Selvaag Bolig ASA: Q3 2022: Good results and homes for NOK 6.2 billion under construction

Selvaag Bolig had operating revenues of NOK 2 228 million and an adjusted EBITDA (IFRS) of NOK 430 million for the first nine months of the year.

So far this year, the company has sold 404 homes net, started construction of 371 units and delivered 438 homes to the buyer. At the end of the quarter, Selvaag Bolig had 1 268 homes under construction with a combined sales value of NOK 6.23 billion. Seventy-three per cent of these homes had been sold at the end of the quarter.

“Sales have been satisfactory so far this year even though the market has been quieter due to higher mortgage interest rates and the higher cost of living,” says CEO Sverre Molvik.

“The profitability in the projects is good, and we have more homes under construction now than we had at the same time last year.

“However, the market situation is challenging, and high construction costs have led to some postponed sales starts. The cost of construction is falling and is now lower than it was before the summer, but we are waiting to start new sales until costs decline further.

“We are in a strong position with over 400 homes for sale and more than 750 homes that can be offered for sale in the first half of next year,” he says.

In the first nine months of the year, Selvaag Bolig has sold homes for NOK 2.7 billion.

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 third quarter 2022 (third quarter 2021)

• Gross sales* amounted to 102 homes (147) with a sales value of NOK 554 million (NOK 731 million)
• Net sales were 83 homes (125) with a sales value of NOK 439 million (NOK 634 million)
• Net construction starts for 68 homes (148), net completions of 142 (318) and net deliveries of 144 to buyers (314)
• Net 1 268 homes under construction (1 201) with a combined sales value of NOK 6 225 million (NOK 6 200 million)
• 73 per cent (76 per cent) of homes under construction sold at 30 September 
• 19 (16) completed homes unsold at 30 September
• IFRS**: Operating revenues of NOK 905 million (NOK 887 million), EBITDA adjusted for financial expenses NOK 137 million (NOK 222 million), corresponding to a margin of 15.1 per cent (25 per cent)
• Earnings per share: NOK 0.85 (NOK 1.64)
• NGAAP***: Operating revenues of NOK 788 million (NOK 774 million), EBITDA of NOK 96 million (NOK 114 million), corresponding to a margin of 12.2 per cent (14.8 per cent)
   

Highlights of the first nine months of 2022 (first nine months of 2021)

• IFRS**: Operating revenues of NOK 2 228 million (NOK 1 849 million), EBITDA adjusted for financial expenses NOK 430 million (NOK 439 million), corresponding to a margin of 19.3 per cent (23.7 per cent)
• Earnings per share: NOK 3.15 (NOK 3.06)
• NGAAP***: Operating revenues of NOK 2 330 million (NOK 2 513 million), EBITDA of NOK 306 million (NOK 410 million), corresponding to a margin of 13.1 per cent (16.3 per cent)
• Gross sales amounted to 512 homes (601) with a sales value of NOK 2 708 million (NOK 3 097 million)
• Net sales were 404 homes (546) with a sales value of NOK 2 108 million (NOK 2 753 million)
• Net construction starts for 371 homes (424), net completions of 426 (533) and net deliveries of 438 to buyers (570)
   

* 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.