Income after external project costs for the quarter ended at NOK 2 097 million, a 13 percent growth compared with the same quarter last year. The corresponding organic growth adjusted for calendar of 11 percent is mainly driven by higher average billing rate, higher number of employees and slightly higher billing ratio. The adjusted EBITA margin increased from 6.7 to 6.9 percent, taking into account calendar effects.
Highlights Q2 2023
- Solid growth in income after external project costs of 13.4 percent to NOK 2,097 million (1,849)
- Calendar effect of NOK -37 million due to one less working day for the quarter compared with Q2 2022
- Organic growth of 11 percent adjusted for calendar effects
- Adj. EBITA decreased to NOK 112 million (124) with an adj. EBITA margin of 5.3 percent (6.7)
- Adj. EBITA adjusted for calendar effects increased to 6.9 percent (6.7)
- Net profit of NOK 79 million (86)
- Earnings per share NOK 7.1 (7.5)
Highlights H1 2023
- Solid growth in income after external project costs of 15.4 percent to NOK 4,456 million (3,861)
- No significant calendar effects for H1 2023
- Organic growth of 11 percent adjusted for calendar effects
- Adj. EBITA increased with NOK 69 million to NOK 493 million (424)
- Adj. EBITA margin increased to 11.1 percent (11.0)
- Net profit of NOK 362 million (312)
- Earnings pr share NOK 32.5 (26.8)
Comments from CEO Egil Hogna: “Higher interest rate and inflation have continued into the second quarter of 2023, resulting in uncertainty and lower demand in certain markets. Nevertheless, Norconsult delivered a solid performance in the second quarter, with profitable growth and good margins taking into account calendar effects. The overall market was good in the second quarter. Most of our business areas experienced a high level of activity and new orders, driven by Infrastructure and the Energy & Industry markets. However, weak macroeconomic development influenced parts of the Building and Architecture markets, with more uncertainty impacting the overall volume of residential and private commercial building projects. During the quarter
we welcomed 275 new employees and ended the quarter with approximately 6,000 employees in total.”
Financial review
Operating revenue and other income for the quarter ended at NOK 2 362 million, an increase of 12 percent compared with the same quarter last year.
Income after external project costs for the quarter ended at NOK 2 097 million, an increase of 13 percent and NOK 248 million, compared with the same quarter last year. Organic growth amounted to approximately 11 percent after adjustment for calendar effects. Acquired growth was 2 percent. Currency effects were 3 percent for the quarter.
The organic growth is mainly driven by the higher number of employees, increased average billing rate, and slightly higher billing ratio.
Adjusted EBITA for the quarter ended at NOK 112 million, compared with NOK 124 million for the same period last year. The calendar effect of one less working day compared to the same period last year, had a negative impact of approximately NOK 37 million in the quarter. The adjusted EBITA margin adjusted for calendar effects was 6.9 percent in the quarter compared to 6.7 percent in the same period last year.
Continued strong performance in Norway Head Office and Norway Regions, while Digital and Technogarden delivered weaker adjusted EBITA for the current quarter compared with the same period last year.
Increased capacity from a higher number of employees contributed positively to adjusted EBITA, as well as increased billing rates and a slightly higher billing ratio. Calendar effects, higher personnel expenses and an increase in other operating expenses had a negative effect.
EBIT for the quarter ended at NOK 102 million, down from NOK 120 million compared with the same period last year. The quarter had one less working day compared with the same period last year, corresponding to a negative effect of NOK 37 million. NOK 15 million has been accrued in Q2 and H1 2023 for increased social security taxes in Norway for individual annual salaries above NOK 750 thousand.
Net profit for the period ended at NOK 79 million, down 9 percent from NOK 86 million in the same period last year.
Outlook
Norconsult has a large exposure to the public sector and a diversified mix of services and end-market exposures which mitigate the impacts of a high interest rate environment. Increased or continued stable activity within infrastructure, public buildings, energy and industry offset softer demand within the residential and private non-residential buildings markets which are impacted by higher interest rates. The orderbook remains stable at approximately 75% of our annual revenues. During previous economic downturns, Scandinavian governments implemented counter cyclical measures like infrastructure investments which reduced the general impact on the economy and benefited Norconsult’s business.
The third quarter is generally the weakest quarter from a seasonality point of view due to 1) vacation and reduced working time during summer, 2) most annual salary adjustments taking place in July, and 3) new graduates joining the company with low billing ratio initially. Furthermore, this year we have hired a higher number of senior new-hires in Sweden than normal, which is expected to give a slight reduction in the overall billing ratio as these new-hires are gradually staffed on new projects. However, these negative short-term effects are expected to benefit Norconsult’s growth and cash flow going forward.
Share listing process according to plan
Preparations for a listing on the Oslo Børs continue according to plan, and if market conditions permit, the goal is to complete the listing during the fourth quarter of 2023. As a part of the preparation, this is the first time we report interim according to IFRS standards for publicly listed companies. Having freely tradable shares will support Norconsult’s further growth in the Nordic region. Furthermore, we believe a listing on the stock exchange will create an even more competent and inspiring Norconsult in the Nordic market for the benefit
of customers and employees. A strong employee ownership will remain at the heart of our culture, and our new employee share programmes will be among the best in the industry. Norconsult will continue to be an attractive and highly competent company with a strong local presence that attracts, develops, and retains leading talents who work every day to improve everyday life.
For further information, please contact:
Henrik Charlesen, senior communication manager, +4792636088, henrik.charlesen@norconsult.com
Also see: https://www.norconsult.com/financial-information/
About Norconsult
In Norconsult we develop the society of tomorrow by combining engineering, architecture, community planning and digital expertise. We adopt a holistic approach based on local presence, interdisciplinary expertise and collaboration. Approximately 6,000 employees are spread over more than 130 offices, mainly in the Nordics, and each year our advisers solve around 30,000 small and large assignments for private and public clients.
Through innovation and creativity, and with our purpose Every day we improve everyday life, we are constantly seeking more sustainable, efficient and socially useful solutions.
The company possesses leading expertise in several areas, such as architecture, building and property, digitalisation, geo sciences and environment, industry, renewable energy, safety, society and urban planning, transport and water. We offer consultancy services in all phases of a project, and follow up our clients all the way from the development of ideas and concepts, through planning and engineering design to operation and monitoring.
Important Notice
These written materials are not for release, publication or distribution, directly or indirectly in Australia, Canada, Japan, the United States or to US persons or in any other jurisdiction where such distribution would constitute a violation of the relevant laws or regulations of such jurisdiction. The information contained herein does not constitute an offer of securities for sale in the United States, Australia, Canada, Japan or any other jurisdiction where such offer would constitute a violation of the relevant laws or regulations of such jurisdiction. The securities may not be offered or sold in the United States unless they are registered under applicable law or exempt from registration. The company does not intend to register any portion of the offer in the United States or to conduct a public offer of securities in the United States or any other jurisdiction in which it would be unlawful or would require registration or other measures. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted.