News

15. Aug 2012

Nordecon records sales revenue of 62.9 million euros in first six months of 2012

The sales revenue of Nordecon AS in the first half of 2012 was 62.9 million euros – 16% more than in the same period last year. The group’s gross profit was 2.2 million euros, compared to a loss of 1.4 million euros in the first six months of 2011. The company’s portfolio of work yet to be performed under construction contracts amounts to 166 million euros, which is a rise of 19% year-on-year for the period.

The sales revenue of Nordecon AS in the first half of 2012 was 62.9 million euros – 16% more than in the same period last year. The group’s gross profit was 2.2 million euros, compared to a loss of 1.4 million euros in the first six months of 2011. The company’s portfolio of work yet to be performed under construction contracts amounts to 166 million euros, which is a rise of 19% year-on-year for the period.
 
“Given the market conditions, the way things panned out in the first half of the year was pretty much as expected,” said Jaano Vink, chairman of the management board of Nordecon AS. “But when you look at our financial results in the context of the last couple of years, the fact that we’re back in profit in our main operations is a big achievement. Getting back to that point has largely been the result of the restructuring we’ve undertaken, and we’ve also streamlined our cost management and working processes over the last few years.”
 
Vink says that the majority of the profit was earned in Q2, once the weather conditions and overheads related to changes in technology which affected the results in Q1 had passed. “There weren’t any of the losses we’d posted in the previous period from contracts we entered into in 2009 and 2010 either,” he explained. “Construction is a seasonal business, and your financial results as a whole depend on how harsh the winter is and how long the kind of weather that’s conducive to building lasts. That’s what our results for the second half of the year will hang on.”
 
Describing the results in sales revenue, Vink said: “It was higher than last year’s, which was expected, given the success we’ve had in tenders and the growth in our contract portfolio. In fact the amount of work we’ve got ahead of us is almost 20% higher now than it was this time last year, and is valued at more than 160 million euros. We’re particularly pleased with the private contracts we’ve added to our portfolio of building work. There’s been a noticeable upturn in the economy this year, and that’s having a positive impact on our sector.”
 
Vink says the construction market is likely to continue to grow this year, since the market is flush with funds from both EU projects and the CO2 quota. “But looking ahead to 2013, that growth could dry up and the market may even drop off a bit unless a significant number of private clients come out of the woodwork,” he explained. “The big thing here is the fact that EU support is tailing off for this budgetary period, which goes through to the end of next year. The conditions require the funds to have been paid out by then, which means that we can’t start any more waterworks projects, for example, which are providing us with a lot of work at the moment, because they normally take more than a year-and-a-half to complete. At least, not until the new EU budget is finalised. As a result, competition this year and next is likely to remain fierce. And builders can’t afford to take time out when it comes to looking for ways of making getting jobs and performing them more efficient.”
 
Vink added that the key to remaining competitive in a large organisation is new investments. “That’s why we’re investing as much as we are in technology and equipment over the longer term,” he said. “We sank 1.7 million euros into frontline resources in the first half of the year – a lot of which went on our new mobile asphalt plant, which went into operation in late July.”
 
Nordecon continues to work in two main areas: project management and general contracting in the construction of buildings and other structures. The proportion of revenue they represent is more or less even, at 46% and 54% respectively. The slightly higher proportion of structures reflects the situation on the market at present, with areas supported by the European Union such as roads, environmental construction and technical networks dominating.