NCC-Group: Interim report January-September 2000

11/1/2000 7:36 AM EST

NCC-GROUP:
Interim report January-September 2000

The Group's income after net financial items for January-September
amounted to SEK 1,539 m. (910). Income includes SEK 912 m. deriving from
the repayment of surplus funds from SPP. Excluding non recurring items,
earnings amounted to SEK 627 m. (709).

On a rolling 12-month basis, income after net financial items amounted to
SEK 1,880 m., compared with SEK 1,251 m. for full-year 1999. Excluding non
recurring items, earnings amounted to SEK 968 m. (1,050).

Earnings per share for the January-September period amounted to SEK 9.80
(6.10). Excluding non recurring items, earnings amounted to SEK 3.90
(4.80) per share.

The NCC's Group's organizational structure is being changed to increase
the focus on growth areas, such as telecom and service. The agreement with
Ericsson regarding the build-out of the information structure of tomorrow,
for 3G among other applications, will help to secure solid growth for NCC
Telecom in the future.

The acquisition of Riebers & Sons' Roads business area will make NCC the
clear leader in the Nordic market for asphalt and crushed products and
will also provide a boost to the Group's rapidly expanding operations in
Poland and the Baltic countries.

The go-ahead for construction of the first stage of the A2 highway project
represents a breakthrough for NCC in Poland and for BOT-financed
infrastructure projects in Eastern Europe. The projects provide NCC with
construction work totaling SEK 2.7 billion.

"Adjusted for non recurring items, earnings for January - September
amounted to SEK 627 m., which is lower than in the year-earlier period. To
a large extent, the earnings dip was due to a reduction in civil
engineering investments and a weaker market for asphalt products," says
Jan Sjöqvist, President and Chief Executive Officer of the NCC Group,
commenting on the interim report for the period ended September 30, 2000.

"Other parts of the Group are showing a favorable business trend.

Earnings from real estate development have improved sharply. Since we
expect strong growth in the telecom and service sectors, among others, NCC
is currently implementing a comprehensive change in its Group structure.
The aim is to enable the Group to capitalize on the opportunities arising
from, for example, the fast-growing broadband market and the build-out of
the third generation of mobile telephony networks. The new NCC Telecom,
which commenced operations as early as October 1, experienced a flying
start through a partnership agreement with Ericsson. It is estimated that
the business area's order volume will be at least SEK 10 billion over a
five-year period," says Jan Sjöqvist.

"The A2 highway project is the largest single contract in NCC´s history
and represents a breakthrough for us in the Polish market. It is also a
so-called BOT project, which means that it is a privately financed
infrastructure-project solution in which we participate with financing,
construction work and operation of the highway," says Jan Sjöqvist.
Orders received
Orders received by the NCC Group's construction operations (the Civil

Engineering, Housing, Building and Industry business areas) during the
January - September 2000 period amounted to SEK 29,535 m. This was a 17-
percent increase compared with the SEK 25,341 m. reported in the year-
earlier period. On a rolling 12-month basis, orders received amounted to
SEK 40,354 m., compared with SEK 36,160 m. for full-year 1999.

Net sales
Consolidated net sales amounted to SEK 27,211 m. (26,440), up 3 percent.
On a rolling 12-month basis, net sales amounted to SEK 38,231 m., compared
with SEK 37,460 m. for full-year 1999.

Earnings
Income after net financial items amounted to SEK 1,539 m. (910), which
included repayments of surplus funds from SPP in an amount of SEK 912 m.
The comparative figure for the preceding year includes combined capital
gains of SEK 201 m. from the sale of Neptun Maritime and the BPA share-
holding. Excluding non recurring items, income amounted to SEK 627 m.
(709).

The earnings decline was due mainly to a reduction in civil engineering
investments and a weaker market for asphalt products. NCC Industry
reported lower earnings for January - September 2000 compared with the
year-earlier period, which was due primarily to the third quarter.

Improved earnings are expected during the fourth quarter, compared with Q4
1999.The slight decline in NCC Civil Engineering's earnings was mainly
attributable to a market downturn in Denmark and Norway. Volumes and
profitability related to Swedish operations remained unchanged. The
earnings trends in Denmark and Norway are expected to remain negative
during the fourth quarter. NCC Real Estate's earnings trend was favorable
and income from NCC Building improved.

On a rolling 12-month basis, income after financial items amounted to SEK
1,880 m., compared with SEK 1,251 m. for full-year 1999. Excluding non
recurring items, rolling 12-month earnings amounted to SEK 968 m.,
compared with SEK 1,050 m. for full-year 1999.

Earnings per share
Earnings after full tax amounted to SEK 1,054 (661), which corresponds to
SEK 9.80 (6.10) per share. Excluding non recurring items, earnings after
full tax amounted to SEK 416 m. (516), or SEK 3.90 (4.80) per share.

On a rolling 12-month basis, earnings per share amounted to SEK 11.40,
compared with SEK 7.70 for full-year 1999. Excluding non recurring items,
rolling 12-month earnings per share amounted to SEK 5.50, compared with
SEK 6.40 for full-year 1999.

Profitability
The return on capital employed on a rolling 12-month basis was 13 percent,
compared with 10 percent for full-year 1999. Excluding non recurring
items, the rolling 12-month return on capital employed was 8 percent, half
a percentage point lower than in full-year 1999.

The return on shareholders' equity on a rolling 12-month basis was 13
percent, compared with 9 percent for full-year 1999. Excluding non
recurring items, the rolling 12-month return on shareholders' equity was 6
percent, compared with 7 percent for full-year 1999.

Investments
The Group's gross investments in real estate amounted to SEK 3,617 m.
(2,159), of which real estate development projects accounted for SEK 3,228
m. (1,978).

Cash flow
Cash flow, before financing, was positive in an amount of SEK 217 m. (neg:
2,150). Cash flow during the current year is being affected by improved
liquidity from projects conducted within contracting operations and
investments in proprietary housing construction and real estate
development. The acquisition of Superfos was included in the figure for
the year-earlier period.

Financing and liquidity
On September 30, 2000, NCC's net indebtedness (interest-bearing
liabilities less liquid assets less interest-bearing receivables) amounted

to SEK 6,350 m. (6,238). On December 31, 1999, NCC's net indebtedness
totaled SEK 5,296. The increase was mainly due to higher investments in
proprietary housing construction. On September 30, 2000, the average
interest rate for the borrowing portfolio was 5.4 percent (5.3), excluding

pension liabilities. On the same date, the average period of fixed in-
terest was 1.7 years (2.1).

Equity/assets and debt/equity ratios
The equity/assets ratio was 29 percent (32). The decrease was mainly
attributable to the extra dividend of SEK 7 per share approved by the

Annual General Meeting in March. The background to this was that NCC
reduced its equity/assets ratio target from 35 to 30 percent at the
beginning of 2000.

The debt/equity ratio (net indebtedness divided by shareholders' equity
including minority interests) on September 30, 2000 was a multiple of 0.7,
compared with 0.5 at year-end. The debt/equity ratio is expected to
increase during the fourth quarter, due to the Rieber acquisition.

Personnel
The average number of employees in the NCC Group during the period was 24
563 (23,108).

CONSTRUCTION MARKET
The Nordic construction market is expected to grow slightly in the next
few years, although the trend will vary from country to country and sector
to sector. The Swedish and Finnish markets are expected to grow by 5 - 6
percent in 2000 and 2001, while Denmark will show an opposite trend. A
slight recovery has occurred in Norway, although increased interest rates
are expected to inhibit growth in the construction market in 2001.

The largest upswing is expected in the housing market, particularly in

Sweden and Finland, where demand is strong. However, a slower growth rate
has been noted in Finland during the autumn. Some growth is expected in
the "Other buildings" segment (offices, retail premises, hospitals) in
2000 and 2001, while the roadwork and civil engineering market is
stagnating or declining in most Nordic markets. The Danish civil
engineering market has declined by more than 30 percent since 1998 and the
Norwegian market by 20 percent.

In Sweden, NCC's largest individual market, the largest increases are
expected in the housing segment, particularly in the Stockholm region,
where demand for new housing is considerable. However, the growth rate is
being inhibited somewhat by a shortage of land approved for development
and by Sweden's utility value principle, which makes it unprofitable for
private real estate companies to build and manage residential buildings.

In the Swedish civil engineering market, a continued decline is expected
in public sector investments in infrastructure, at the same time as no
decisions regarding private funding of major projects have been made. On
the other hand, private investments in the energy and telecom sectors are
increasing, a trend that is generating considerable construction volumes.

Construction investments in the telecom sector rose by 30 percent during
the first half of 2000.