March 7, 2024

Green construction from Sweden: NCC

Green construction from Sweden: NCC

Quick Facts

  • NCC is a market-leading Swedish construction company
  • We recently added its shares to the Obermatt Europe Value Wikifolio
  • NCC is known for its focus on its 12'000+ employees and its good ESG performance


  • Strong Obermatt rangs, especially Sentiment
  • High annual EPS growth and consistently high EBIT margins
  • Solid financial base with low debt ratios
  • Good sustainability measures in place


  • Cyclicality of the construction industry ❌
  • Affected by the risks that large construction projects bring ❌
  • Highly dependent on the Nordic market with strong competition ❌

With the weather currently giving off spring vibes in Switzerland, we’ve decided to stay true to winter and are going all the way north in this week’s blog. NCC - a market leading construction company from Sweden - has been added to our Europe Value Wikifolio.

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NCC, headquartered in Sweden, has operations in Sweden, Norway, Denmark and Finland in the areas of infrastructure, building, raw materials production and property development and employs more than 12,000. If you’ve ever been to these countries, the likelihood you have encountered public or private infrastructure built by NCC is high.

The company sparked our interest as it currently has note-worthy Obermatt Ranks, and is prized by Obermatt in the area of Employee Focus in the EU; they’ve been able to steadily decrease work-related accidents by increasing health and safety for their employees. However, they don’t only prioritize employee health and wellbeing; they are also ranked second-highest when it comes to ESG in the Nordic region and fourteenth best in the world in the construction & engineering industry. They also follow Sweden’s zero carbon commitment goals and have managed to reduce their CO2 emissions by 52% compared to 2015.

Their strong performance doesn’t end at ESG, it also spills over to its financial performance. Over the last three years, the company has grown its earnings per share by 12% yearly, and also managed to keep its EBIT margins steadily high, which gives them a competitive advantage in the market. They also boast a strong financial base and could pay off all their debts within less than three years using only their net profit after taxes. As a comparison, it would take Peab, another major player in the construction industry, approximately nine years to do the same. This solid financial foundation allows them to undertake large-scale projects and weather economic downturns more effectively. In Copenhagen, for example, they are creating a new man-made island, with apartments and an underground car park.

We do see some risks with this investment, though. As NCC primarily works on large construction and infrastructure projects, they can often be susceptible to delays, cost overruns, and unforeseen challenges and this affects profitability and reputation. The company is also highly dependent on its key markets (the Nordic region), which makes them vulnerable to economic fluctuations specific to the region. In addition, unstable cash flows as seen in recent years make them vulnerable to changes in interest rate and thus more expensive debt and lower margins.

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