Selvaag Bolig ASA

Good morning and welcome to the first quarter of the Result Promotion for Self and Housing. My name is Sverre Moldvik. I am the director of the department. Together with the financial director Kristoffer Brunvold, we will go through today's agenda. We start by looking at the highlights from the quarter. We look at the operational, Kristoffer takes us through the financial, then we take the market and future prospects finally. We sold very well, relatively speaking, in Q1, the best sales-wise quarter since Q1 2022. We also see that the used market is strong today, selling away much of the large warehouse that was built in the course of last fall and early January. It has now fallen to normal levels. We deliver a good result given the circumstances. We lock our building costs and manage to deliver good results in spite of high wages and price increases during this period. It is still challenging with higher building costs, so we are pleased with this. The building costs have stabilized. It is quite predictable. We manage to lock the building costs now levels that allow us to start selling and building more projects in more areas now than at the same time last year. In the key figures, we had a revenue of SEK 628 million after IFRS, and a adjusted EBITDA margin of 17%. We had a running revenue of SEK 542 million, and an adjusted EBITDA margin of SEK 8.2 million. Kristoffer will go through this in detail later. If we look at the operation, then we have this with the building costs. They have come down to a level that is acceptable. We manage to start building with an acceptable margin. Many projects, and we have contracted several projects already, both in Stavanger and in Østland here now. And we are working on contracting projects in Bergen at the moment, and several in the Østland. So the prices have dropped, not as much as I had hoped, but they have come down and stabilized. There are also big regional differences. I'm not sure why, but it is also something that is in place in normal times. It is cheaper to build in the Westland, Bergen and Stavanger, than it is in Oslo and other places. When it comes to sales starters, we have had several sales starters this year. We have released about 210 units and sold a good part. Recently, we launched a project on Landås, a sales start half a week ago, and have sold over half of those houses. Sold 35 of 61 that have been released. We have many projects ready. There are about 700 units that are completely ready. Given that the market is moving away from the trend that is now out, it will be put out over the course of the year. So we have a good deal of properties for sale, as the market has proposed, for example, and have regulated the income we have there. And we see a clear improvement, at least in the attitude towards and it works more constructively. We have a lot of faith that we will get down the regulation time now on Bjerke and some of the projects that we are about to get regulated. So it looks positive. We are also actively working with We are trying to influence the municipal committee to change the technical regulations, and not least the housing legislation, which is important. We could have sold far more houses if the banks had been able to lend money to those who have the right of way. Many of them are being stopped today because of the housing legislation. Or we are in the route of reporting according to CSRD directives, which we will report according to in relation to the 25 results. So that's fine. If we look at the sales, we sold the best sales since Q1-Q2. Sold homes for 760 million in the quarter, and what is exciting about this pace is that we are still at least as strong in Q2, so that's very positive. We have about 250 sales on PTE this year. The rolling 12 is also up. It strengthens from not so weak levels, but it is at least a sign of improvement, and that is very positive. So, we start building. 123 units, finished at 236, so the order reserve drops to just under 4 billion. 62% of this was sold at the beginning of the quarter, and more now. We are still guiding on the same number of purchases this year, at 515 units. 75% of this was sold at the start of the quarter, and more now. There are a few failures in Q1 and Q2 in 2025. There is no reason to judge the year for that. There will be several failures at the end of the year. This was the period when we had very few initiatives over some time, when it was at its worst. But we got a catch-up effect at the end of the year. Kristoffer, can you?

Good morning. Let's have a look at the financial highlights. As usual, we start with the results of the IFRS, where we get the income and costs from our projects as a result of the delivery of housing to our customers. We delivered 179 units, of which 52 units were from collaboration projects. The main delivery in the quarter is a project in Skårebyen in Lørnskog, Trondheim, Ringeveplus, Sansle in Bergen, and a project in Ski, which is the major delivery in the quarter. The total revenue is 628 million kroner. This includes 16 million, which comes from the factored project management for joint projects and the operation of our service centers. The project cost is 516 million. As Sverre mentioned, we run fixed-price contracts, including wages and pricing, and we have good project managers who follow the project with strict cost control and deliver enough per quarter with costs within the budget. which contributes to the fact that we can deliver such solid margins as we do in this quarter. If we had not had fixed price contracts, this would have looked much worse. Other costs came in at 63 million. It is the same amount as last year. We have put a salary increase behind us, so there is a stable development in fixed costs. We have the same cost base as last year. We report an adjusted EBITDA of 106 million, corresponding to a margin of 17%. This includes the financial element of 38 million, which is in the project costs according to IFRS. This is interest on construction loans, interest on sales credits, and option premiums to the European Parliament. This is a significant financial element in this. If we look at last year, we had a higher turnover of 734 million and a margin of 15%. The reason why we have a lower turnover here now, even though we have overhauled several units, is because there are many more units from collaborative projects that are consolidated in net on their own money and not brutto turnover. We will come back to that in the pro forma agreement here. Normal EBITDA is 68 million, and at the bottom we deliver a result per share of 60 euros, which is about the same as last year, or down from 70 euros. Let's have a look at the proforma results. We have several co-operative projects that we are involved in, and here we consolidate our share of gross income and costs, so that we get revenues and goods costs that are better compared quarter by quarter. We have delivered 179 units that we are involved in, total revenue of 868 million, and a margin of 15%. In comparison with last year, with a revenue of 785 million, and a margin of 14%. Adjusted EBITDA of 134 million. And then of course the same result at the bottom, 60 euros per share. More information about these proforma accounts can be found in a note to the quarterly report for those who are interested in it. Then we go over to our operating report, which then follows this running calculation method according to the Norwegian accounting rules. The current calculation is that you take sales degree times completion degree, which gives an excursion degree in all projects, which means that you gradually take out turnover and results in the project's lifetime, i.e. implementation. If we look at this regime, we get a turnover of 547 million, almost the same level as last quarter, and a margin of 8%. This is to be noted after the overhead costs, so the projects still contribute with good margins, but the margin comes under pressure as a result of the fact that we have less housing production, which is now at 671 units, which means that we get less contributions from the projects to cover fixed costs at the bottom, which is at the same level as last year. If we look at 12 months rolling, we are at 2.1 milliarder, which is the same level as last year, and a rolling margin of 8%. The cash flow entered the quarter with 267 million in the bank. The main points here are that we have a positive cash flow from DRIFT at 147 million, which is driven by a significantly reduced stock market, as a result of many overdue units in the quarter. The second main point is that we have a negative cash flow from financing, and this is due to the fact that we have just paid off a lot of our building loans in the quarter, as a result of having overdue units. This was 233 million in net payments. A decline of 58 million, which brings us out of the quarter with 208 million in the bank at the end of the quarter. Let's look at the balance. There are no major changes in the balance sheet, but we see that the total balance goes down to 4.5 billion. And that is of course due to the fact that what we have in production is falling. We have fewer homes in production, lower activity and the total balance is falling. We have also exceeded many events, which means that we have lowered a good amount of building loans. Solid income for all shares at 52.6%, which corresponds to a recorded income per share of 25.10 kroner. The stock market is down by 232 million from last quarter, which I will come back to. Other conditions have increased by 20 million. This is due to the fact that we have handed over some properties at the end of the quarter, which is expected to come first in the following month in the next quarter. The cash was down by 58 million, which we were talking about in the cash law. And then we have this element of revenue from our customers, which now accounts for 14 million, and is included in other short-term yields. This is at a lower level now than it was, for example, two or three years ago. This is due to the fact that the new norm in the market is that we collect 100,000 in revenue from our customers, of course with solid financing evidence. Let's look at the stock storage. This is down from the previous quarter, as you can see here. Booked empty building at 662 million. This is down a bit from the previous quarter due to the start of construction. Warehouse work down by 497 million due to a high number of overcrowded units. And then we have this finished warehouse that increases from the previous quarter up to 270 million. Then we see that we have finished unsold items that have increased from 95 to 126 by the end of the quarter. In addition, we have 56 finished but sold units that are now being delivered in the following quarter. We manage these finished units, we follow up every week and we are not in a hurry to send out this. We have a solid turnover and liquidity position, so we sell these with small discounts in the coming quarters. Given that these projects are in the area with a low supply of new houses, we expect this to sell in the future. Let's look at the yield. Total revenue yield of 1.2 billion. There is no change in the sum of this, it is on a lower level. The big one here is of course our building loans at 667 million. We also have Yield to Urban Property, which is credited with sales credits and repurchase agreements at 435 million. In addition, we now have interest loans again in the balance, in addition to the interest we did not sell to EARN PROPERTY, at 95 million. There are no changes in the margins or conditions of these loans, and we also have two top facilities in DNB that have not been cut off by the end of the quarter. We report a total net interest rate of 9.9 million, which is now down from last quarter, where it was at 1.1 billion. Yes. Now we will look at the withdrawal of the net capital. This is calculated as the net result of the last 12 months, and divided by the net capital at the start of this period. This gives us 235 million in net result after tax, which gives a withdrawal of 10% of the net capital in the last 12 months. Now that we are done with the financials, we will move on to an update on the market.

Yes, we are starting to look at the Oslo market as we usually do. Now we are starting to see that the supply side is moving even more than it has been in recent years. There is a demand in Oslo for about 3,300 units. It was completed in 2023, almost as much as the so-called need, while now in 2024 and in the future, the gap will be very large, especially in 2025, when half of the estimated need will be completed. The estimated need is also relatively low, I think, because it is a description that is a result of, among other things, how much has been completed in previous years. So it really has something to do with the actual demand. If we look at Akershus, Akershus has actually taken up the subcontract in Oslo, so that in total, over time, it has been built as much. We also see that it is falling, and that is due to the fact that the large development municipalities, such as Lørenskog, for example, are not able to maintain the large volumes that they have made in recent years. So that means that collectively, there will be a big gap. When you look at Oslo, or call it Stor-Oslo, that is to say Akershuset-Oslo collectively, there will be a gap that is increasing, and therefore you read what you read in the newspaper, that there will be a lot of price pressure in the Oslo region, because the supply side is too low. We don't know about 2025 or 2026 yet. It depends on how much we start building this year. It doesn't mean that 2026 will be better than 2025. The reason for this we can see here in more detail. It is sold more in Oslo from the change of year to now than it is now. The supply is under 1,000 units in Oslo, a city with more than 710,000 people. In Akershus it is the same, and we can see that it sells significantly more than what has been put out, so that the supply side is falling. It is quite flat in Bergen and Stavanger, where it sells about the same, but in Bergen it sells a little less than what has been put out. In total, we can see on the new housing side that, across Munntak and Trondheim, the supply side is falling by 1,000 per capita. This is a good indicator and very significant in relation to what we think about the price increase this year. We also see in the used market, as I mentioned earlier, For those of you who were involved in the report in Q3 and Q4, there was a very high level of use, as a result of the fact that those who changed homes went from buying first to selling first. Then you get a lot of increase in the use of the offer. And then it has fallen to normal levels now. I am quite confident that this will fall, so that we will also receive an unhealthy offer in the future. When it comes to the Q2-Q3-Q4 report, there will be a much lower offer. than what we have seen in previous years. And then you get an additional price pressure in the market as well, which is re-planted. And as Kristoffer was saying, we have unsold finished products that we have not had any haste to buy. And of course it will be easier to sell them at a time when you get wage growth now and at the same time a lower supply side. We can already see that here. If you look at the price growth this year, it is about 7% in Oslo, and 9% in Bergen. But it is 7-8% average this year for the areas we operate in. In April, it was a strong price growth. It is very strong, especially in Oslo. We are now up to almost 96,000 in the used market in Oslo per square meter. Very high, and comparable to Stavanger, for example, which is about half, or under half, at 46,000. That is quite a large number, a significant large number of small houses in Stavanger, so not quite directly comparable. Big differences, and high prices, especially in Storoslo. If we take a look at a selection of our projects that are in progress, we have Snøbyen, which we called Stasjonsbyen before, we have about 750 units to sell. We have actually started selling our Plus project there today, if I'm not mistaken. It will be exciting, there is a lot of interest in that. We are releasing 70 units of about 220 Plus apartments there today. It will be exciting to see how that goes. We have started building Skårebyen in Q1. It is selling well. Landås had a sales start last week at 61 ordinary apartments, where we sold 35 of them. So a very good market. Kalmets Brygge is regulating several plus houses. We have more in Ryngeved Trondheim, where we are about to complete the first 170. We will come to Sansli Bergen with a new project after the holidays. At Lervik in Stavanger, we have just started building the first 97 units. Not the first, but almost the last. We have 100 units there. There we have a simple regulation that we plan to get out in the fall. We have also laid out a follow-up line in Solbergskogen, and it seems to be going well. So we have also started building that line, that project. When new projects come up, we have a lot of exciting things going on in Bergen, including Solheimsvannet, which is a plus project. We are still waiting for the Lørnvagn in Oslo. As I said earlier, I hope that James and Co. will deliver the goods soon. Lørnevangen, Lilleake and Økerne. There is great faith that this will happen, so that we can start selling on Lørnevangen either at the end of the year or until next year. Fredrikstad is a large project that is also in the process of passing through regulation, which we hope to come up with over the course of the year. Bjelke is optimistic. We have three planning initiatives, three big regulation plans that go in parallel. It's a place between 1,400 and 1,800 homes. It depends on what we get in terms of the housing standard. The new City Development Office is positive about this, that we can build a reasonable mix of housing and not an unreasonable mix of housing, as it has been. Fornebu is the same. It's more about the Fornebu Railway and the line-up, depending on whether the Fornebu Railway manages to maintain its progress, and not least the municipality, to give us permission to regulate here again. We also have a lot going on in Sweden. This was just a selection. In Sweden, by the way, we are renegotiating some of these landmarks we have in relation to the fact that there are time zones It is an option system, these market indications, that makes it possible to negotiate before you possibly add a purchase agreement. So, summarized, When it comes to future prospects, it is the Oslo press again, as I have said in many quarters. It has been true. It is the reason why prices have been so good here in the country, through a time of rising interest. It will strengthen now, because it will be even smaller in the Oslo region. It will be even more difficult to find a home after two years. Even fewer vacancies. We have great faith that the interest rate will drop in the fall, or before Christmas, even though there are a lot of spiky analyses in the newspaper. We saw that the Swedish interest rate dropped early in May. It will probably fall further. We will notice this in the projects we are working on. We already notice it in the interest. If we look at the total, this includes the construction costs should make it possible for us to start building much more in the future, that is to say increase the speed again. There is no guarantee for that, but it's a good sign. We have a lot in the shelves. We have products, pre-regulated projects in many places, and projects that are ready to be put out to take the growth back, which is very positive. We are missing a lot in Oslo itself. I hope we will be able to do that soon. In summary, it was a good sale in Q1, the best for a long time. Even though it is not normal on normal levels yet, but it is much better anyway. We see that the second hand market is strengthening again. It is a reason to fear a large increase in used housing. And we deliver a good result again, much because we bind our building costs and have it in both good and bad times as a principle. And the building costs look to be stable. The only thing that I think is necessary for them to fall significantly is that the krona strengthens significantly against the euro. That was actually what we had. Any questions?

Some questions, if I may. There are a number of competitions in the industry, within this segment. Are you looking at some structural possibilities? What have you done? What have you evaluated?

Yes, we are looking at structural opportunities. In the case of entrepreneurs, there are many contests. There have not been any major contests yet, directly related to housing that have fit into the areas where we are. But we are of course looking to follow up. In Sweden there is a lot that is emerging, and there is usually a reason for that, so we would rather buy empty banks. But we are looking at many different companies, both those that are interesting and those that are less interesting.

Two questions about volume and margin. You said that there will be a catch-up effect 2025, or final decisions. Can you say something about the total volumes against the 5, 15, 20, 24? That is one thing. The other is, you say, acceptable margin for what is being contracted now. Acceptable margin, how should we look at it in relation to what is being reported today?

When it comes to the catch-up effect, it is a catch-up effect in comparison to the quarter we went to, which was down to zero. In the quarter, there is a lot in relation to that. But we don't get as many vacancies in 2025 as in 2024, we don't. But we keep that year, which I have also been talking about earlier in the quarter. So it will be a good year, in a way. Then you have to look at the projects that are being delivered. There will be fewer than the 515. Margin, shall we say. You asked a question about margins.

If I were to compare this to what is being reported today,

There's a lot of variation, I can tell you that. It's always from a low one digit to two digits. It's about the level you see here today. That's good, I think, in relation to the fact that we haven't written down any of these projects, but we manage to get it to the same level. That's in relation to that.

Can you put the margin you see on NG? Yes.

I think you are writing 700, of course. That number I think was 600 three months ago, so there has been some movement here in the so-called project portfolio. It has come closer to a sales start.

The sum of that, we have much more than that, of course. What we add to that is that we write down the planned sales dates we have in our so-called internal tracking system. It is sold faster there, and typically it takes about six months of pre-sale before the next step comes. If you look at Landås, for example, where we have sold enough to start building the first step already now. In theory, you could have had a faster forwarding, but that is not the case now. So we won't get there anyway, but that's what you come across. There are so many different dependencies, that's why it comes with a certain number. But if it goes fast, you can turn around and get more. It's to show that we have a lot. We've had quarters, like in 2017, where we didn't have anything to sell. We sold everything. Or 2016, when we didn't have anything to sell. We're not there. That's one of the positives of today's situation.

Any questions from the web? Simen Mortensen, DNB, says that 46 of the 139 sold apartments in Q1 were rented by Selvåg. Can you tell us about your profitability in this case? And how do you see the case adjusted for this case?

Yes, sales adjusted for these sales, so take that first, and then it was 46 units, so then it can do the math, and we sold very well in the quarter, so of course it is a part of the improvement. But it was still a good sale, even without that. That block is sold at full price, so it is the same as we would have sold it in the market as such. It is in a stale condition, and we have also sold the block next to it in competition, and it was also the real estate agent who bought it. No discounts or anything like that.

Can you comment on unsold units? It has come up to 844 million kroner. Can you say something about how much of this is for sold but not delivered units, and how much is actually unsold? And when will the finished sold but not delivered be delivered?

Yes, there are about 250 million of them that are sold, of the 844. At the same time, or in addition, there is a lot of other things that are in the unsold post, among other things, something we have had with us since the stock market, something we have in Spain that is there. So the site is Ballpark. 5.50, which is unsold, finished. Right now, we have relatively few finished products in the next quarter, which we will then go out and eat, and will then be reduced again. But we will work with selling these out to the price list. We have no sense of urgency to push them out and discount, as we have been talking about before. If we had done that last year, for example, we would have had to discount these quite a lot, say maybe 500,000 or something per unit. Then it is better to sell them now and discount little or nothing.

How does the number of unsold employees affect your willingness and ability to start new projects?

have no impact at all. If we want, we can sell these units quite quickly. It's just about our profitability. This does not include our sales level in unit production, which is what we are in charge of, in terms of risk.

The sales rate is now at 62%. How does this affect your financing opportunities, especially for possible liquidity reserves, credit facilities and so on?

As long as we are above... We like to be higher, just so it is said, but we will work slowly but surely up now in sales. But again, it has been a conscious action, because we have had relatively low sales on things that have been completed, for example in Q1 as well, which have affected this sales level. But we are working with the same answer as I said before. We are working on getting rid of them now, at full price, and not giving them away for cheap. And it does not affect the financing of new projects. If we start doing that, we will sell out. We have a solid share of our own capital, and nothing has been affected by that yet.

There is a question that I might be able to answer. What do you think the new EU energy directive will mean for construction costs in Norway and Sweden, given the requirements for fossil-free construction sites, requirements for reuse and global warming points? The answer is that we have good control, good time, and I think that this is not very dramatic, since we are like all our competitors. For example, there will be a demand for solar cells in Nybygd from 2029. It is more complicated for business, but it is also not clear when or how this directive will be implemented in Norway.

A small comment. Most likely, tech will be in charge of this. It will be included in the technical specifications, so it will be the same for everyone. That's what I'm most concerned about, that there won't be big differences. If it's the same for everyone, this will be unproblematic.

The last question is from Petter Nielsen. Hi, it looks like the saga on Barkarby is going a bit late. How do you perceive the market in Sweden?

The market in Sweden has been terribly heavy, far heavier than in Norway. What we have seen now is that there are more proofs. We have sold 10 of the 40-50 units that we have put out. I am quite confident that the market will improve quickly now that the interest rate is going down. There are very few, very many so-called housing rights associations, that is housing rights law, that have been pulled out of the market and turned into rental rights in Sweden. So there is a low supply side to housing rights laws, or property rights as they are called. So I am confident that it will come to a solution and that we will get started with that. It is a question of time. If we are lucky, if the market is solving very well, we will start there this year. If not, it will be next year.

Thank you. That was all from the web.

Then we say thank you and see you again in August.