-10-25 NCC AB17
Project exampleAttractive apartments in Hellerup, Denmark
• 50 apartments in an attractive location in Hellerup
• Customer: Danica Pension• Order value: SEK 520 million
2018-10-25 NCC AB18
• Classrooms, kitchen, outdoor facilities and sports hall
• Customer: Norrevo Fastigheter• Order value: SEK 165 million
2018-10-25 NCC AB19
Project exampleSchool in Norrköping, Sweden
NCC Industry
2018-10-25 NCC AB20
Lower volumes in Q3
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Q12015
Q2 Q3 Q4 Q12016
Q2 Q3 Q4 Q12017
Q2 Q3 Q4 Q12018
Q2 Q3
Stone material sold, thousands of tons
0
500
1,000
1,500
2,000
2,500
3,000
Q12015
Q2 Q3 Q4 Q12016
Q2 Q3 Q4 Q12017
Q2 Q3 Q4 Q12018
Q2 Q3
Asphalt sold, thousands of tons
2018-10-25 NCC AB21
Solid base, strongest parts Sweden and AsphaltNet sales Jan-Sep 2018
Product mix Geographical
Stone material 22% (23)
Foundation 11%(12)
Sweden 55%(56) Norway 17%
(14)
Denmark 19%(18)
Finland 9%(12)
2018-10-25 NCC AB22
Asphalt and paving 67%(65)
NCC Property Development
2018-10-25 NCC AB23
2018-10-25 NCC AB24
Profit recognized projects
Project Type LocationLettable area,
sqm.
Alberga E Office Helsinki, Finland 5,800
Mölndal Galleria, 50% Retail Gothenburg, Sweden 13,100
Arendal 3 Logistics Gothenburg, Sweden 6,800
Property portfolioLeasable space, sqm, in ongoing or completed projects not recognized in profit
0
50,000
100,000
150,000
200,000
Q12016
Q2 Q3 Q4 Q12017
Q2 Q3 Q4 Q12018
Q2 Q3
Sweden
Norway
Denmark
Finland
No. of projects
18 17 18 19
16
1918
22 21 21
2018-10-25 NCC AB25
18
6,400 sqm leased in the quarter Leased floor space, sqm
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Q12016
Q2 Q3 Q4 Q12017
Q2 Q3 Q4 Q12018
Q2 Q3
Remaining unlet area
Let during quarter
Previously let area
Let during quarter(% of available unletarea)
2018-10-25 NCC AB26
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q12016
Q2 Q3 Q4 Q12017
Q2 Q3 Q4 Q12018
Q2 Q3
2018-10-25 NCC AB27
Property portfolio
Letting ratio
Completion ratio
Project exampleBromma Blocks in Bromma, Sweden
• Approx. 50,000 sqm offices, retail and hotel
• Approx. 20,000 sqm leased to Maxi ICA supermarket and a Biz Apartment hotel
• Investment of SEK 2.5 billion• Completion 2021
2018-10-25 NCC AB28
Mattias LundgrenCFO
2018-10-25 NCC AB29
Income statement
SEK MJul-Sep
2018Jul-Sep
2017Oct 17-Sep 18
Jan-Dec 2017
Net sales 14,269 13,075 55,786 54,441
Gross profit -402 908 1,949 3,981
Selling and administrative expenses -661 -550 -2,993 -2,933
Cost ratio 4.6% 4.2% 5.4% 5.4%
Other -46 4 -20 26
EBIT -1,108 364 -1,063 1,075
Financial items -24 -25 -79 -91
EBT -1,133 339 -1,142 983
Tax 179 -55 229 -106
Profit for the period -955 283 -913 877
2018-10-25 NCC AB30
SEK MJul-Sep
2018Jul-Sep
2017Jan-Dec
2017
NCC Infrastructure -883 -65 -198
NCC Building -107 89 409
NCC Industry 283 409 577
NCC Property Development -326 -9 601
Other and eliminations -75 -62 -314
EBIT -1,108 364 1,242
EBIT per business area
2018-10-25 NCC AB31
SEK MJul-Sep
2018Jul-Sep
2017
NCC HQ etc. -122 12
Internal gains 13 -10
Other Group adjustment 34 -64
Other and eliminations -75 -62
NCC Infrastructure
458
225
5 3 36Claims/warranties Write downs Restructuring
costsRevaluationof property
Other revaluations
SEK M
2018-10-25 NCC AB32
SEK MJul-Sep
2018Jul-Sep
2017Oct 17-Sep 18
Jan-Dec2017
Net sales 4,515 4,472 19,914 18,490
EBIT -883 -65 -980 -198
Of whichrevaluation -727 -150 -727 -150
EBITmargin, % -19.6 -1.4 -4.9 -1.1
NCC Building
191
1490
Claims/warranties Write downs Restructuringcosts
Revaluationof property
Otherrevaluations
SEK M
2018-10-25 NCC AB33
SEK MJul-Sep
2018Jul-Sep
2017Oct 17-Sep 18
Jan-Dec2017
Net sales 6,101 5,319 26,214 24,622
EBIT -107 89 371 409
Of which revaluation -295 - -295 -
EBITmargin, % -1.8 1.4 1.4 1.7
NCC Industry
440
30
68
Claims/warranties Write downs Restructuringcosts
Revaluationof property
Otherrevaluations
SEK M
2018-10-25 NCC AB34
SEK MJul-Sep
2018Jul-Sep
2017Oct 17-Sep 18
Jan-Dec 2017
Net sales 4,301 4,051 12,931 12,393
EBIT 283 409 338 577
Of which revaluation -115 - -115 -
EBITmargin, % 6.6 10.1 2.6 4.7
RoCE, % 6.9 13.1
NCC Property Development
0 0 0
363
Claims/warranties Write downs Restructuringcosts
Revaluationof property
Otherrevaluations
SEK M
2018-10-25 NCC AB35
SEK MJul-Sep
2018Jul-Sep
2017Oct 17-Sep 18
Jan-Dec 2017
Net sales 397 168 838 2,567
EBIT -326 -9 -374 601
Of which revaluation -363 - -363 -
EBITmargin, % neg neg neg 23.4
RoCE, % neg 15.7
Q12015
Q2 Q3 Q4 Q12016
Q2 Q3 Q4 Q12017
Q2 Q3 Q4 Q12018
Q2 Q3-3
-2
-1
0
1
2
3
4
5Cash flow before financing
Cash flow
SEK MJul-Sep
2018Jul-Sep
2017Jan-Dec
2017From operating activities 142 477 1,664
From property projects -55 -269 478
Other working capital -508 468 17
Investing activities -152 -233 -797
Cash flow before financing -574 443 1,361
SEK BN
R12
2018-10-25 NCC AB36
Group financial objectives
2018-10-25 NCC AB37
Reduced number of objectives
Operating Margin
≥ 4.0%
Net Indebtedness
< 2.5 x EBITDA
Dividend policy ≥ 40% of profit after tax
Return on Equity
≥ 20%
2018-10-25 NCC AB38
EBIT margin
-3%
-2%
-1%
0%
1%
2%
3%
4%
2017 Q3 2018, R12
Target ≥4%
All comparative figures for 2017 according to IFRS15
2018-10-25 NCC AB39
Net indebtness* / EBITDA
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2017 Q3 2018, R12
Restriction <2.5 timesnet indebtedness* / EBITDA
Times
* Excl. pension liability
2018-10-25 NCC AB40
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
2017 Q3 2018, R12
Return on shareholders’ equity
Target ≥20%
2018-10-25 NCC AB41
Tomas CarlssonCEO
2018-10-25 NCC AB42
• Large infrastructure projects in Norway and Sweden
• Still a generally strong demand in building
• Demographies drives demand for schools, hospitals and elderly care around our cities
• Growing cities and population growth
• Nordic economies stable with reasonable growth projections
2018-10-25 NCC AB43
Strong positive drivers in the market
• Build on our strong and healthy core
• Focus on projects, customers and geographieswhere NCC can deliver value
• Lower risk profile in the projects– not less ambitious in our business
• Clear main objectives: Restore profitability and better consistency
2018-10-25 NCC AB44
New baseline
2018-10-25 NCC AB45
Contact information and calendar
Chief Financial OfficerMattias LundgrenTel: +46 (0)70-228 88 [email protected]
IR Manager Johan BergmanTel: +46 (0)70-354 80 [email protected]
Financial Calendar 2019
January 30 Year end report 2018
April 9, 2019 Annual General Meeting
April 29, 2019 Interim report Jan-Mar
July 19, 2019 Interim report Jan-Jun
October 28, 2019 Interim report Jan-Sep
2018-10-25 NCC AB46
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