GRK Infra Plc 2023: Strong growth and profitability in a difficult market situation

January–December 2023 in brief (IFRS):

  • Revenue increased by approximately 21 per cent to a record high of EUR 546.2 (450.5) million.
  • Adjusted EBITDA was EUR 38.0 (26.3) million, or 7.0 (5.8) per cent of revenue.
  • EBITDA was EUR 37.7 (24.4) million, or 6.9 (5.4) per cent of revenue.
  • Adjusted operating profit was EUR 24.9 (13.7) million, or 4.6 (3.0) per cent of revenue.
  • Operating profit was EUR 24.2 (11.4) million, or 4.4 (2.5) per cent of revenue.
  • The equity ratio was 39.9 (41.9) per cent.
  • Return on equity was 24.3 (9.0) per cent.
  • Net debt-free, cash and cash equivalents were EUR 97.6 million (EUR 43.0 million) and net debt EUR -63.7 million (EUR -7.2 million).
  • The order backlog grew strongly, amounting to EUR 568 (381) million at the end of the year.

CEO’s Review

“Last year was exceptionally strong for GRK. Our revenue increased in Sweden in particular, our profitability improved, the order backlog rose to a record-high level and, in addition, our financial position is very good. In our industry and in these market conditions, the result can be considered to be an excellent performance. I am particularly happy that the positive development concerned all of our operating countries and businesses.  Naturally, the performance also reflects the exceptionally difficult reference year 2022, when the impacts of Russia’s war of aggression against Ukraine, such as the rise in the prices of materials and energy, undermined our profitability. However, we were able to react to the change quickly, for example through project selection and contract pricing.

During 2023, our revenue increased by approximately 21 per cent to a historic record of EUR 546.2 million. The actual growth leap took place in accordance with our strategy in Sweden, where revenue increased by 146 per cent to EUR 165.9 million. In Sweden, the biggest contract in GRK’s history contributed to the business volume in particular. GRK is building earthworks and foundation reinforcement works for the H2 Green Steel factory project in northern Sweden. H2 Green Steel is building steel and hydrogen plants for the production of green steel in Boden, northern Sweden. The contract worth approximately SEK 2 billion was signed in early 2023, but we have received new additional contracts from the client during the year.

In Finland, our revenue increased slightly. GRK succeeded in increasing the revenue of both civil engineering and road construction and rail business. Currently, construction activity has slowed in Finland and the challenging market conditions are expected to continue, but the need for infrastructure construction is high especially in growth centres and, for example, rail investments are progressing in many cities.  In late 2023, we received a new significant project in our order backlog when we were selectedto carry out the Espoo City Rail Link regional contract worth approximately EUR 100 million.

GRK operates in all areas of infrastructure construction in Estonia, but the growth comes from railway projects. The Rail Baltica traffic project is currently under way, involving the building of a 1,000-kilometre-long railway connection through the Baltic countries from Tallinn to Poland and the electrification of Estonia’s existing rail network. GRK won two significant Rail Baltica subcontracts in 2023.  In addition, Eesti Raudtee (Estonian Railways) selected GRK to electrify the Aegviidu–Tapa–Tartu railway line.   

At the end of 2023, our order backlog of EUR 568 million was at a strong level and evenly distributed.   New orders secured after the end of the financial period in January–February demonstrate our ability to thrive in a difficult market situation.

I would like to thank every one at GRK members for the excellent results achieved last year. I also want to thank our customers, for which we have had the opportunity to do diverse and demanding work.”

Juha Toimela, CEO, GRK

GRK Group’s key figures 

GRK Group 1–12/2023 1–12/2022  1–12/2021  
Revenue (EUR million) 546.2 450.5 430.6 
EBITDA (EUR million) 37.7 24.4 32.6 
EBITDA % 6.9% 5.4% 7.6% 
Adjusted EBITDA (EUR million) 38.0 26.3 34.0 
Adjusted EBITDA % 7.0% 5.8% 7.9% 
Operating profit (EUR million) 24.2 11.4 20.7 
Operating profit margin, % 4.4% 2.5% 4.8% 
Adjusted operating profit (EUR million) 24.9 13.7 22.6 
Adjusted operating profit margin, % 4.6% 3.0% 5.3% 
Profit for the financial period (EUR million)   20.1 7.0 15.7 
Equity (EUR million) 88.9 77.0 78.2 
Return on equity % 24.3% 9.0% 21.9% 
Equity ratio, % 39.9% 41.9% 43.6% 
Order backlog at the end of the year (EUR million) 568 381 382 
Average number of personnel 1,012 946 888 

Key events in 2023

New projects

  • In January 2023, GRK signed an agreement on the largest contract in its history. GRK Infra AB will carry out the foundation and earthworks of H2 Green Steel’s new hydrogen and steel plant in Sweden. The value of the contract exceeds SEK 2 billion, or close to EUR 200 million. The project will continue until early 2025. GRK is responsible for, among other things, piling, soil cutting and soil transfer in the plant area.
  • In Estonia, the focus of revenue shifted to the rail business. In Estonia, the Rail Baltica railway connection is being built and the existing railway network is being renovated. GRK started electrifying Estonian railways from Aegvidu to Tartu, and we also received two significant projects related to Rail Baltica. Their total value is approximately EUR 127 million.
  • In Finland, the most significant new project is the Espoo City Rail Link project developing the Helsinki Metropolitan Area’s public transport system.  GRK was selected to carry out the first regional contract of the Espoo City Rail Link worth approximately EUR 100 million. GRK will build two new tracks between Leppävaara and Kilo, as well as bridges and cycling paths.

Ongoing projects

  • GRK’s revenue also reflects significant ongoing projects, such as the maintenance of railway and safety equipment in Uusimaa and Southwest Finland, as well as theKalasatama–Pasila tramway project.GRK and AFRY make up the Karaatti alliance that will implement the northern part of the project from the northern part of Hermannin rantatie to Pasila and the tramway electricity supply stations.

Corporate responsibility

  • GRK made progress as a pioneer in sustainable construction. Our carbon footprint decreased and the use of recycled materials remained at a good level.  In 2023, GRK used approximately 950,000 (900,000) litres of renewable fuels. Renewable fuels accounted for approximately 17 per cent of our total consumption.
  • GRK’s carbon footprint was 16,332 (18,360) tonnes of CO2 equivalent. Our carbon intensity, which takes into account the growth in revenue, was 29.9 per cent, which is significantly lower than in 2022 (40.8 per cent).
  • Employee satisfaction improved based on the eNPS measurement, being 29 (23).
  • There was a setback in occupational safety. One indicator is the accident frequency rate, which describes the number of accidents causing sick leave per one million hours worked.  The Group’s accident frequency rate was 13.1 (11.6).

*The comparison figure for 2022 has been refined in connection with the calculations. The previously reported carbon footprint was 14,367 tonnes of CO2 equivalent. The further specification of the benchmark figure is due to a correction of the volume of LPG use.