The sales revenue of Nordecon AS for the first half of 2011 was 54.4 million euros, which is 46% more than in the same period last year. The gross losses of the company for the period totalled 1.4 million euros, which is significantly lower than the 2.9 million euros recorded in the first six months of 2010.
"The increase in the group’s sales revenue is first and foremost a sign of the construction market recovering from the recession, but also of course of the hard work put in by the Nordecon team on procurements," said Jaano Vink, Chairman of the Management Board of Nordecon AS. "We’re still operating in two main areas – the construction of buildings and the erection of other structures – and the proportion of revenue they represent is more or less what we were aiming for, at 46% and 54% respectively. The slightly higher proportion of structures reflects the situation on the construction market at the moment, where areas that are being supported by the European Union, like roads, environmental construction and technical networks, are edging ahead."
Vink says that taking 2011 as a whole, there is every indication that the second half of the year will see a higher volume of work for Nordecon than at the same time last year. "Profitability should also improve, little by little," he said. "Our gross losses for the first half of the year were due to on-going projects from 2009 and 2010 – long-term contracts you enter into during a recession tend to result in losses when input prices start rising. Pretty much everyone operating on the market today has these albatrosses hanging round their necks, and unfortunately Nordecon’s no exception."
When asked which contracts in particular were exerting this pressure, Vink said: "The technically challenging construction work on the Maritime Museum at the old seaplane hangars on the waterfront in Tallinn has had the greatest impact on profits, or rather losses. The hangars are unique, but the condition we found them in was far worse than anyone associated with the project could have thought. As such, we went into the job without a clear idea of how difficult it would be – and needless to say it’s turned out to be incredibly complex. And despite what people might have read in the media, the extra money we’ve asked the client for isn’t to cover our losses as the builder, but to compensate for the unforeseen additional work we’ve had to carry out along the way."
Vink added that Nordecon had already set boosting the profitability of its portfolio of contracts as its top priority in 2010. "That’s the direction we’ve been moving in, and there’s no reason to think we’ll change course any time soon," he said. "The changes that have been introduced in the company over the last couple of years have borne fruit, but along with the efforts we’ve gone to, the recovery in competition, such as it’s been, has played a role as well."
