NCC Infrastructure and the Q2 results

Since I began as Head of NCC Infrastructure in early April I have spent time learning about our operations. I will continue to do so in order to understand the status of our current business.

In Q2 the business area delivered an EBIT margin of 1 percent (1,5), while the externally communicated goal is 3,5 percent. But the ambitions are even higher.

I am convinced we can succeed – through focused and systematically work. I will come back to how, but let me just first go through some of the financial key numbers.

In the second quarter orders received fell to MSEK 3,740 (4,483), but rose to MSEK 13,237 (9,480) in the first six months. That give us an order backlog almost 34 percent higher than last year, MSEK 24,118 (18,019). In addition, Norwegian Bane NOR awarded NCC Infrastructure with a contract worth MSEK 1,700 in July.

Our one percent profit margin was delivered on a net sale of MSEK 4,990 (4,539) in Q2, which give us an EBIT of MSEK 51 (70). For the first half year our EBIT amount to MSEK 40 (4), with an EBIT margin of 0,4 percent (0).

To be honest – with the profit margins we deliver today we must look at ourselves and admit we are an underperforming business unit. I am certain we can do better. And from what I hear when I talk with the projects and divisions – so are you! At the same time, we can also see that some parts of our business area are performing very well.

Going forward, our priority is profit before volume. This means that we will not chase growth, we will instead focus on increasing our profitabilty.

Safety

Our safety performance, measured in Lost Time Injury Frequency (LTIF), was 11 in Q2 2018 (rolling 12 months) and 6,7 in Q2 2017 (rolling 12 months). This really worries me a lot, and we need to improve. People shall not get injured at our jobsites and shall be able to come home safely from work every day.

Going forward we will focus on Safety and Profitability

Based on the business area's safety and profitability performance, I have launched a program to both enhance safety and increase profitability.

I had the pleasure to discuss concrete activities with the division management teams before summer, and I really look forward to seeing how these will be operationalized and executed in the divisions and supporting functions.

The program is very much about securing and improving basic skills in winning and executing our projects. Important actions, will for example to be more selective in what project we bid for and to have the right team in bidding, planning and execution of the projects. Also risk management will be important going forward.

During 2019 the program will be our "strategic" focus and will be incorporated in our Business plans for 2019.

I wish you all a great fall!

 

Kenneth Nilsson, EVP and Head of NCC Infrastructure