Selvaag Bolig ASA: Q2 2023: Good results and dividend

“Operating revenues were higher in the first half of 2023 than in the corresponding period last year. The profitability is still good, but has declined due to lower margins in the delivered projects. Based on the results, the board has decided to pay a dividend of NOK 1 per share for the first half of 2023. That is lower than one year earlier and reflects the uncertain market conditions,” says CEO Sverre Molvik.

During the first half, Selvaag Bolig delivered 305 units and at the end of the second quarter, the company had 1 018 units net under construction with a combined sales value of NOK 5.5 billion. 68 per cent of these were sold at the end of the quarter.

“In the first half we delivered roughly as many housing units as in the same period last year. Sales have been satisfactory despite challenging market conditions, but due to high construction costs we have started sales and construction of fewer homes than usual. We have, however, planned several new sales and construction starts in the second half,” 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 second quarter 2023 (second quarter 2022)

• Gross sales* amounted to 99 homes (139) with a sales value of NOK 564 million (NOK 751 million).
• Net sales were 79 homes (120) with a sales value of NOK 440 million (NOK 634 million).
• Net construction starts for 83 homes (190), completions of 162 net (210) and deliveries of 155 net (217) to buyers.
• 1 018 homes net under construction (1 342) with a combined sales value of NOK 5 458 million (NOK 6 807 million).
• 68 per cent (75 per cent) of homes under construction sold at 30 June.
• 43 completed homes (13) unsold at 30 June.
• IFRS**: Operating revenues of NOK 837 million (NOK 966 million), EBITDA adjusted for financial expenses NOK 95 million (NOK 233 million), corresponding to a margin of 11.4 per cent (24.1 per cent).
• Earnings per share: NOK 0.55 (NOK 1.90).
• NGAAP***: Operating revenues of NOK 542 million (NOK 784 million), EBITDA of NOK 54 million (NOK 104 million), corresponding to a margin of 10.0 per cent (13.2 per cent).
  

Highlights of the first half 2023 (first half 2022)

• Dividend of NOK 1.00 per share (NOK 2.00) for first half.
• IFRS**: Operating revenues of NOK 1 571 million (NOK 1 322 million), EBITDA adjusted for financial expenses NOK 205 million (NOK 293 million), corresponding to a margin of 13.1 per cent (22.2 per cent).
• Earnings per share: NOK 1.25 (NOK 2.30)
• NGAAP***: Operating revenues of NOK 1 137 million (NOK 1 542 million), EBITDA of NOK 126 million (NOK 210 million), corresponding to a margin of 11.1 per cent (13.6 per cent).
• Gross sales* amounted to 251 homes (410) with a sales value of NOK 1 438 million (NOK 2 152 million).
• Net sales were 195 homes (321) with a sales value of NOK 1 098 million (NOK 1 667 million).
• Construction starts for 88 homes net (303), completions of 323 net (284) and deliveries of 305 net (294) to buyers.

* 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.