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Share 2016-09-27 17:29 RATOS B 39.81 SEK

HENT

Operations

HENT is a leading Norwegian building contractor that focuses on the construction of newbuild public and commercial real estate. The company also has a smaller but growing renovation-oriented business. HENT is involved in projects throughout Norway, operating from its head office in Trondheim and local offices in Oslo, Ålesund, Bergen, Hamar, Horten, Bodø and Tromsø.

HENT focuses on project development, project management and purchasing. To a large extent, the projects are carried out by a broad network of quality assured subcontractors. HENT has strong established customer
relations and often works closely with customers to develop projects together.

HENT’s market position is especially strong in central and northern Norway in the segment for large projects (>NOK 250m) as well as schools, healthcare-related buildings, offices and hotels.

Market

The total construction market in Norway, public works not included, amounts to approximately NOK 280bn of which newbuild public and commercial real estate accounts for approximately NOK 70–75bn.

The Norwegian construction market is highly fragmented. HENT is one of the leading players and competes with Veidekke, Skanska, AF-Gruppen, NCC and Kruse Smith, among others.

The newbuild market is cyclical, but has historically shown good structural growth. Since the start of the 2000s, annual market growth has been approximately
5%. A stable, albeit somewhat lower, future market growth is expected in HENT’s market segment. Currently low oil prices negatively impact the construction market.
At the same time, there are permanent structural demand drivers, including underlying stable public finances, low unemployment, demographic growth and the need to invest in infrastructure and public buildings.

The year in brief

2015 was yet another excellent year for HENT which continued to raise its market shares following good competitiveness and order intake. The order book was approximately NOK 8.7bn at year-end (8.7). Contracts signed during the year included one for construction of Vålerenga Stadion, a project worth around NOK 600m. 

HENT’s sales rose by 22% as a result of a large order book and efficient implementation of ongoing projects, which also improved the adjusted EBITA margin.

HENT has started its first project outside Norway with the construction of a hotel in Helsinki. At the beginning of 2016 HENT set up an office in Stockholm to start marketing activities in the Swedish market. The company has continued to improve its health, safety and environmental efforts by focusing on forming a safer work environment and extending its preventive measures to reduce crime in the workplace.

Following a refinancing at the end of the year, Ratos’s shareholder loan of NOK 50m was repaid and a dividend of NOK 365m, of which Ratos’s share totalled NOK 267m, was issued.

Sustainability

HENT’s most important sustainability issues include labour law (focusing on conditions for subcontractors), health, work environment, safety and business ethics. All of these are related to HENT’s strategy and managing them is central to the company’s commercial success. HENT works actively to further enhance work with all these issues. 

Development potential

Ratos invested in HENT because it is a well-run company with a strong position in the Norwegian construction market. The company delivers high quality and a flexible cost structure, which allows matching of costs to demand and managing fluctuations in the cyclical construction market. This combined prompts us to take a positive view of the company’s future prospects.

HENT has a skilled and dedicated management that increased its ownership in conjunction with Ratos becoming an owner in 2013 – strong proof of belief in the company’s future.

HENT has seen rapid expansion in recent years with stable profitability and has continuously strengthened its market position. Together with the company’s management we aim to further develop the company and create opportunities for continued organic growth within the existing business model and the potential for geographic expansion.

(Mainly from Ratos's annual report 2015.)