NRC Group Q1 2025 presentation: EBIT improves amid record order backlog

Introduction & Market Context

Nordic infrastructure contractor NRC Group ASA (OB:NRC) presented its first quarter 2025 results on May 16, showing signs of operational improvement despite ongoing challenges. The company, which specializes in railway infrastructure across Norway, Sweden, and Finland, reported an all-time high order backlog of NOK 8.9 billion, providing a solid foundation for future growth.

CEO Anders Gustafsson highlighted the company’s progress in establishing a "solid foundation" following restructuring efforts initiated last year, particularly in Finland. The infrastructure market across the Nordic region continues to benefit from governmental support for sustainable transportation solutions, creating significant opportunities for specialized contractors like NRC Group.

Quarterly Performance Highlights

NRC Group reported revenue of NOK 1.3 billion in Q1 2025, unchanged from the same period last year. However, the company significantly improved its EBIT performance, reducing losses to NOK -27 million compared to NOK -99 million in Q1 2024.

As shown in the following key financial metrics chart, the company’s EBIT margin improved to -2.1% from -7.5% in the comparable quarter:

Order intake remained strong at NOK 2.2 billion, though slightly below the NOK 2.5 billion reported in Q1 2024. The company secured major contracts during the quarter, particularly in Norway and Sweden, contributing to the record-high order backlog of NOK 8.9 billion – an 8.5% increase from Q1 2024.

The strengthened order backlog provides improved visibility for future revenue, with nearly NOK 4 billion allocated for execution in the current year:

Detailed Financial Analysis

NRC Group’s financial performance showed notable improvement in profitability metrics despite flat revenue. The company has changed its main reporting KPI to "clean EBIT" from the previously used adjusted EBIT metric, aiming for greater transparency.

The detailed financial results reveal the progress made in operational efficiency, though the company continues to face challenges in working capital management:

Performance varied significantly across the three countries where NRC Group operates:

• Norway: Revenue of NOK 500 million with EBIT of NOK 4 million (0.7% margin)
• Sweden: Revenue of NOK 350 million with EBIT of NOK 1 million (0.2% margin)
• Finland: Revenue of NOK 419 million with EBIT of NOK -15 million (-3.7% margin)

The company’s cash position deteriorated during the quarter, with operating cash flow of NOK -150 million compared to NOK -126 million in Q1 2024. This was primarily attributed to an increase in working capital requirements.

The following chart illustrates the tender pipeline across the group, which remains robust at NOK 29 billion, supporting management’s optimistic outlook:

Strategic Initiatives

NRC Group is implementing several strategic initiatives to improve profitability and operational efficiency. The company has completed its executive and country management teams, providing stability in leadership.

In Finland, the "Acceleration Lane" restructuring program implemented in January 2025 is showing initial results, with the country now operating under a new divisional structure. Meanwhile, the company has launched a new program to improve cost efficiency in Norway, though specific details were not disclosed.

Safety performance continues to improve across the organization, with decreases in lost time injuries, sickness absence, and serious injuries compared to previous years.

Forward-Looking Statements

NRC Group maintains its guidance for 2025, targeting revenue of approximately NOK 7 billion with an EBIT margin exceeding 2.0%. The company also reaffirmed its longer-term 2028 targets of more than NOK 10 billion in revenue with an EBIT margin above 5.0%.

The following chart illustrates the company’s long-term strategic targets:

"We are confident on our 2025 guiding of more than 2.0% EBIT-margin," stated CEO Anders Gustafsson, pointing to the record order backlog and promising tender pipeline across all three countries as key drivers for future growth.

The company expects a linear improvement in profitability toward its 2028 targets, supported by operational efficiency initiatives and the strong market for sustainable infrastructure projects across the Nordic region.

While challenges remain, particularly in Finland and with working capital management, NRC Group’s improved EBIT performance and record order backlog suggest the company is making progress on its recovery path following the restructuring efforts initiated last year.

Full presentation:

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