Broad range of services provides AF Gruppen with its best ever quarterly profit

The construction and industry group AF Gruppen achieved a strong quarterly operating profit of MNOK 81.4 and an operating margin of 5.4%.

The good result is due to margin improvements in the business areas Building and Civil Engineering and growth in Energy and Environment.

AF Gruppen achieves its highest ever quarterly profit. The business area Building shows strong results and has a good order backlog. Margins have improved in Civil Engineering. Environment has established business in Great Britain and signed a contract for decommissioning of six platforms from British sector in the North Sea. Energy has a positive growth in operating revenue and profit in the third quarter. The demand for energy services is strong. Profit before tax in the third quarter reduced due to a write down of shares held as current assets of MNOK 9.6.
 
AF handed over several large projects during the third quarter. Leirfossene power station in Trondheim and Hotel Opera in Gothenburg was completed during the quarter.

The market outlook is different in AF’s five business areas. Energy and Environment have a strong inflow of projects. There are a high number of new tenders in Civil Engineering, but many competitors. Some of the business units in Building experience reduced demand. AF has not started any new projects on own account in Property in 2008.

AF Gruppen has in the third quarter signed a contract with Kilden Teater- og Konserthus for the construction of a new theater and concert hall in Kristiansand. The contract value is MNOK 450. AF has also signed a contract with Shell U.K.  Limited for demolition and recycling of six platforms from the British sector in the North Sea. The contract value is MNOK 230.

AF has continued to target the Energy business area in the third quarter. AF acquired 100% of the shares in Aeron AS in July 2008. Aeron is a leading supplier of HVAC-systems (Heating, Ventilation, Air Conditioning og Cooling) to the ship industry and will be part of the Energy business area.
 
”AF Gruppen is pleased to disclose the Group’s highest ever operating profit. Profit improvements in Building and Civil Engineering give AF Gruppen a competitive advantage in a difficult market. The business area Energy shows a significant increase in operating profit in third quarter 2008. The increase is due to organic growth and acquisitions. AF’s environmental services have established business in Great Britain during the quarter. AF has gained a foothold in the demolition and recycling market on the British sector of the North Sea through several large contracts in 2008. AF has created new and valuable businesses from the use of our abilities across our business units. We feel the potential for our new business areas is large in the coming years.

The market for building services is affected by the negative influence from the financial markets. The number of new tenders is higher in Civil Engineering than Building, but the competition is fierce for every project. The housing market is very weak. We have written down the value of our unsold housing units in the third quarter. The demand for our energy and environmental services is good. AF Gruppen has a stable order backlog and the group reported its highest ever quarterly operating profit,” says Pål Egil Rønn, CEO of AF Gruppen.

The presentation can also by viewed by webcast. Please see www.ose.no or www.afgruppen.no