Selvaag Bolig ASA: Good results and order backlog of more than NOK 5.5 billion
Selvaag Bolig delivered 150 homes in the first quarter. Revenues reached NOK 734 million, which was NOK 378 million higher than the same quarter of last year. The EBITDA margin adjusted for financial expenses was 15 per cent.
“The results for the quarter were good, and the order backlog in the company is still high,” says CEO Sverre Molvik.
At the end of the quarter, Selvaag Bolig had 1 097 units with a combined sales value of NOK 5.64 billion under construction.
“We have been through some challenging quarters where high construction costs and the situation in the market have resulted in us starting construction on fewer homes than we have completed. We have nevertheless a solid order backlog which assures our results going forward. For the homes under construction, our costs are fixed. They are thus not impacted by price and pay increases,” says Molvik.
Selvaag Bolig currently has 350 homes for sale and believes it will be possible to start sales on more projects going forward.
“Interest rate hikes and the increased cost of living have led to longer sales processes for new homes than earlier. At the same time, our sales have been satisfactory, and the second quarter has started at the same level as the first quarter.
There are still large requirements for new housing and the interest is there. With construction costs starting to come down to acceptable levels, it will make it possible again for us to launch sales on new projects also outside of the Oslo-area. We are thus expecting a stable market going forward and we anticipate that we will succeed in starting construction on more homes,” says Molvik.
The live webcast of the presentation can be viewed from 0830 here. An English transcript of the presentation will be made available on the company’s website.
Highlights of the first quarter 2023 (first quarter 2022)
- Net construction under way on 1 097 homes (1 361) with a combined sales value of NOK 5 641 million (NOK 7 034 million)
- 69 per cent (73 per cent) of homes under construction sold at 31 March
- 80 per cent of homes due for completion in 2023 are sold
- Pre-tax profit NOK 86 million (NOK 47 million)
- IFRS**: Operating revenues of NOK 734 million (NOK 356 million), EBITDA adjusted for financial expenses NOK 110 million (NOK 61 million), corresponding to a margin of 15 per cent (17 per cent)
- Earnings per share: NOK 0.70 (NOK 0.40)
- NGAAP***: Operating revenues of NOK 595 million (NOK 758 million), EBITDA of NOK 72 million (NOK 106 million), corresponding to a margin of 12 per cent (14 per cent)
- Net construction starts for 5 homes (113), net completions of 161 (74) and net deliveries of 150 to buyers (77)
- Gross sales* amounted to 152 homes (271) with a sales value of NOK 874 million (NOK 1 401 million)
- Net sales were 116 homes (201) with a sales value of NOK 658 million (NOK 1 033 million)
* Units sold are sales contracts entered into with customers pursuant to the Norwegian Housing Construction Act. In accordance with the IFRS, they are recognised as income on delivery. Net sales include Selvaag Bolig’s share of joint venture projects. Gross sales include all homes in joint venture projects.
** Pursuant to the IFRS, all profit is recognised when the homes are delivered to the buyer. Profit pursuant to the IFRS accordingly derives primarily from homes which began to be built roughly two years ago.
*** The accounts pursuant to Norwegian generally accepted accounting principles (NGAAP) utilise the percentage of completion method. This means that profits are recognised on the basis of construction progress and sales in the projects. That presents ongoing value creation in the company.