The financial unrest throughout the autumn of 2008, led to a marked slow-down in the number of new assignments during the fourth quarter. The markets are currently characterised by a high level of uncertainty about the future. The rescue packages now being launched by several governments, aim, among other things, to increase the activity in the building and construction industry. The effect of these packages will most likely not be noticeable in our market until the second half of 2009. Therefore, we predict a somewhat weaker building and construction market during the first quarter of 2009.

A more well-functioning financial market, combined with increased public building and construction activity, may limit the extent of the slow-down in the second half of the year.

Market conditions and risk factors

Risk factors

Regarding Veidekke’s construction operations, the tighter market results in more stringent demands to be selective in choice of projects, and to continue to maintain a strong focus on profitability and risk management rather than on higher turnover.

Regarding property development, focus will continue to be directed at upholding requirements for advance sales of dwellings prior to the start-up of new projects, developing the existing portfolio of development sites and being selective in the purchase of new sites.

There was a significant change in the risk situation in the Scandinavian markets during the second half of 2008, due to the growing financial unrest. This applies mainly to the private sectors of the markets, for instance in terms of lack of financing for new projects and delays in the start-up of projects. Furthermore, this situation has increased the risk attached to the execution of projects, due to material suppliers and subcontractors not being able to fulfil their contractual obligations, and it has led to higher customer credit risk.

Veidekke has a strong focus on following the market development, handling the new risk situation, and on implementing necessary measures.