November 9, 2017 / 10:11 AM / a year ago

UPDATE 1-Norway home builder Selvaag eyes 2018/19 market recovery

(Adds CEO, CFO from investor presentation)

OSLO, Nov 9 (Reuters) - Norwegian home builder Selvaag Bolig posted lower year-on-year third-quarter earnings on Thursday and changed its dividend policy.

* Chief Executive Baard Schumann says company prepared for market recovery in 2018-2019, after gradual weakening of units sold in 2017

* Q3 revenue NOK 379​ million vs year-ago 387 million

* Adjusted EBITDA drops to NOK 44.9 million vs year-ago 92.2 million, due to “extraordinary good Q3 last year, with completion of project in Toensberg”

* Says new homes sales last year in general were extremely good, will probably not return to those levels

* Selvaag has sold 99 percent of 2017 completions by Q3 2017, 86 percent of 2018 completions, says “will deliver a good 2018”

* 78 percent of total units under construction sold by Q3 2017

* “The population is growing, and the towns are attracting ever more residents. That has created a big demand for new homes in and around the urban centres. Combined with low interest rates on residential mortgages and limited unemployment, this means we expect sales of new homes to grow in 2018 and 2019.”

* Says has entered into an agreement to buy sites associated with the Bjerke Travbane race track, one of the best remaining development plots in Oslo. This acquisition could provide more than 1,500 homes.

* Expects margins to be good going forward, maintains target of minimum 12 percent project margin

* Aims for long-term growth but not at the expense of margins; to focus on fewer units with higher margins

* Now aims to pay dividends of “minimum 40 per cent” of net annual profit, vs earlier goal to pay “up to 50 per cent”

* CFO Sverre Molvik says company no longer has covenants that put limits on dividend payments, and that this is the reason for going from a maximum dividend target to a minimum dividend target

* CFO: Won’t pay extraordinary dividend. Also notes Selvaag usually pays larger H2 dividend than H1 and that this tradition may be upheld

* Will maintain an equity ratio of minimum 30 percent (Q3 42.4%)

* Shares trade 2 percent lower for the day at 1009 GMT vs 0.4 percent decline in the Oslo benchmark stock index

For more on the company, click on (Reporting by Camilla Knudsen, editing by Henrik Stolen and Terje Solsvik)

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