Heavy Construction 44 Improvement, «Five in ‘97 - Veidekke Towards the Year 2000»
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CONTENTS: 1996 Operations 2 Veidekke showed a turnover for 1996 of NOK 4,058 million. From Strength to Strength 4 The Board of Directors’ Report 6 Its pre-tax profit rose from NOK 78.4 to NOK 121.2 million, Accounts for Group 14 which was considerably better than the year before and Accounts for Parent Company 29 gave a profit margin of 3 per cent. Auditor’s Report 33 Shareholder Policy 34 Key Figures 38 «Five in ‘97 - Veidekke towards the year 2000» Veidekke in 1996 39 1996 was also marked by Veidekke’s process of change and Building 40 Heavy Construction 44 improvement, «Five in ‘97 - Veidekke towards the year 2000». Asphalt 48 This process is firmly anchored in the organisation and has Property 52 emerged with the help of improvement groups and meetings Health, Safety, Environment 56 The Corporate Management 64 at all levels of the company. The representatives for the Organisation 66 hourly and monthly paid employees have been actively Addresses 67 involved in the process. Priority has been given to four main Major projects 68 areas: • Management • Customer relations • Supply management • Technical skills Publication dates for interim reports in 1997: 1st quarter: 24 April 2nd quarter: 14 August 3rd quarter: 30 October The Annual General Meeting will be held on 24 April 1997 Front page: Top: Foreman Aslak Larsen, with carpenter Ronny Sjølie in the background. Bottom: Veidekke at work on the double track on the stretch from Såstad to Haug on the Østfold Line for the Norwegian State Railways. This page: Top: Tommy Strøm, iron fixer. Bottom: The Grøner building at Fornebuveien 11-13 in Bærum was developed and built by Veidekke, and then sold to an investor group. Turnover VEIDEKKE NOK mill. Mill. kroner The Veidekke Group holds a leading position in the buil- 4500 ding, heavy construction, asphalt and property markets. 4000 Veidekke was founded in 1936 and has been listed on the 3500 Oslo Stock Exchange since 1986. Throughout its activities, 3000 2500 Veidekke emphasises the importance of controlled growth 2000 and a strong focus on profitability through a flexible orga- 1500 nisation with decentralised profit responsibility. 1000 500 Business philosophy 0 In partnership with its customers, Veidekke aims to supply products and services to the building, heavy construction and asphalt markets and give its shareholders a high, stable Profit before taxation NOK mill. return on their investments over time. We will achieve this 140 by: 120 • Choosing projects where Veidekke has an advantage by virtue of its expertise 100 • Long-term customer relations 80 • Growth in assets based on our own employees 60 • Cooperation with selected partners 40 20 Objectives It is Veidekke’s aim to be the leading contractor in Norway. 0 1992 1993 1994 1995 1996 From 1997 and onwards the company intends to achieve a profit margin on a level of five per cent, reduce the Areas of activity 1996 company’s absence rate to under 5 per cent and bring the injury rate down to less than 12 per million working hours. FIVE-YEAR REVIEW 1996 1995 1994 1993 1992 Turnover* 4,058 3,965 3,162 3,137 3,665 Profit before taxation* 121.2 78.4 5.2 75.2 81.2 ■ Building 44% Orders-on-hand, Building and ■ Heavy Construction 33% Heavy Construction 2,261 1,944 1,731 1,358 1,205 ■ Asphalt 21% Equity ratio (%) 33.7 29.2 28.7 31.5 28.6 ■ Property 2% Earnings per share (NOK) 13.83 9.13 -1.25 8.84 8.70 Dividend per share (NOK) 5.50 3.00 2.00 2.75 2.25 Number of employees at 31 December 3,111 2,888 2,785 2,694 2,869 Absence hourly paid (%) 5.4 5.4 4.6 5.2 5.2 Number of lost-time injuries per million working hours 16.3 19.9 18.7 16.1 23.5 * NOK million For key figures and definitions, see page 38 Operations Operations Description of operations Figures Priority areas in 1996 Achieved in 1996 Priority areas in 1997 Building Veidekke’s Building Division was more selec- 1996 1995 1994 • Build up technical skills and increase • Cross-regional cooperation on • Build up specialised skills in selected tive in its choice of projects in 1996 and Turnover 1,823.2 1,951.8 1,557.7 transfer of experience between the building projects. market areas to increase market focused strongly on profitability in prefer- Operating profit 28.3 10.9 -3.9 regions. advantages. 44% 44% ence to volume. The division showed a Profit before taxation 53.6 34.5 13.0 • Larger number of contracts developed profit for the year of NOK 53.6 million. • Customer orientation and supplier with customers. New cooperation • Expand cooperation with strategic The improvement in profit is a result both of Number of employees 1,467 1,408 1,404 cooperation. agreements set up with suppliers. suppliers. active improvement efforts at each indi- vidual building site and of choosing projects Build up production capacity and Build up capacity in central parts of the where Veidekke has a competitive advan- • • Purchased Moderne Bygg A/S and • expertise on housing market, especially East of Norway region. Turnover Profit tage. Orders-on-hand stood at NOK 1,125 integrated it into Region Oslo. million at 31 December 1996. in central parts of the East of Norway. Purchased Seby A/S in Romerike. See also page 40-43 Heavy Construction The activities of the Heavy Construction 1996 1995 1994 • Improve profits by improving producti- • Marked improvement in profit from • Continued market selectivity and focus Division in 1996 bear evidence of the organ- Turnover 1,389.4 1,172.0 950.9 vity and by being more selective in NOK 2.9 to NOK 27.4 million. on strategic projects. isational development and productivity choice of projects. improvement work carried out here. Operating profit 20.4 1.7 -40.1 33% 22% Increase in profit margin from 0.2% Emphasise the Division’s competitive Improvement groups with participants from Profit before taxation 27.4 2.9 -35.0 • • to 2.0%. advantages. all levels of the organisation were formed at Number of employees 931 810 743 most construction sites. The increase in • Higher margins. profits and improvement in orders-on-hand • Active participation throughout • Continue improvement process with the can largely be ascribed to this work and to company in development process and emphasis on cross-sectional utilisation of Turnover Profit selectivity in choice of projects. The Heavy • Focus on skills upgrading and competence training. the Division’s collective resources. Construction Division showed a profit of organisational development. See also page 44-47 NOK 27.4 million. Orders-on-hand stood at NOK 1,136 million at 31 December 1996. Asphalt Veidekke’s Asphalt Division achieved a turn- 1996 1995 1994 • Asphalt core dams and asphalt paving • Asphalt core in construction of Dam • Asphalt paving at Oslo Airport, over of NOK 868.6 million in 1996. The Turnover 868.6 812.2 686.9 at airports. Urar in Setesdal. Contracts relating to Gardermoen. increase compared with the year before Operating profit 46.6 46.3 40.9 asphalt core technology in China and 21% 29% reflects the acquisitions during the year and • Further development of cold mix South Africa. • Completion of asphalt core contracts the level of activity at Gardermoen airport. Profit before taxation 35.4 42.4 35.7 technology, including microsurfacing awarded in 1996. Sale of technology to In other areas, the level of activity remained Number of employees 645 605 514 and stabilising with bitumen by milling. • Contracts for stabilising with bitumen Three Gorges project in China. fairly stable. The Division showed a profit of by milling for the Public Roads NOK 35.4 million, which is better than the • Rationalisation and better utilisation of Administration and microsurfacing • Assist Noremco with contracts with an year before after an adjustment is made for existing machinery. contracts for the Civil Aviation element of asphalt technology in Turnover Profit gains on sales of NOK 11 million in 1995. Authority. Agreement with Shell and Zanzibar and Tanzania. Orders-on-hand stood at NOK 170 million Nynäs to cooperate on technology See also page 48-51 at the end of the year. Crushed stone and development. • Organisational adjustments to achieve gravel operations also showed a satisfactory further coordination of machinery and result. • More efficient operations and cost operations. savings contributed to better results. Property Veidekke sold 11 properties for a total of 1996 1995 1994 • Utilise collective network of contacts • More cooperation between Building • Find new development areas. NOK 190 million in 1996. At the end of the Turnover 62.6 63.5 49.6 and expertise. and Property divisions. year, Veidekke owned property totalling Operating profit 18.3 20.3 22.9 • Develop products and know-how 2% about 64,000 square metres split between 21 5% Profit before taxation 6.1 0.8 2.6 • Improve customer service and market • Skøyen project developed and sold. directed at new markets. properties. About 21,000 sq.m. of this total contact. floorage is used by Veidekke itself. Revenues • 11 properties sold. • Incorporate experience from manage- from rent amounted to NOK 45.8 million, • Release capital by selling properties and ment, operation and maintenance in of which NOK 31.1 million derived from reinvest in new development projects. Responsibility for management, new projects. external revenues. The Property Division • Turnover Profit showed a profit of NOK 6.1 million in operation and maintenance of 1996. • Maintain high occupancy rate and 125,000 sq.m.