SRV Financial Statement Release 1-12/2023: Order backlog grows to over one billion, driven by business construction; amount of unsold apartments is low - result burdened by weak demand for housing
October-
- Revenue totalled
EUR 181.8 (181.2) million (+0.3 %). -
Operative operating profit amounted to
EUR 2.4 (0.2) million with an operating profit ofEUR 3.1 (-6.3) million. -
Cash flow from operating and investment activities totalled
EUR 13.6 (4.6) million. -
New agreements valued at
EUR 253.1 (287.2) million were signed in October-December.
January-
- Revenue totalled
EUR 610.0 (770.1) million (-20.8 %). -
Operative operating profit amounted to
EUR 1.1 (18.9) million with an operating profit ofEUR -6.8 (-76.4) million. The divestment ofSRV Russia Oy in the third quarter had aEUR -9.5 million impact on operating profit, of whichEUR -9.3 million consisted of the recognition of translation differences in income. -
The result before taxes was
EUR -15.8 (-79.1) million. -
Earnings per share were
EUR -0.9 (-6.6). -
Cash flow from operating and investment activities totalled
EUR 0.0 (-8.0) million. - The equity ratio fell to 34.4 per cent (36.3% 12/2022) and gearing rose to 71.7 per cent (55.1% 12/2022). Excluding the impact of IFRS 16, the equity ratio was 48.0 (48.2) per cent and gearing was -4.3 (-7.5) per cent.
-
At period-end, the order backlog stood at
EUR 1,048.6 (838.8) million. New agreements valued atEUR 781.4 (624.6) million were signed in January-December. The sold share of the order backlog was 92.6 (89.2) per cent. - The Board of Directors proposes to the General Meeting that no dividend be paid for the 2023 financial year.
Outlook 2024
During 2024, SRV's revenue and result will be affected by several factors in addition to general economic trends, such as: the margin of SRV's order backlog and its development; the start-up of new contracts and development projects; geopolitical risks, including related direct and indirect effects, such as material costs and the availability of materials and labour; and changes in demand. Higher interest rates and the reduced availability of financing are having a negative impact on demand for housing and business premises among consumers and investors, and thus pose uncertainty with respect to the estimated start-ups of new projects.
In 2024, revenue will mainly consist of relatively low-margin - yet also low-risk - cooperative contracting and, to a lesser extent, of development projects sold to investors as well as housing construction competition and negotiation contracting. Developer-contracted housing production will account for only a small percentage of revenue, as no developer-contracted housing projects are scheduled for completion during the year.
- Full-year consolidated revenue for 2024 is expected to grow compared to 2023 (revenue in 2023:
EUR 610.0 million ) -
Operative operating profit is expected to improve on 2023 (operative operating profit in 2023:
EUR 1.1 million ).
Significant events after the period
- On
3 January 2024 , SRV announced that change negotiations would be launched with a view to adjusting the company's costs to the ongoing challenging market situation.
President & CEO's review
"2023 was more difficult than we had originally expected at the beginning of the year, as market conditions remained challenging. Demand among consumers and real estate investors declined considerably on the back of inflation and the subsequent rise in interest rates. This had an exceptionally large and rapid impact on the housing construction market in particular. As a result, several planned projects were halted and many contract startups were postponed, leading to a significantly lower volume than expected for the year as a whole. At the same time our business construction grew strongly, driven by cooperative contracting.
Our revenue ended up being considerably lower than in the previous year. Low volumes, coupled with the structure of our order backlog, meant that our operative operating profit also fell significantly short of the previous year, although it was still positive. Even though our financial result was modest, there is a bright side - project controllability continued to improve, which was reflected in the large number of projects that achieved their budgeted margins, which in turn partly compensated for the decreased volume and order backlog structure. This gives us confidence in future developments. Our revenue rose as anticipated during the fourth quarter, supported by our stronger order backlog, and operative operating profit was higher than in the comparison period.
The improvement in operational controllability was reflected not only in the number of projects that achieved their budgeted margins, but also in better schedule management, a significant improvement in customer satisfaction (NPS B2B 61) and excellent progress in occupational safety. Our lost time injury frequency (LTIF) for 2023 was 8.7 compared to 12.1 in 2022. An improvement of more than two points in one year is a firm indication of tighter leadership and a stronger safety culture. It was also pleasing to receive recognition for this: two of our construction sites - the Wintteri multipurpose building in Uusikaupunki and a Wood City office in
Our order backlog continued to grow throughout the year, and stood at
During these challenging economic times for the construction industry, it is very important to maintain a strong balance sheet and ensure our financing is in order. The completion of As Oy Helsingin Kokardi in the Pasila district of
In
In
1-12/ | 1-12/ | 10-12/ | 10-12/ | |||
(IFRS, milj. eur) | 2023 | 2022 | change | change, % | 2023 | 2022 |
Revenue | 610.0 | 770.1 | -160.0 | -20.8 | 181.8 | 181.2 |
Operative operating profit | 1.1 | 18.9 | -17.8 | -94.4 | 2.4 | 0.2 |
Operative operating profit, % | 0.2 | 2.5 | -2.3 | 1.3 | 0.1 | |
Operating profit | -6.8 | -76.4 | 69.6 | 3.1 | -6.3 | |
Operating profit, % | -1.1 | -9.9 | 8.8 | 1.7 | -3.5 | |
Profit before taxes | -15.8 | -79.1 | 63.3 | 0.7 | -10.0 | |
Net profit for the period | -15.1 | -85.7 | 70.5 | -0.6 | -8.9 | |
Net profit for the period, % | -2.5 | -11.1 | 8.6 | -0.4 | -4.9 | |
Earnings per share | -0.89 | -6.62 | 5.7 | 0.09 | -0.77 | |
Order backlog (unrecognised) | 1048.6 | 838.8 | 209.8 | 25.0 | ||
Equity ratio, % | 34.4 | 36.3 | -1.9 | |||
Equity ratio, %, excl. IFRS 16 1) | 48.0 | 48.2 | -0.2 | |||
Net gearing ratio, % | 71.7 | 55.1 | 16.6 | |||
Net gearing ratio, %, excl. IFRS 16 1) | -4.3 | -7.5 | 3.2 | |||
Financing reserves | 78.6 | 65.9 | 12.7 | 19.3 |
1. The figure has been adjusted to remove the impacts of IFRS 16.
Business Review
January-
The Group's revenue declined by
The Group's operative operating profit decreased to
The Group's operating profit was
At period-end, the Group's order backlog stood at
October-
The Group's revenue totalled
The Group's operative operating profit amounted to
The Group's operating profit was
Espoo,
Board of Directors
All forward-looking statements in this financial statement release are based on management's current expectations and beliefs about future events. The company's actual results and financial position may differ materially from the expectations and beliefs such statements contain due to a number of factors that have been presented in this financial statement release.
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SRV in brief
SRV is a Finnish developer and innovator in the construction industry. We are building a more sustainable and responsible urban environment that fosters economic value and takes the wellbeing of both the environment and people into consideration. We call this approach lifecycle wisdom. Our genuine engagement and enthusiasm for our work comes across in every encounter - and listening is one of our most important ways of working. We believe that the only way to change the world is through discussion.
Our company, established in 1987, is listed on the
SRV - Building for life
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