STOCKHOLM (Thomson Financial) - NCC AB first-quarter profit after financials rose to 117 million crowns from a 85 million loss, boosted primarily by good performance in its property development operations.

However, the figure was lower than the market's expectations for a profit after financials of 183 million crowns, according to SME Direkt.

Sales fell to 11.41 billion crowns from 11.82 billion. Operating profits at the Swedish construction company swung to 169 million crowns from a 53 million loss.

NCC chief executive Olle Ehrlen said: "During the first quarter, orders received remained favourable and were in line with the year-earlier period, due to healthy demand in the building and civil-engineering market, primarily in Sweden.

"The order backlog remained high, providing the prerequisites for a high production in 2008, too."

He added, however, that the company was seeing "distinct signs of a slackening in residential markets" in the Nordic and Baltic regions.

NCC sold fewer housing units during the first quarter, compared with the past, with the number of unsold units mainly increasing in the Baltic region, he said.

"Due to the lower demand, we have reduced the number of proprietary housing starts, apart from in Finland and Germany where market conditions remain relatively healthy," he added.

Ehrlen said the earnings of NCC Construction Sweden were hit by the decrease in the number of sold housing units, although the trend was positive for construction operations.

Orders received decreased to 11.99 billion crowns from 12.21 billion. The order backlog on March 31 was 45.12 billion crowns, of which proprietary projects accounted for 11.10 billion crowns.

NCC reiterated that the 2008 outlook is "generally favourable" for the markets in which it is active, although growth is expected to be lower than in 2007.

It said the civil engineering market will remain positive in 2008 and that conditions will also be favourable for other buildings (offices, industrial premises and public buildings), as well as for aggregates, asphalt and paving.

"On the other hand, NCC estimates that the residential markets has passed its peak," the company said.

Previously, NCC said that the Nordic and Baltic housing markets are "subject to increasing uncertainty". TFN.Stockholm@thomsonreuters.com hc/ro

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