Despite surging inflation and unpredictable market conditions, COWI manages to keep the momentum. The top line grew by DKK 300 million, and more than 300 people joined the company in the first half of the year. Despite severe market uncertainties, the positive trend is expected to continue for the rest of 2022.
The green transition has picked up speed in 2022. Increased focus on climate adaptation and, not least, Western governments' ambition to liberate the Western world from Russian gas and fossil fuels, in general, have had a positive effect on COWI's financial results in the first half of the year. Thus, all of the Group's core areas have experienced high activity, but Arkitema suffers due to the challenging market conditions.
In total, the turnover has increased by DKK 300 million to DKK 3,635 million. EBIT is up by DKK 20 million to DKK 205 million compared to the same period last year, and the EBIT margin of 5.6 per cent was on par with the same period in 2021. Moreover, the company has delivered organic growth of 8.1 per cent. Operating cash flow was a negative DKK 30 million, primarily due to the update of an operating system and resulting lag in invoicing. Since May, the cash flow has picked up.
As part of COWI's new strategy to transform its business and reach 100 per cent revenue within sustainability-related projects in three to five years, the company chose at the beginning of the year not to take on any projects that accommodate the exploration of fossil fuels. In the first half of the year, the Group began to divest and phase out activities in a number of regions to focus on securing a stronger market position in its three core markets, Scandinavia, the UK and North America.
"We are very pleased that we have managed to grow our business even though we are facing severe market uncertainties. It shows how robust our business is and especially how well our new strategy matches the development and not least the customers' need for assistance with the green transition," says Lars-Peter Søbye, CEO of the COWI Group.
Strong order book to safeguard against economic crisis
The current value of COWI's order book is DKK 5.1 billion, and it is not expected that a coming economic crisis will affect the business significantly.
"We typically carry out planning and design work on projects and do not expect these types of tasks to be impacted in the short term. It is very unlikely that these parts of the projects will be affected, as it will be expensive to stop this part of the work because it will delay the projects by many years. On the other hand, we foresee that the construction phase of projects might be affected by soaring raw material prices and supply chain challenges," adds Lars-Peter Søbye.
He continues:" COWI is the strongest brand and the preferred consultant in all our designated markets. Against this background, we have also increased our workforce by 300 colleagues in the first half of the year. But we need more colleagues, and the pool of engineers needs to be significantly expanded if we are to succeed with the green transition. For us, it is crucial that we are able to move resources from business areas with low activity or low margins to areas with high activity and high margins. However, we are already doing this. For instance, we have moved employees from our Buildings division to Industry division."
Predictability has declined significantly
Despite market turmoil and rising costs, Lars-Peter Søbye is cautiously optimistic.
"Our core business is healthy, and we have a solid order book that will keep us busy for a long time. We are moving closer to our customers and have many good dialogues about what may be the right solution for them based on their situation. Our strong brand also makes us capable of attracting and retaining talented employees. Against this background, we are relatively optimistic about the future," explains Lars-Peter Søbye.
Major wins in H1:
- In North America, COWI will deliver turnkey design for Empire Wind 1 and 2 as well as Beacon Wind 1 offshore wind turbine foundations off the coast of New York for a joint venture between Equinor and bp. With an anticipated generation capacity of more than 2 GW of renewable power, the development will power about two million New York homes and play a major role in meeting New York State's goal of reaching 70 per cent renewable energy by 2030.
- In Norway, COWI and Citec have been awarded the engineering and design contract for a full-scale carbon capture (CC) project at Fortum's energy recovery plant at Klemetsrud in Oslo. Building on a pilot project at Klemetsrud, the CC project is considered essential to meeting Norway's climate targets.
- In Sweden, COWI has won a contract as owner's engineer for the first phase of Skellefteå Kraft's CCS (carbon capture and storage) project. COWI will be responsible for preparing the invitation to tender for the FEED (front-end engineering and design) package. COWI will also carry out support and evaluation of engineering contractors.
- In Denmark, COWI has been hired as a full-service consultant on two motorway projects by Kolding and Randers, respectively. Kolding and Randers. Both projects are part of the national ‘2035 Infrastructure Plan', which aims for a greener future and supports Denmark in becoming richer and better connected.
- In the UK, COWI has won the detailed design package contract for utility works around the proposed High Speed 2 (HS2) station at Euston, London. This vital design package will facilitate HS2's works to improve connectivity and capacity for passengers accessing the existing London Underground network. HS2 is one of the UK's most ambitious transport schemes ever to be undertaken, with Euston station known for being the most complex utility project in the UK.
- In Denmark, Arkitema and COWI have won the competition to design the master plan for the transformation of the 140,000 m2 Frederiksberg Hospital area in central Copenhagen. The project has a huge focus on sustainability, both environmentally and socially.