AF Gruppen Reports Mixed Q1 Results with Profitability Gains

AF Gruppen (AGRUF, AFG.OL) sees slight EPS decline in Q1 while revenues dip. However, profit margin lifts, showcasing robust financial health and a strong order backlog.

Date: 15-05-2025

AI Rating: 6

Overview of Financial Performance
AF Gruppen's recent report indicates a mixed Q1 performance as earnings per share (EPS) dipped slightly to NOK 1.27 from NOK 1.30, signaling a slight decrease in profitability compared to the previous year. However, the company's overall financial health appears robust due to significant developments in profit margins and operational cash flows.

Profitability and Margins
The profit margin increased from 2.6% to 3.0%, reflecting improved operational efficiency and cost management. This uptick is crucial as a higher profit margin indicates that the company is retaining a greater portion of its revenues, enhancing its resilience against market fluctuations.

Revenue Growth and Order Backlog
Although revenue slightly declined to NOK 7,129 million from NOK 7,187 million, the significant expansion of the order backlog to NOK 44,232 million (an increase of nearly NOK 4 billion from the previous quarter) suggests future revenue potential and stability. The order backlog is a critical indicator for construction companies, as it predicts sales and operational activity for upcoming quarters.

Free Cash Flow and Financial Strength
AF Gruppen showcased a strong positive cash flow from operating activities at NOK 330 million, significantly up from NOK 128 million in the same quarter last year. Such an increase in free cash flow denotes better liquidity and the ability to finance operations or return value to shareholders. Additionally, net interest-bearing receivables improved from -NOK 974 million to NOK 290 million, indicating a healthier balance sheet.

Areas of Concern
Despite the generally positive indicators, the Civil Engineering sector did face NOK 100 million in shutdown and termination costs, which could impact future performance. Maintaining watchfulness on this sector will be crucial for investors.

Stocks: AGRUF AFG.OL