Consti Plc Financial Statements Bulletin for January –
GOOD FINANCIAL YEAR IN A CHALLENGING MARKET
10–12/2023 highlights (comparison figures in parenthesis 10–12/2022):
- Net sales
EUR 86.1 (93.3) million; change -7.7 % -
EBITDA
EUR 4.9 (5.7) million and EBITDA margin 5.7 % (6.1 %) -
Operating result (EBIT)
EUR 3.9 (4.8) million and EBIT margin 4.5 % (5.2 %) -
Order backlog
EUR 270.0 (246.7) million; growth 9.5 % -
Order intake
EUR 91.6 (109.1) million; change -16.0% -
Free cash flow
EUR 2.8 (10.4) million -
Earnings per share
EUR 0.37 (0.49)
1–12/2023 highlights (comparison figures in parenthesis 1–12/2022):
- Net sales
EUR 320.6 (305.2) million; growth 5.0 % -
EBITDA
EUR 15.9 (14.9) million and EBITDA margin 5.0 % (4.9 %) -
Operating result (EBIT)
EUR 12.3 (11.4) million and EBIT margin 3.9 % (3.7 %) -
Order intake
EUR 280.0 (283.7) million; change -1.3% -
Free cash flow
EUR 13.1 (18.0) million -
Earnings per share
EUR 1.17 (1.10) -
The Board of Directors proposes a dividend of
EUR 0.70 per share. The Board proposes that the dividend be paid in two instalments. The first instalment ofEUR 0.40 per share be paid inApril 2024 and the second instalment ofEUR 0.30 per share be paid inOctober 2024 .
Guidance on the Group outlook for 2024:
10-12/ | 10-12/ | Change % | 1-12/ | 1-12/ | Change % | |
Net sales | 86,060 | 93,264 | -7.7 % | 320,607 | 305,217 | 5.0 % |
EBITDA | 4,891 | 5,674 | -13.8 % | 15,940 | 14,927 | 6.8 % |
EBITDA margin, % | 5.7 % | 6.1 % |
| 5.0 % | 4.9 % |
|
Operating result (EBIT) | 3,908 | 4,827 | -19.0 % | 12,345 | 11,428 | 8.0 % |
Operating result (EBIT) margin, % | 4.5 % | 5.2 % |
| 3.9 % | 3.7 % |
|
Profit/loss for the period | 2,879 | 3,739 | -23.0 % | 9,014 | 8,491 | 6.2 % |
Order backlog |
|
|
| 270,021 | 246,650 | 9.5 % |
Free cash flow | 2,835 | 10,413 | -72.8 % | 13,104 | 18,000 | -27.2 % |
Cash conversion, % | 58.0 % | 183.5 % |
| 82.2 % | 120.6 % |
|
Net interest-bearing debt |
|
|
| -934 | 3,871 |
|
Gearing, % |
|
|
| -2.3 % | 10.7 % |
|
Return on investment, ROI % |
|
|
| 20.8 % | 18.3 % |
|
Number of personnel at period end |
|
|
| 1,008 | 975 | 3.4 % |
Earnings per share, undiluted (EUR) | 0.37 | 0.49 | -24.5 % | 1.17 | 1.10 | 6.4 % |
CEO
“In 2023, the total market for housebuilding is estimated to have contracted by approximately 11 percent from the previous year. Although renovation is significantly less sensitive to economic fluctuations than new construction, renovation growth also halted.
Despite the market conditions, we successfully capitalised on attractive growth opportunities during the fiscal year. Our full-year net sales grew by 5.0 percent, reaching
Our net sales for October–December decreased by 7.7 per cent and were
Our October–December operating result was 3.9
During the year, our order intake amounted to
Towards the end of the review period, we started work to renew our strategy for the strategy period 2024–2027. In accordance with our new strategy, we will grow in construction and building technology by responding to the demand created by the ageing building stock, urbanisation, and climate change. Our business area specific strategy emphasises taking advantage of attractive growth opportunities in both construction and building technology. We will also continue our actions to increase customer value, improve production efficiency, and develop our personnel and leadership. We have also updated our sustainability themes and mapped out our most important development targets on the way to becoming a responsible forerunner in our field. By the end of the strategy period, we aim to have four equally strong business areas, with total net sales amounting to approximately
Economic uncertainty continues to pose challenges to the demand outlook for construction and building technology. Visibility for the financial year 2024 is limited, and we do not anticipate significant improvements in the first half of the year. Supported by a strong order backlog, we aim to continue our solid performance also during 2024 and focus on implementing our new strategy and advancing the impact of our sustainability work.
I would like to thank all our customers and partners for the good cooperation, and all
Strategy 2024–2027
Consti’s strategy update for the period 2024–2027 was launched in the fourth quarter of 2023. The Group strategy was formed by first drawing up strategies for Consti’s four business areas, in which the broad participation of the business areas was central. Finally, the Group strategy was compiled on the basis of finalised business area strategies.
Consti’s vision remains to be “Our customer’s number one partner and expert in multiple types of construction”. Consti’s mission is to improve the value of Finnish buildings and promote climate change mitigation with outstanding expertise in construction and building technology. The updated strategy for 2024–2027 is based on achieving growth in construction and building technology by responding to the demand created by the ageing building stock, urbanisation, and climate change.
In both construction and building technology, growth is based on the development of current business operations. In the construction business areas,
The goal is to further utilise Consti’s expertise more extensively throughout the construction value chain, from project development to maintenance. Changes in construction legislation and tightening energy efficiency requirements increase the developer’s responsibilities, and this is expected to emphasise the role of the main contractor, especially in project development and planning.
In developing sustainability,
Alongside energy renovations,
- Growth in construction
- Growth in building technology and technical real estate services
- Customers and partnerships
- Operational efficiency
- Personnel and leadership
- Sustainability
The company’s long-term financial goals remain unchanged:
- Growth: net sales growing faster than the market
- Profitability: EBIT margin exceeding 5 percent
- Free cash flow: Cash conversion ratio exceeding 90 percent
- Balance sheet structure: Net debt to adjusted EBITDA ratio of less than 2.5x
- The Company’s aim is to distribute as dividends at least 50 percent of the Company’s annual net profit
Operating environment
In 2023, the total market for housebuilding is estimated to have contracted by approximately 11 percent compared to the previous year. Although renovation is considerably less sensitive to economic fluctuations than new construction, renovation growth has also halted.
The demand for renovation has been steady in
Nearly two-thirds of renovation involve residential properties, with over half of them being professional renovation. In residential renovation, there is a notable emphasis on building technology, constituting around 40 percent of the total value of renovation.
The renovation market encompasses not only technical repairs related to building age but also significant building purpose modifications, for example, converting old, underutilised office properties into hotels or apartments, or improving usability by renewing layouts.
Housebuilding experienced a significant contraction in 2023. In its December economic outlook, Euroconstruct revised its earlier estimates from summer 2023 significantly downward, stating that new residential construction decreased by 37 percent instead of the initially projected 25 percent. Euroconstruct also adjusted renovation growth estimates, now projecting a decrease of 0.8 percent, compared to the 0.8 percent growth estimated in June.
In its September reporting of market conditions, the
The sharp decline in housebuilding is primarily a consequence of the slowdown in residential construction following an exceptionally intense period of housing production. The rise in interest rates has particularly dampened demand for completed homes.
Non-residential new construction decreased by only 2.6 percent according to Euroconstruct. Commercial space construction declined significantly, but construction of, for example, industrial and warehouse spaces, as well as green investments, increased. The demand for warehouse and logistics facilities is driven by e-commerce. Office construction continued to grow strongly in the
According to Euroconstruct’s estimate, renovation of residential buildings contracted by around 1.3 percent. This decline is attributed to the sharp increase in living expenses, such as property maintenance costs and rising interest rates, which began affecting the demand for residential renovations already in 2022. It has been estimated that in 2023, renovation of non-residential buildings remained almost on level with the previous year. However, renovation decreased in absolute numbers, because according to Statistics Finland, renovation prices rose by 12 per cent in spring 2023.
Approximately one-fifth of all renovation is maintenance and upkeep, with a higher-than-average share in non-residential properties.
Renovation market is expected to remain stable in 2024. According to Euroconstruct’s forecast, the renovation market is expected to remain at the 2023 level in 2024. RT predicts a decline of about one percent in renovation. Euroconstruct anticipates a slight increase in the value of residential renovation, accompanied by a slight decrease in the value of other renovation.
The construction of new residential buildings is expected to decrease by 9–15 per cent in 2024. Non-residential construction is forecasted to grow by 3-7 percent. Residential construction is expected to return to normal levels in 2025–2026.
Both new construction and renovation prospects are hindered by the rise in construction costs and interest rates, with additional cost increases in renovation due to higher property maintenance expenses. Both housing companies and institutional landlords have postponed significant renovations in the past couple of years.
In needs-based renovation, facade repairs and pipeline renovation are the largest projects for residential buildings. The number and value of pipeline renovation have been growing faster than other renovation for a long time, and this growth is expected to continue for a few more years. The growth is sustained by the large number of residential buildings that have reached the age when pipeline renovation are required. For a long time, apartment buildings built in the 1960s had the most building technology renovation. Now, properties built in the 1970s, which have the largest number of dwellings in terms of floor area, and partly properties from the 1980s, which are the most numerous due to e.g., the large number of terraced house construction, have reached renovation age. In addition to addressing technical repair needs, building technology enhancements improve living comfort.
Together with pipeline renovation, the increase in heating costs and the green transition contribute to growth in the building technology market. While energy efficiency has so far been primarily addressed alongside other renovation, the rising cost of energy and carbon neutrality goals have increased interest in separate energy renovation.
Besides building technology renovation, many housing companies have a growing need for facade renovation, which have often been neglected due to financial reasons in favour of pipeline renovation. Climate change significantly increases the demand for facade renovation and related maintenance services. The importance of roofs, eaves, cladding, and intact facades grows as winters become wetter, slanting rainfall increases and extreme weather phenomena intensify. The need for facade renovation is also heightened by the large number of residential buildings from the 1970s and 1980s reaching the renovation age.
In addition to renovation related to building technology and environmental goals, the need for renovation in commercial and office premises is increased by changes in space needs.
The need for renovation is sustained by both the aging building stock and global megatrends such as urbanisation, an aging population, changes in working habits and retail, and sustainability goals. Renovation play a crucial role in reducing the carbon footprint of the built environment, as the number of new buildings increases by only about one percent annually.
In
Outlook for 2024
According to forecasts, the renovation market is likely to remain unchanged in 2024. Euroconstruct estimates that the renovation market will remain at the 2023 level in 2024. RT expects a decline of about one percent in renovation. Euroconstruct predicts a slight increase in the value of residential building renovation and, correspondingly that the value of other renovation will decrease slightly.
The construction of new residential buildings is estimated to decrease by 9–15 percent in 2024. Non-residential new construction is predicted to increase by 3–7 percent. Residential construction is expected to return to normal levels in 2025–2026.
Economic uncertainty continues to pose challenges to the demand outlook for construction and building technology. Visibility for the fiscal year 2024 is limited, and significant improvements are not expected in the first half of 2024.
Supported by a strong order backlog,
Press conference
Microsoft Teams meeting for analysts, portfolio managers and media representatives, will take place
Financial reporting in 2024
Consti Plc’s Annual General Meeting shall be arranged on Wednesday
- Interim report 1-3/2024 published
25 April 2024 -
Half-year financial report 1-6/2024 published
19 July 2024 -
Interim report 1-9/2024 published
25 October 2024
Further information:
Esa Korkeela, CEO,
Joni Sorsanen, CFO,
Distribution:
Major media
www.consti.fi
Attachments
- Consti Financial Statements Bulletin 2023.pdf
© STT Info Finland, source