Veidekke construction earnings decline

By Helen Wright11 August 2011

Terje Venold, president and CEO of Veidekke Group

Terje Venold, president and CEO of Veidekke Group

Despite generally positive developments in the Scandinavian construction market, Veidekke reported a NOK36.8 million (€4.7 million) drop in gross second quarter construction earnings to NOK72 million (€9.2 million) after impairments on a project in Norway impacted results.

The contractor, which reported a 5% year-on-year increase in construction revenues to NOK3.6 billion (€459 million), said its Norwegian operations were impacted by margin pressure as well as a NOK30 million (€3.8 million) write-down on a major project.

Veidekke's Norwegian construction division reported gross second quarter earnings of NOK35 million (€4.5 million), compared to NOK87.3 million (€11 million) in the same period of 2010. Operating revenues were NOK2.4 billion (€306 million), up from NOK2.3 billion (€293 million) last year.

The company's Swedish construction unit reported better results. Operating revenues rose by 30% year-on-year to NOK903.8 million (€115 million), while gross earnings rose 3.2% to NOK28.7 million (€3.6 million).

Meanwhile, in Denmark, the company reported gross construction earnings of NOK9.3 million (€1.2 million) on operating revenues of NOK386.6 million (€49 million) - 8% and 13% increases respectively.

"The level of activity in several segments of the construction market is beginning to pick up. However, there are large local and market variations," the company said.

Meanwhile, Veidekke provided an update on an ongoing investigation by the Norwegian Competition Authority into possible price collusion between the company's asphalt contractor, Kolo Veidekke, and rival NCC Roads.

"This case involves a risk of exposure for Veidekke," the company said. "Under certain conditions and in accordance with applicable competition laws, Veidekke will obtain full leniency. The case has significance for Veidekke's reputation," it said.

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