CONSTI PLC FINANCIAL STATEMENTS BULLETIN 3 FEBRUARY 2023, at 8.30 a.m.
Consti Plc Financial Statements Bulletin for January – December 2022
NET SALES GREW AND PROFITABILITY IMPROVED
10–12/2022 highlights (comparison figures in parenthesis 10–12/2021):
- Net sales EUR 93.3 (82.6) million; growth 12.9 %
- EBITDA EUR 5.7 (4.0) million and EBITDA margin 6.1 % (4.9 %)
- Adjusted operating result (EBIT) EUR 4.8 (3.0) million and Adjusted EBIT margin 5.2% (3.6%)
- Operating result (EBIT) EUR 4.8 (3.0) million and EBIT margin 5.2 % (3.6 %)
- Order backlog EUR 246.7 (218.6) million; growth 12.8 %
- Order intake EUR 109.1 (66.9) million; growth 63.1%
- Free cash flow EUR 10.4 (6.1) million
- Earnings per share EUR 0.49 (0.30)
1–12/2022 highlights (comparison figures in parenthesis 1–12/2021):
- Net sales EUR 305.2 (288.8) million; growth 5.7 %
- EBITDA EUR 14.9 (9.2) million and EBITDA margin 4.9 % (3.2 %)
- Adjusted operating result (EBIT) EUR 11.4 (9.5) million and Adjusted EBIT margin 3.7% (3.3%)
- Operating result (EBIT) EUR 11.4 (5.7) million and EBIT margin 3.7 % (2.0 %)
- Order intake EUR 283.7 (275.1) million; growth 3.1%
- Free cash flow EUR 18.0 (5.5) million
- Earnings per share EUR 1.10 (0.47)
- The Board of Directors proposes a dividend of EUR 0.60 per share
Guidance on the Group outlook for 2023: The Company estimates that its operating result for 2023 will be in the range of EUR 9.5–13.5 million.
KEY FIGURES (EUR 1,000)
10-12/2022
10-12/2021
Change %
1-12/2022
1-12/2021
Change %
Net sales
93,264
82,605
12.9 %
305,217
288,773
5.7 %
EBITDA
5,674
4,014
41.3 %
14,927
9,202
62.2 %
EBITDA margin, %
6.1 %
4.9 %
4.9 %
3.2 %
Adjusted operating result (EBIT)
4,827
3,011
60.3 %
11,428
9,535
19.9 %
Adjusted EBIT margin, %
5.2 %
3.6 %
3.7 %
3.3 %
Operating result (EBIT)
4,827
3,011
60.3 %
11,428
5,705
100.3 %
Operating result (EBIT) margin, %
5.2 %
3.6 %
3.7 %
2.0 %
Profit/loss for the period
3,739
2,290
63.2 %
8,491
3,717
128.4 %
Order backlog
246,650
218,578
12.8 %
Free cash flow
10,413
6,136
69.7 %
18,000
5,458
229.8 %
Cash conversion, %
183.5 %
152.9 %
120.6 %
59.3 %
Net interest-bearing debt
3,871
14,262
-72.9 %
Gearing, %
10.7 %
44.7 %
Return on investment, ROI %
18.3 %
9.2 %
Number of personnel at period end
975
961
1.5 %
Earnings per share, undiluted (EUR)
0.49
0.30
63.3 %
1.10
0.47
134.0 %
CEO Esa Korkeela’s comment
“Consti's solid development continued during the last quarter of the year. Our net sales for October-December increased by 12.9 percent and amounted to 93.3 (82.6) million euro. Our net sales for the reporting period 2022 increased by 5.7 percent and amounted to 305.2 (288.8) million euro. 75.1 (70.0) percent of our net sales were generated in the Greater Helsinki area.
Our operating result for October-December was 4.8 (3.0) million euro, which is 5.2 (3.6) percent of our net sales. The last quarter advanced according to our expectations, and our projects predominantly progressed as planned. Our profitability improved, although cost inflation had a negative impact on our result through both increased construction costs and increased indirect costs. Our operating profit for the reporting period doubled and was 11.4 (5.7) million euros, which is 3.7 (2.0) percent of our net sales. Our adjusted operating result for the reporting period before items affecting comparability was 11.4 (9.5) million euros, which is 3.7 (3.3) percent of net sales.
Thanks to improved profitability and released working capital, our free cash flow for October-December improved compared to the previous year and was 10.4 (6.1) million euro. With the positive cash flow development, our balance sheet and liquidity positions strengthened during the last quarter. Our January-December free cash flow improved significantly compared to the previous year and was 18.0 (5.5) million euro, which means a cash conversion ratio of 120.6 (59.3) percent.
During October-December, our order intake amounted to 109.1 (66.9) million euro, which means an increase of 63.1 percent compared to the comparison period. The most significant orders of the last quarter were the renovation of Taivallahti elementary school, the renovation and new construction project of Oulunkylä elementary school and kindergarten, and the alliance project for the implementation phase of the new ward building of Jorvi Hospital, where Consti will carry out the HVAC and sprinkler work. Our order intake for January-December increased by 3.1 percent year-on-year and amounted to 283.7 (275.1) million euro. Thanks to the strong order intake, our order backlog at the end of the reporting period increased by 12.8 percent compared to the comparison period and was 246.7 (218.6) million euro.
We made progress in our strategic projects in accordance with our plans. Our long-term work to improve profitability continued. We achieved growth in the segments we wanted among renovation, building technology as well as in Service business. The expansion of our operations into new construction continued both in the Greater Helsinki area and regionally. During the year, we also strengthened our abilities in, for example, project development, design management and energy efficiency. In corporate social responsibility, our work progressed in accordance with our chosen responsibility themes for the strategy period. As part of environmentally friendly services, we developed, among other things, the Consti OPTIMI multi-energy system, which can be used to even halve the energy consumption of properties.
Based on our current market view, we believe that the demand for renovation and building technology services will remain reasonably good in 2023. According to forecasts, renovation will be the only area of construction that will grow in 2023. Growth is expected from both residential renovation and other renovation. The forecasts reflect the needs-oriented nature of renovation. However, strong inflation and the rapid rise of both energy costs and the price of financing may postpone construction projects in the short term. Uncertainty in the outlook for construction is also brought about by the rise in the prices and availability of building materials and products, intensified by the war in Ukraine.
Our strong order backlog, the progress of our strategic projects, and our steadily improved performance put us in a good position to continue our positive and solid development in 2023.”
Operating environment
In recent years, the Finnish house building market has been divided almost equally between new construction and renovation.
In 2022, new construction grew more than renovation. New construction growth was driven by residential construction. Estimates of the growth of residential new construction vary from the Confederation of Finnish Construction Industries RT's seven percent to Euroconstruct's around ten percent. RT estimates that non-residential new construction increased by 2.5 percent, while Euroconstruct estimates that it increased 3.5 percent.
Renovation grew an estimated 0.8–1.5 percent in 2022 and were worth approximately 14 billion euro.
In 2023, both residential construction and non-residential construction are predicted to decrease clearly. Renovation, on the other hand, will continue to grow steadily according to estimations.
Renovation has grown relatively steadily for the last 20 years. Growth is projected to remain steady for years to come, as renovation is more need-based and less sensitive to economic cycles than new construction.
Nearly two-thirds of renovation is conducted in residential buildings, and more than half of this volume is estimated to be professional renovation. Just over one third of all renovation is conducted in non-residential buildings. In 2022, renovation of non-residential buildings grew more than renovation of residential buildings.
In the renovation of residential buildings, the emphasis is still on building technology, which accounts for approximately 40 percent of the value of renovation. It has been estimated that building technology renovation will increase more strongly than other renovation also in the next few years. The growth of building technology renovation is maintained by the large number of residential buildings that have reached the age where they require pipeline renovation.
The higher prices of heating and the green transition will also bring growth to the building technology market. Until now, energy efficiency has been improved largely in connection with other renovation, but rapidly rising energy prices have made energy renovation profitable as independent projects as well. Energy efficiency and a building’s ability to withstand increasing extreme weather conditions are improved with building technology and construction solutions such as facade renovation. Renovation plays a central role in reducing the carbon footprint of the built environment, as the number of new buildings is growing by only about one per cent per year.
In the short term, however, building technology companies’ expectations for the future have darkened. Future prospects are overshadowed by uncertainty regarding the prices and availability of supplies and equipment, and the price of energy, caused by the war in Ukraine. According to a survey conducted by Statistics Finland, renovation prices had risen by more than ten percent in the fall of 2022 from the previous year. The prices for pipeline and roof renovation had risen the most.
In addition to building technology renovation, many housing companies have a growing need for facade renovation, which they have postponed due to financial reasons, to make way for pipeline renovation. Approximately one fifth of all renovation projects are maintenance and repair projects.
In the building technology market, Consti also operates in all other areas of new construction apart from housing construction. In new construction, the construction of business premises started to pick up after the COVID-19 pandemic at the end of 2022. The construction of hospital and teaching facilities also increased clearly.
According to forecasts, renovation will be the only area of construction that will grow in 2023. Growth is expected from both residential renovation and other renovation.
In 2023, the new construction of residential buildings is predicted to decrease by approximately 10–13 percent, and the new construction of non-residential buildings by approximately 1–2 percent. However, the ongoing hospital and school projects keep service construction at a good level. There is more uncertainty associated with the growth of commercial and office construction.
It is expected that renovation will continue on a growth path of around one per cent also in 2023. Growth is expected from the renovation of both residential and non-residential buildings.
The age of Finland’s building stock is a primary driver of the need for renovation. Housing construction was at its peak in the 1970s, and the building technology and structures of that time now require thorough renovation. Along with the need for building technology renovation, expectations for living comfort have risen. In addition, the need for renovation in business premises is also driven by changes in space needs.
However, strong inflation and the rapid rise of both energy costs and the price of financing may postpone renovations in the short term, especially renovations commissioned by housing companies. General meetings held in housing companies during the spring will, to a large extent, determine their readiness for renovation investments. Uncertainty in the outlook for construction is also brought about by the rise in the prices and availability of building materials and products, intensified by the war in Ukraine.
In addition to the age of the building stock, renovation needs are increased by many phenomena named as megatrends, such as urbanisation, the aging of the population, changes in working methods, the growth of e-commerce and climate change. Both new construction and renovation remain heavily concentrated in growth centres.
Outlook for 2023
In 2023, Finland's house construction volume is estimated to decrease by approximately 3.7 percent from the previous year. New construction is predicted to decrease by about 7.2 percent, but it is expected that renovation will continue on a growth path of around one per cent also in 2023. Growth is expected from both residential renovation and other renovation. According to the current market outlook, the demand for renovation and building technology services will remain reasonably good in 2023. The forecasts reflect the needs-oriented nature of renovation. However, strong inflation and the rapid rise of both energy costs and the price of financing may postpone construction projects in the short term. Uncertainty in the outlook for construction is also brought about by the rise in the prices and availability of building materials and products, intensified by the war in Ukraine as well as the potential labour disputes.
Consti's strong order backlog, the progress of strategic projects, and steadily improved performance put the company in a good position to continue positive and solid development in 2023.
The Company estimates that its operating result for 2023 will be in the range of EUR 9.5–13.5 million.
Press conference
Microsoft Teams meeting for analysts, portfolio managers and media representatives, will take place 3 February 2023, at 10:00 a.m. (EET). The meeting will be hosted by CEO Esa Korkeela and CFO Joni Sorsanen.
Financial reporting in 2023
Consti will publish its Financial Statements, Board of Directors’ Report, Auditors’ Report, and Corporate Governance Statement on the company website during week 11/2023.
Consti Plc’s Annual General Meeting shall be arranged on Tuesday 4 April 2023 in Helsinki. Invitation to the Annual General Meeting will be published later as a separate Stock Exchange release.
Consti Plc shall publish three interim reports during 2023:
- Interim report 1-3/2023 published 27 April 2023
- Half-year financial report 1-6/2023 published 21 July 2023
- Interim report 1-9/2023 published 27 October 2023
CONSTI PLC
Further information:
Esa Korkeela, CEO, Consti Plc, Tel. +358 40 730 8568
Joni Sorsanen, CFO, Consti Plc, Tel. +358 50 443 3045
Distribution:
Nasdaq Helsinki Ltd.
Major media
www.consti.fi
Consti is a leading Finnish company concentrating on renovation and technical services. Consti offers comprehensive renovation and building technology services and selected new construction services to housing companies, corporations, investors and the public sector in Finland’s growth centres. Company has four business areas: Housing Companies, Corporations, Public Sector and Building Technology. In 2022, Consti Group’s net sales amounted to 305 million euro. It employs approximately 1000 professionals in renovation construction and building technology.
Consti Plc is listed on Nasdaq Helsinki. The trading code is CONSTI. www.consti.fi
Attachments
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Consti Financial Statements Bulletin 2022.pdf
