Selvaag Bolig ASA: Q2 2024: Good results and better sales

“The results were solid. This was mainly due to good project margins because we signed fixed price construction contracts at favorable times. In addition, we sold property which contributes positively to the result,” says CEO Sverre Molvik.

At the end of the second quarter, the company had 661 net homes under construction with a total sales value of NOK 4.2 billion. 66 per cent of these had been sold at the end of the quarter, and 80 per cent of the homes to be completed this year had been sold.

The second quarter of 2024 was a good sales quarter for Selvaag Bolig. The company sold 235 homes gross worth NOK 1 574 million. The net sales, i.e. sales adjusted for Selvaag Bolig's share in joint ventures, amounted to 207 homes worth NOK 1 385 million. The number of homes sold was the highest since the first quarter of 2022, and the sales value was all time high.

“This will help secure income and more construction starts going forward. We are also planning several new sales starts in the second half of the year to take advantage of the positive momentum in the market, which looks set to continue,” says Molvik.

According to Statistics Norway, urbanization and population growth create a large and long-term need for new housing in Selvaag Bolig's core areas. In recent years, however, the market has been negatively affected by increased construction costs and mortgage interest rates, as well as reduced purchasing power in households. The company has therefore completed more homes than it has started.

“The market has been challenging over time and the number of units under construction has therefore declined significantly during the last two years. The company also has a high number of completed units that remain unsold. The board has therefore decided not to pay dividends for the first half of the year. Dividends for the whole year will be assessed in February 2025 based on the results for the year and the market situation. The company's policy of paying a dividend of at least 60 per cent of the result has not changed,” 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 2024 (second quarter 2023)

• Gross sales* amounted to 235 homes (99) with a sales value of NOK 1 574 million (NOK 564 million).
• Net sales were 207 homes (79) with a sales value of NOK 1 385 million (NOK 440 million).
• Net construction starts for 95 homes (83), completions of 105 net (162) and deliveries of 127 net (155) to buyers.
• 661 homes net under construction (1 018) with a combined sales value of NOK 4 211 million (NOK 5 458 million).
• 66 per cent (68 per cent) of homes under construction sold at 30 June.
• 119 completed homes (43) unsold at 30 June.
• IFRS**: Operating revenues of NOK 620 million (NOK 837 million), EBITDA adjusted for financial expenses NOK 124 million (NOK 95 million), corresponding to a margin of 19.9 per cent (11.4 per cent).
• Earnings per share: NOK 0.85 (NOK 0.55).
• NGAAP***: Operating revenues of NOK 603 million (NOK 542 million), EBITDA of NOK 48 million (NOK 54 million), corresponding to a margin of 8.0 per cent (10.0 per cent).
  

Highlights of the first half 2024 (first half 2023)

• IFRS**: Operating revenues of NOK 1 248 million (NOK 1 571 million), EBITDA adjusted for financial expenses NOK 230 million (NOK 205 million), corresponding to a margin of 18.4 per cent (13.1 per cent).
• Earnings per share: NOK 1.45 (NOK 1.25).
• NGAAP***: Operating revenues of NOK 1 150 million (NOK 1 137 million), EBITDA of NOK 93 million (NOK 126 million), corresponding to a margin of 8.1 per cent (11.1 per cent).
• Gross sales* amounted to 389 homes (251) with a sales value of NOK 2 441 million (NOK 1 438 million).
• Net sales were 346 homes (195) with a sales value of NOK 2 144 million (NOK 1 098 million).
• Construction starts for 218 homes net (88), completions of 341 net (323) and deliveries of 306 net (305) to buyers.

* Units sold are sales contracts entered into with customers pursuant to the Norwegian Housing Construction Act and the Tenancy Act in Sweden. 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.