The long-term aim of BWG Homes is to create good and stable profitability with moderate risk by owning and developing leading house builders. For many years, the Group’s strategy of building in the outskirts of large urban centres and highly populated areas has produced good results. In these areas, access to property is generally more stable, and costs are normally lower than in highly populated areas. In the Group’s markets, family homes at affordable prices also proved to be the right focus area in 2009.
The Group will continue in this strategic direction. In 2010, the Group will continue to acquire properties at the right price and in the right location with a view to development of attractive new residential areas.
After the decline in house sales which started as early as end 2006, sales of new houses in Norway and Sweden began to show positive growth from the second quarter of 2009. Although the order backlog for housing companies strengthened during 2009, housing starts and the order backlog in the housing sector and are still at a low level. Only a moderate increase is expected in 2010.
Population growth and a low level of housing starts in 2008, 2009 and the early part of 2010 may lead to a constrained supply in Norway and Sweden. A low level of housing starts would mean a rise in prices of new and resale homes until there is a better balance between supply and demand.
The Group’s order intake rose by 23 per cent in 2009, while the order backlog ended the year 26 per cent higher than the previous year. The Group has a strong cash flow and its net interest-bearing debt fell considerably during the year. Strong sales throughout the year and market demand for the Group’s products allow scope for increased staffing and a higher rate of production in 2010.
The external conditions for the Group’s operations are highly positive. Housing interest rates are still at a low level and unemployment is stable. The resale market is healthy and demand for new homes is good. Management keeps a continuous focus on the cost level and potential for efficiency improvements.
It is the Board’s conclusion that BWG Homes is well positioned for further profitable growth.