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NCC issues massive profit warning

Publicerad: 19 Oktober 2018, 13:01

Tomas Carlsson, CEO of NCC. Photo: NCC.

On the occasion of Tuesday’s capital market day, NCC warned that the company will make a billion loss in the third quarter. The warning comes after the new CEO Tomas Carlsson discovered a whole lot of non-performing activities in a review of the company and that one third of the company is unprofitable.


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NCC warned on Tuesday that it will make a loss of more than 1 billion crowns in the third quarter. The warning comes after the new CEO Tomas Carlsson discovered a whole lot of non-performing activities in a review of the company and that one third of the company is unprofitable.

The stock tanked at the announcement, shedding 13% of its value as markets opened, but recovered during the day.

The quarter was charged with provisions for disputes and guarantees, revaluation of certain development properties and write-downs totalling almost SEK 1.6 billion. The company is therefore expected to report an operating loss of SEK 1.1 billion in the third quarter.

NCC has conducted a detailed review of the activities and discovered that only two thirds of the company’s departments are profitable. It will therefore put results before growth in the future.

The plan to improve profitability includes the divestment of loss-making activities, such as the Road Service division in the Infrastructure business area and a series of smaller activities in the Industry business area and certain development properties in the Property Development business area.

“Today NCC presents a new path forward. We are now lowering the risk level associated with the Group’s project portfolio and balance sheet, discontinuing certain unprofitable operations and focusing on NCC’s healthy core operations that can be found in all business areas and countries”, NCC’s  CEO Tomas Carlsson said in a press release.

Carlsson said at a presentation later on Tusday that the company has not been a good owner of the Road Services division. He points out that the division has reported weak results for many years and that synergies with the company’s other activities are limited. On Monday evening, the company therefore decided to spin off the activities and, from the fourth quarter of this year, they will be reported separately.

The company also indicates that today’s measures are likely to entail additional restructuring costs of approximately SEK 200 million until the end of 2019.

Moreover, it is indicated that NCC reduces the number of financial objectives to increase the clarity of profitability before volume. These objectives, which otherwise remain unchanged, include distributing at least 40% of after-tax profit for the year. According to Carlsson, the company has sufficient resources to maintain its dividend in the future.

“My assessment right now is that we have the capacity to keep the current dividend policy,” he said at Tuesday’s presentation.

Oskar von Bahr

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