Kreate Group Plc Half-year report January–June 2023
This release is a summary of Kreate Group’s Half-year report January–June 2023. The complete Half-year report is attached, and also available on the company’s website at https://kreate.fi/en/investor/releases-and-reports/reports/.
Kreate's Half-year report: Revenue increased by 29% – order backlog remained at a high level
April–June in brief
- Order backlog amounted to
EUR 264.9 (204.4) million, increase 29.6% - Revenue grew compared to the reference period, amounting to EUR 85.7 (67.0) million
- The year-on-year change in revenue was 28.0% (26.6%)
- EBITDA was EUR 4.0 (3.5) million, amounting to 4.7 (5.3) per cent of revenue
- EBITA was EUR 2.6 (2.4) million, amounting to 3.0 (3.6) per cent of revenue
-
Earnings per share were
EUR 0.17 (0.19) -
Free cash flow from operating activities was
EUR -1.7 (-0.4) million - Interest-bearing net debt was EUR 39.1 (29.4) million
-
Guidance updated on
6 July 2023 : Kreate estimates that its revenue (2022:EUR 273.9 million ) will be EUR 300–325 million. EBITA (2022:EUR 8.8 million ) is estimated to be at the level ofEUR 7 .0–8.5 million.
January–June in brief
- Revenue grew compared to the reference period, amounting to EUR 151.6 (117.4) million
- The year-on-year change in revenue was 29.1% (28.7%)
- EBITDA was EUR 5.0 (5.6) million, amounting to 3.3 (4.8) per cent of revenue
- EBITA was EUR 2.2 (3.5) million, amounting to 1.4 (3.0) per cent of revenue
-
Earnings per share were
EUR 0.10 (0.26) -
Free cash flow from operating activities was
EUR -1.6 (-1.6) million
Development of the operating environment
In looking at the Government Programme published by the Finnish Government, the infrastructure construction market can be expected to grow in the coming years, even though the outlook for the current year is more downbeat. Both the
There is an acute need in
The Finnish Government intends to implement an extensive transport investment programme of nearly
In addition to the state’s infrastructure projects, the City of Vantaa has decided on the construction of an approximately 19-kilometre tram line, with the project estimated to start already in autumn 2024. There are several other similar plans in the
It is possible to apply for funding for the planning and construction of the infrastructure network from the military mobility package of the European Union’s CEF financial instrument, but this must be done by
Willingness to invest is high in industry, but inflation and rising interest rates have contributed to the postponement of initiation decisions. Once realised, they will also boost the construction industry. Green transition investments will launch at the earliest in 2024 due to the long permit processes, and their total value is estimated at approximately
Business premises and repair construction has remained approximately at the previous year’s level, but housing construction has plummeted. Construction market expert company Forecon predicted in the spring that housing construction will decrease by more than 20 per cent in 2023. At the moment, new apartments are still being completed in large numbers, but in the meanwhile demand is sluggish, thereby causing an oversupply in the market for new apartments. The number of housing projects started has been reduced this year, which weakens the outlook for housing construction for 2024 as well. However, the slowdown in the rise in construction costs and even a slight drop in the prices of some materials is a positive signal.
The long-term outlook of infrastructure construction in
In its strategy, Kreate has chosen its business functions according to areas of structural engineering and transport infrastructure construction supported by the megatrends that will grow in the long term. Specialisation in demanding and versatile infrastructure is significantly more sustainable across business cycles and downturns than focusing on basic infrastructure construction. Furthermore, Kreate’s expansion into
Overall, Kreate believes that the structural engineering and transport infrastructure construction markets that are relevant for demanding infrastructure construction will decline slightly in 2023 compared to the level in 2022. Kreate’s strategic specialisation in demanding infrastructure projects and good order backlog will lead to revenue growth in 2023.
Key figures
EUR million | 4–6/2023 | 4–6/2022 | 1–6/2023 | 1–6/2022 | 1–12/2022 |
Order backlog |
|
| 264.9 | 204.4 | 306.9 |
Revenue | 85.7 | 67.0 | 151.6 | 117.4 | 273.9 |
Year-on-year change in revenue, % | 28.0 | 26.6 | 29.1 | 28.7 | 15.3 |
EBITDA | 4.0 | 3.5 | 5.0 | 5.6 | 13.6 |
EBITDA, % | 4.7 | 5.3 | 3.3 | 4.8 | 5.0 |
EBITA | 2.6 | 2.4 | 2.2 | 3.5 | 8.8 |
EBITA, % | 3.0 | 3.6 | 1.4 | 3.0 | 3.2 |
Operating profit | 2.5 | 2.4 | 2.1 | 3.4 | 8.6 |
Operating profit, % | 2.9 | 3.5 | 1.4 | 2.9 | 3.2 |
Result for the period | 1.5 | 1.6 | 0.8 | 2.3 | 5.6 |
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Capital employed |
|
| 80.8 | 68.5 | 75.9 |
Return on capital employed, % |
|
| 9.8 | 16.0 | 12.5 |
Return on equity, % |
|
| 10.4 | 20.9 | 13.8 |
Net investments in operating activities | -1.1 | -1.0 | -4.3 | -2.8 | -4.2 |
Free cash flow from operating activities | 1.7 | -0.4 | -1.6 | -1.6 | 3.5 |
Net working capital |
|
| 6.9 | 3.6 | 4.7 |
Net debt |
|
| 39.1 | 29.4 | 33.4 |
Net debt/EBITDA, rolling 12 months |
|
| 3.0 | 2.0 | 2.5 |
Net debt/EBITDA, rolling 12 months pro forma* |
|
| 3.0 |
| 2.4 |
Equity ratio, % |
|
| 28.2 | 31.6 | 31.6 |
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|
|
|
|
Earnings per share, diluted, € | 0.17 | 0.19 | 0.10 | 0.26 | 0.63 |
Earnings per share, undiluted, € | 0.17 | 0.19 | 0.10 | 0.26 | 0.64 |
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Personnel at the end of the period |
|
| 504 | 424 | 447 |
Personnel on average | 460 | 407 | 424 | 393 | 416 |
*) The pro forma for the reporting period includes the EBITDA of the acquisition from 1 July to
President & CEO
“The first half of 2023 in the infrastructure construction industry was marked by steadiness offering no surprises – regardless of the drastic drop in housing construction, the deterioration of the economic situation and changes on the global stage, infrastructure construction – and especially focusing on technically challenging infrastructure – carried us through. We continued our targeted efforts in the management of working capital and cash flow in a challenging market environment, and we have succeeded well in managing liquidity and receivables. Tendering also picked up after the first quarter, and this was positively reflected in Kreate’s order backlog, which stood at
In the second quarter, we consistently won tenders in various types of construction. We took on several small contracts in bridge and transport infrastructure construction, and our foundation construction professionals started the construction of the Kokinniitty parking facility. In addition, our investments in railway construction are starting to show, with increases in the size and versatility of the projects won. We won three different contracts for the massive construction project between Kytömaa and Ainola in the Helsinki–Riihimäki rail project. Their total value is approximately
Kreate’s revenue in the first half of 2023 was
Green transition investments amounting to billions of euros have been featured a lot in the media, but there is still a long way to go before concrete construction projects are started. Currently, of projects related to the green transition, especially the construction of wind and solar power plants is progressing, but other countries are also competing for investments in the billions on hydrogen, for example. In addition to functional logistics, companies also need emission-free electricity, which places demands on improving the distribution network. In addition to investments in the green transition, there are investment plans in industry that will nevertheless have to wait for the cost level to stabilise, inflation to go down and the predictability of the interest rate environment to improve.
There would be things to build in the pipeline and there is sufficient interest in
For winning green transition projects for
Result guidance for 2023 (published on
Kreate estimates that its revenue (2022:
Justifications: The strong order backlog and systematic execution of projects, in some cases even faster than predicted, have increased Kreate’s revenue in the first half of the year. The same trend is expected to continue in the second half of the year as well, with which revenue is estimated to grow to a higher level than previously estimated.
At the same time, the persistently high level of inflation during the first part of the year, wage development in the industry as well as changes in the total construction market have affected profitability. Moreover, in contrast to the previous estimate, projects not bound to an index from previous years resulted in negative margin effects, weakening profitability in 2023. In railway construction, the postponement of projects estimated to start early in the year has strained the market and that has had a weakening effect on the estimated volume and profitability of this business.
Kreate Group’s financial reporting
- Interim report for January–September 2023:
25 October 2023
Webcast event for analysts and media
A live webcast for analysts and media will be held today,
Communications Manager
Distribution: Nasdaq Helsinki, key media, kreate.fi/en
Contacts
Mikko Laine , CFO, Kreate Group Oyj, +358 50 599 9201, mikko.laine@kreate.fi- Timo Vikström, President & CEO, Kreate Group Oyj, +358 400 740 057, timo.vikstrom@kreate.fi
About Kreate Group Oyj
Attachments
- Download announcement as PDF.pdf
- Kreate Group Half year Report January–June 2023.pdf
© STT Info Finland, source