Business area Civil Engineering
Infrastructure investments behind strong volume growth
|Net sales, MSEK||Nettoomsättning, Mkr||13,745||11,825||10,740|
|Operating profit, MSEK||Rörelseresultat, Mkr||415||374||355|
|Operating margin, %||Rörelsemarginal, %||3.0||3.2||3.3|
|Orders received, MSEK||Orderingång, Mkr||16,349||14,191||12,089|
|Order backlog on 31 December, MSEK||Orderstock per 31 december, Mkr||13,620||10,832||8,679|
|Number of employees on 31 December||Antal anställda per 31 december||3,580||3,344||3,080|
Business area Civil Engineering is a leading player in Sweden with operations in Norway and Finland as well. The business area works with landscaping and pipelines, builds and maintains roads, railroads, bridges and other infrastructure as well as foundation work. Operations are organized in geographic regions and the specialized product areas: Local market, Infrastructure and Operation and maintenance.
Business area Civil Engineering is active on the local civil engineering market working with landscaping and pipelines, foundation work and builds different kinds of facilities. In the area of infrastructure and heavy construction it builds roads, railroads, bridges, tunnels and ports. Civil Engineering also provides operation and maintenance for national and municipal highways and street networks as well as cares for parks and outdoor property. It also operates water and sewage supply networks. The business area collaborates extensively over regional and country borders for joint development and experience exchanges, project management and to create scale advantages in larger and more complex projects.
THE BUSINESS 2018
The market in most places in both Sweden and Norway was characterized by good demand in infrastructure and the local market, concentrated to areas where the population is growing. The level of orders received during the year has been high and they were increasingly collaboration projects. However, in Finland market interest has been slightly lower than previous years.
Our strategy of working with systematic risk management and selecting projects that suit our organization’s expertise is essential to having a sound order backlog. We received several new commissions in 2018. Among them is the construction of a new stretch of E22 between Sätaröd and Vä in the middle of Skåne for the Swedish Transport Administration. The project includes 16 km new highway, rerouting and new construction of private and public roads that intersect the highway as well as 26 new bridges.
In May the contract for the second stage of Olskroken in Gothenburg was signed with the Swedish Transport Administration. With a contract worth SEK 2,900 million it is the largest project in Civil Engineering’s history. Olskroken is one of the most important junctions in the West Sweden railroad system and it will be expanded with railway track overpasses. The project is divided into several stages and will run until 2025.
In July Peab was commissioned to build Vattenfall’s largest land-based wind power plants Blakliden and Fäbodberget in Åsele and Lycksele. The project includes 67 km new roads, 55 km cable shafts and cable support as well as 84 foundations. The customer is Blakliden Fäbodberget Wind AB.
In Norway Peab is rebuilding a section of highway on E6 between Trondheim and Melhus. The highway is being widened from two lanes to four. The road was opened at the end of 2018, a month in advance. The entire project will be completed in late summer 2019. This project is a collaboration between Civil Engineering in Norway and Sweden.
On Gotland the Swedish Fortifications Agency has commissioned Peab to expand Tofta target range to include a garage for combat vehicles, a multifunctional building as well as a gym and exercise room.
In addition, Civil Engineering received five road maintenance contracts in Sweden for a total of SEK 713 million.
Developing work methods and competence
At the beginning of the year the Swedish operations in Civil Engineering were quality and environmentally certified according to ISO 9001:2015 and ISO 14001:2015. Work has begun to certify Norwegian operations in 2019.
Our broad program concerning project steering that includes raising competence in planning, project finances and contract administration continued according to plan and is expected to lead to further positive results.
Continued development of collaboration with customers in projects
Both ECI (Early Contractor Involvement) and Partnering entail working in close collaboration with our customers so that together we create the conditions to improve customer satisfaction and cost-efficiency, and minimize risks in projects.
In 2018 business area Civil Engineering together with business area Construction refined and further developed the concept Peab Partnering. The concept was used in projects like Stridsberg Bridge in Trollhättan, Ocean Pier in Helsingborg and Kol Quay in Stockholm as well as in a number of projects for industrial customers in northern Sweden.
NET SALES AND PROFIT
Net sales for 2018 amounted to SEK 13,745 million (11,825) which was an increase of 16 percent. After adjustments for acquisitions net sales increased by 15 percent. The increase during the year stems from all product areas and there is a greater portion of Infrastructure in net sales.
Operating profit for 2018 amounted to SEK 415 million (374) and the operating margin was 3.0 percent (3.2).
ORDERS RECEIVED AND ORDER BACKLOG
Orders received during 2018 amounted to SEK 16,349 million (14,191). Orders received included a SEK 2,900 million extension of the West Sweden railroad system, Olskroken, in Gothenburg for the Swedish Transport Administration.
Order backlog on 31 December 2018 increased to SEK 13,620 million (10,832).
Project allocation of order backlog, 31 Dec 2018
|Below 200 MSEK, 57% (73)||201 MSEK – 500 MSEK, 13% (10)||501 MSEK – 1,000 MSEK, 7% (5)||> 1,000 MSEK, 23% (12)|
Operating profit and margin
Net sales, %
|Local market, 54% (55)||54|
|Operations and maintenance, 17% (18)||17|
|Infrastructure and heavy construction, 29% (27)||29|
|Private, 30% (25)||30|
|Public, 58% (62)||58|
|Internal/other, 12% (13)||12|
Net sales, %
|Sweden, 89% (91)||89|
|Norway, 10% (8)||10|
|Finland, 1% (1)||1|