Business area Industry

Profitable complete supplier with strong local roots

Key ratios

2017 2016 2015
Net sales, MSEK 12,761 12,161 10,800
Operating profit, MSEK 867 753 648
Operating margin, % 6.8 6.2 6.0
Capital employed on 31 December, MSEK 5,781 5,416 4,885
Number of employees on 31 December 3,452 3,385 3,204
Concrete, thousands of m3 1) 1,221 1,101 990
Asphalt, thousands of tons 1) 2,619 2,589 2,353
Gravel and Rock, thousands of tons 1) 14,799 13,109 11,005

1) Refers to sold volume

Business area Industry is a complete supplier of all the products and services needed to carry out a sustainable and cost-effective construction and civil engineering project. Industry offers everything from gravel, sand, concrete, asphalting and temporary electricity to prefabricated concrete elements. Business area Industry also rents out cranes, machines and transportation as well as handles production waste.

Business area Industry consists of a number of companies with operations on the Nordic construction and civil engineering market. With local roots the companies take on large and small jobs. The business area is run in six product areas: Asphalt, Concrete, Gravel and Rock, Transportation and Machines, Rentals and Construction System.

Business area with strong brands

Through good organic growth supplemented by strategic acquisitions business area Industry has built up strong brands that complement the Peab brand. Among these are Lambertsson, Swerock, Cliffton, Skandinaviska Byggelement, Glacell, ATS Kraftservice, Lättklinkerbetong, Virtanen, Kranor and Ferdigbetong.

THE BUSINESS 2017

Business area Industry has operations in Sweden, Norway and Finland. Market conditions in 2017 were very good in all three countries. The Swedish market was particularly strong despite a slowdown in housing production towards the end of the year. The favorable market situation was also reflected in the positive development in most of Industry’s product areas.

Industry works intensively on sustainability, focusing in 2017 primarily on work to reduce its environmental impact.

Strategic changes in the business area

A number of structural deals were carried out in 2017. Acquisition of 60 percent of the shares in AB Smidmek Eslöv in 2017 complemented product area Construction System’s existing offer with steel and concrete frames. The business had net sales of SEK 249 million during the financial year 2016/2017 and 29 employees. The Swedish part of the product area Foundation Work was transferred to business area Civil Engineering and foundation operations in Norway, Nordisk Fundamentering AS, was sold to NCC. The business had net sales of NOK 252 million in 2016 and 102 employees.

Higher net sales and good volumes in general

Swerock’s markets in Finland, Norway and Sweden continued to be good and volumes rose. There was a brand name change to Swerock in Finland for prefabricated concrete and ballast operations. Concrete delivered large volumes in all the Nordic countries as did Gravel and Rock, which in Norway is developed under the brand Norrock. New quarries in strategic places continued to be a priority. Opening Arendal in Gothenburg is an example. Transportation and Machines displayed positive development with a substantial demand for vehicles and machines. The exception was mining transportation where a project in Svappavaara was concluded in 2017. Transportation and Machines also include Recycling, which handles masses, waste management and recycling. These operations grew all over Sweden.

Record volumes for Asphalt

Product area Asphalt developed positively in 2017. Asphalt manufacturing rose and a number of asphalt plants produced record volumes. Some of the largest contracts were written with Swedavia and several municipalities in southern and western Sweden.

Running operations sustainably is essential and the new sustainable strategy informs which issues are prioritized. In the past year ECO-Asfalt® was further developed and twelve of the thirteen stationary asphalt plants in Sweden were converted from operating on fossil fuel to bio-oil. The asphalt plant in Trondheim, Norway was converted from fuel oil to liquefied gas. Working to reduce carbon dioxide emissions continued and next in line is the mobile asphalt plant in Biri, Norway.

Greater demand for for rentals

Lambertsson Sverige presented profitable growth and Traffic Equipment is the unit that grew the most. The number of depots rose with new establishments in Varberg and Partille. During the first quarter 2018 two more depots opened in Borås and Solna. Investments in so-called green machines continued. In addition, supplementary services for better working environments, for example, in the form of traffic closures and barriers were developed. The Lambertsson Installation unit was consolidated under the brand Glacell, which offers complete solar energy and electricity installation solutions. Even ATS Kraftservice, which delivers services in power and electricity distribution, had many ongoing projects in 2017.

Activity was high at Lambertsson’s crane operations in Sweden and Norway (Kranor) in 2017. In order to increase our presence in northern and eastern Stockholm a depot for mobile cranes was opened in Bro. Our presence was further strengthened in southern Sweden through the takeover of construction cranes from Thage AB. The favorable market situation was also reflected in the good development of the Norwegian crane operations. Both the Swedish and Norwegian agency for crane sales developed positively in 2017.

Finnish Virtanen was busy throughout 2017. A successful installation of one of Europe’s largest construction cranes at Helsinki Airport together with a new depot and trailer operations for transportation in the capital city region contributed to this.

A lot going on in Construction System

A number of measures were taken in Construction System to coordinate units and thereby streamline production.

Construction System’s newly built factory for the manufacture of prefabricated concrete elements in Ucklum began running at full capacity. In 2017 the decision to invest in higher capacity in the hollow core slab factory in Hallstahammar was made. An important project for Construction System going forward is delivering framework material to The Point – the 110 meter high office building that is the fourth stage of Malmö’s new city district Hyllie.

NET SALES AND PROFIT

Net sales for 2017 increased by five percent and amounted to SEK 12,761 million (12,161). After adjustments for acquired and divested units net sales increased by four percent. The increase comes from all the product areas except Transportation and Machines, where net sales were the same as last year.

Operating profit for 2017 amounted to SEK 867 million (753). Profit in all the product areas has improved except in Transportation and Machines where it remains unchanged. The operating margin rose to 6.8 percent (6.2).

Capital employed in Industry at the end of the year amounted to SEK 5,781 million (5,416).

Operating profit and margin

Capital employed per product area, 31 December 2017

Net sales

Per product area, 2017
Per geographic market, 2017
Share of net sales, 2017