25.10.2024 08:30:02 EEST | Consti Oyj | Interim report (Q1 and Q3)
CONSTI PLC INTERIM REPORT 25 OCTOBER 2024, at 8.30 a.m.
Consti Plc Interim Report for January - September 2024
SOLID PERFORMANCE CONTINUED, ORDER BACKLOG AT A GOOD LEVEL
7-9/2024 highlights (comparison figures in parenthesis 7-9/2023):
- Net sales EUR 86.0 (89.9) million; change -4.3%
- EBITDA EUR 4.4 (5.7) million and EBITDA margin 5.1% (6.3%)
- Operating result (EBIT) EUR 3.4 (4.8) million and EBIT margin 3.9% (5.3%)
- Order backlog EUR 250.4 (247.3) million; growth 1.3 %
- Order intake EUR 64.8 (23.2) million; growth 178.8%
- Free cash flow EUR 1.7 (7.1) million
- Earnings per share EUR 0.31 (0.47)
1-9/2024 highlights (comparison figures in parenthesis 1-9/2023):
- Net sales EUR 234.4 (234.5) million; change -0.1%
- EBITDA EUR 9.7 (11.0) million and EBITDA margin 4.1% (4.7%)
- Operating result (EBIT) EUR 6.6 (8.4) million and EBIT margin 2.8% (3.6%)
- Order intake EUR 191.9 (188.4) million; growth 1.8%
- Free cash flow EUR 2.4 (10.3) million
- Earnings per share EUR 0.58 (0.79)
Guidance on the Group outlook for 2024:
Consti estimates that its operating result for 2024 will be in the range of EUR 9-12 million.
KEY FIGURES (EUR 1,000) | 7-9/ | 7-9/ | Change % | 1-9/ | 1-9/ | Change % | 1-12/ |
Net sales | 86,049 | 89,872 | -4.3 % | 234,428 | 234,547 | -0.1 % | 320,607 |
EBITDA | 4,376 | 5,705 | -23.3 % | 9,658 | 11,049 | -12.6 % | 15,940 |
EBITDA margin, % | 5.1 % | 6.3 % | 4.1 % | 4.7 % | 5.0 % | ||
Operating result (EBIT) | 3,363 | 4,760 | -29.3 % | 6,572 | 8,437 | -22.1 % | 12,345 |
Operating result (EBIT) margin, % | 3.9 % | 5.3 % | 2.8 % | 3.6 % | 3.9 % | ||
Profit/loss for the period | 2,467 | 3,627 | -32.0 % | 4,572 | 6,135 | -25.5 % | 9,014 |
Order backlog | 250,406 | 247,287 | 1.3 % | 270,021 | |||
Free cash flow | 1,707 | 7,143 | -76.1 % | 2,400 | 10,269 | -76.6 % | 13,104 |
Cash conversion, % | 39.0 % | 125.2 % | 24.8 % | 92.9 % | 82.2 % | ||
Net interest-bearing debt | 3,116 | -2,703 | -934 | ||||
Gearing, % | 7.2 % | -7.2 % | -2.3 % | ||||
Return on investment, ROI % | 18.4 % | 23.1 % | 20.8 % | ||||
Number of personnel at period end | 1,054 | 973 | 8.3 % | 1,008 | |||
Earnings per share, undiluted (EUR) | 0.31 | 0.47 | -34.0 % | 0.58 | 0.79 | -26.6 % | 1.17 |
CEO Esa Korkeela's comment
"Consti's solid performance continued in the third quarter of the year. Our third-quarter net sales decreased by 4.3 percent to EUR 86.0 (89.9) million. The strong growth in the Building Technology business area continued during the quarter, growing by 34.5 percent. In the Public Sector business area, net sales grew by 2.7 percent, while in the Corporations and Housing Companies business areas, net sales decreased compared to the reference period. Our net sales for January-September remained at last year's level and was EUR 234.4 (234.5) million.
Our operating result for July-September was EUR 3.4 (4.8) million, which is 3.9 (5.3) percent of net sales. Operationally, the third quarter of the year proceeded in line with our expectations, with projects progressing predominantly as planned. Profitability remained stable compared to the reference period adjusted for the gain recorded from the sale of the property-related relining business. Our relative profitability in the third quarter was mainly affected by changes in the relative net sales shares of our business areas in comparison with the reference period, the lower level of net sales, and also partly by allocation of resources in tendering and negotiation activities to secure our order backlog. Our balance sheet and liquidity position at the end of the review period remained at a good level.
During July-September, our order intake amounted to EUR 64.8 (23.2) million, which represents a 178.8 percent increase compared to the weak reference period. Although tightened competition and weakened demand affected our order intake, we are satisfied with the total number and quality of the orders received. The distribution of orders between business areas and units was not optimally realised during the reporting period, and we have targeted adjustment measures at some of our units. Our order backlog at the end of the review period increased by 1.3 percent compared to the reference period and was EUR 250.4 (247.3) million.
The implementation of our strategy, published in February 2024, is underway. During the reporting period, we continued our efforts aiming for the growth of our Building Technology business area. Our operational efficiency improvement initiatives continued to focus on ensuring the performance of our business in the prevailing operating environment, emphasizing, among other things, bidding activities and improving the efficiency of our production.
Based on our current market outlook, we expect demand for renovation and building technology services to remain weak in 2024. According to forecasts, renovation is expected to contract by about 4 percent in 2024. The significant weakening of demand for new construction has clearly increased competition for renovation projects and building technology contracts.
In the third quarter, the readiness for renovation investments in housing companies and the public sector has remained at a reasonable level in our operating areas, but private real estate investment companies have remained cautious about launching new construction projects. However, we believe that the prevailing market conditions favour a versatile construction and building technology expert like Consti, which has a strong financial position and the ability to deliver diverse projects ranging from small service contracts to extensive construction projects.
We do not expect a significant improvement in the demand outlook for construction in the last quarter of the year. However, supported by our healthy order backlog, we aim to continue delivering solid results and focus on implementing our updated strategy."
Operating environment
Construction market 2024-25
The Confederation of Finnish Construction Industries RT estimates in its September 2024 review that the total volume of construction will decrease by about 7 percent in 2024 compared to last year. Based on RT's forecast, the volume of renovation is expected to decrease by about 4 percent and new housing construction by about 26 percent in 2024. Like new construction, renovation has suffered from rapidly rising construction costs and interest rates, as well as tighter availability of financing, especially outside growth centres.
According to RT's forecast, the total volume of construction is expected to grow by about 4 percent in 2025. Renovation is forecast to grow by 1 percent and new housing construction by about 15 percent in 2025.
The Confederation of Finnish Construction Industries RT estimates that the decline in renovation will continue into the second half of this year but predicts that the decrease in costs and interest rates will improve the conditions for renovation already during the end of the year. In addition, the demand for renovation may be accelerated by the shift in demand towards old properties instead of new construction.
The renovation market in general
The demand for renovation has been steady in Finland for a long time, and the market value of renovation is almost the same as that of new construction. In 2023, the value of residential building renovation remained on level with the previous year, i.e. around EUR 9 billion. The value of other renovation was still around EUR 6 billion.
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.
Approximately one-fifth of all renovation is maintenance and upkeep, with a higher-than-average share in non-residential properties.
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 Finland, both new construction and renovation are still strongly concentrated in growth centres.
Outlook for the 2024
The volume of housing construction in Finland is expected to decrease by about 8 percent in 2024 compared to last year. The volume of new construction is forecast to decrease by about 12 percent and the volume of renovation by 4 percent in 2024.
Consti expects demand for renovation and building technology services to weaken in 2024. The significant weakening of demand for new construction has clearly increased competition for renovation projects and building technology contracts. In January-September 2024, the readiness of housing companies and the public sector to invest in renovations has remained at a reasonable level in Consti's operating areas, but private real estate investment companies have continued to be cautious about starting new construction projects. The demand outlook for construction is weakened by persistently high construction costs and interest rates, as well as tighter availability of financing, and Consti does not expect a significant improvement in the last quarter of the year.
Despite the market situation, Consti aims to continue solid performance supported by a healthy order backlog during the rest of the year 2024.
Consti estimates that its operating result for 2024 will be in the range of EUR 9-12 million.
Press conference
Microsoft Teams meeting for analysts, portfolio managers and media representatives, will take place 25 October 2024, at 10:00 a.m. (EET). The meeting will be hosted by CEO Esa Korkeela and CFO Anders Löfman.
Financial communication in 2025
Consti Plc's Financial Statements for 2024 will be published 7 February 2025.
The electronic version of the annual report, which includes the full financial statements for 2024, will be published in week 11/2025.
Consti Plc's Annual General Meeting for 2025 is scheduled to take place on Thursday, 3 April 2025 in Helsinki.
Consti Plc shall publish three interim reports during 2025:
- Interim report 1-3/2025 published 25 April 2025
- Half-year financial report 1-6/2025 published 18 July 2025
- Interim report 1-9/2025 published 24 October 2025
CONSTI PLC
Further information:
Esa Korkeela, CEO, Consti Plc, Tel. +358 40 730 8568
Anders Löfman, CFO, Consti Plc, Tel. +358 40 572 6619
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 2023, Consti Group's net sales amounted to 321 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
