Business area Construction

Other building construction compensates for slowdown in housing production

Key ratios

2018 2017 2016
2018 2017 2016
Net sales, MSEK Nettoomsättning, Mkr 28,340 26,726 24,121
Operating profit, MSEK Rörelseresultat, Mkr 670 602 542
Operating margin, % Rörelsemarginal, % 2.4 2.3 2.2
Orders received, MSEK Orderingång, Mkr 31,007 29,280 27,883
Order backlog on 31 December, MSEK Orderstock per 31 december, Mkr 29,776 26,805 24,160
Number of employees on 31 December Antal anställda per 31 december 6,631 6,685 6,600

With local roots close to customers business area Construction performs construction work for both external and internal customers. Construction projects include everything from new production of housing, public and commercial premises to renovations and extensions as well as construction maintenance.

Operations in business area Construction are run via some 150 local offices around the Nordic area, organized in twelve regions in Sweden, three in Norway and two in Finland. There are three specialized housing production regions in Stockholm, Gothenburg and the Öresund region. Construction maintenance operations are run in a nationwide region in Sweden primarily focused on the big city areas. Other regions are responsible for all types of construction projects in their geographic area.

THE BUSINESS 2018

The construction market in Sweden continued to be strong in 2018 and level of orders received in Construction was high. Although housing production contracted somewhat, primarily in the Stockholm region, housing still represents a significant part of the business area’s total business.

While there is less demand for housing there has been a considerable need for renovations and extensions of private and public premises, which has been good for other building construction. New community facilities are needed in Sweden and many of existing buildings require renovation. For example, the City of Stockholm has commissioned the renovation of Medborgarhuset in Södermalm. The project requires careful attention to preserving the building’s cultural history. In May Peab began building a new pool and sports facility in Köping commissioned by Köping municipality. The 10,570 m2 venue will contain several pools, a water slide and a sports arena.

Peab has years of experience in building care centers and there have been a number of renovation and extension projects during the year. Some are new psychiatric premises commissioned by Kalmar County Council, Sollentuna Hospital for Locum in Stockholm, Södra Älvsborg Hospital in Borås for Västfastigheter and the emergency room at Sunderby Hospital in Luleå for Region Norrbotten.

Peab Construction Service with its nationwide offer in rebuilding, renovation and service is an important component in the business area’s aftermarket offer. In the autumn of 2018 Construction Service signed a nationwide contract with the federal Special Properties. The procurement had high security and protection demands and required substantial experience in carrying out projects in locations where operations are open every day of the year.

Market conditions in Norway are similar to the ones in Sweden with a slight decline in housing construction and a definite rise in other building construction during the year. In northern Tromsø the project MH2, new facilities for medical research in the existing university, was completed in 2018 as well as our own housing development project Himmel & Hav (Sky & Sea). The complex located on the waterfront contains 87 apartments in different sizes along with parking spaces, a gym and an outdoor area.

In Oslo 111 of our own developed apartments are going up on Carl Berner Torg, the first project in Peab with a completely digitalized construction site. Everyone in the project uses digital aids to communicate and document the project.

The construction market in Finland has been affected positively by growth in the economy and the construction segments have grown in 2018. Peab is represented in most of the larger towns in Finland and during the year one project among others was building a combined office and apartment building in Jyväskylä with a grocery store on the ground floor. The extension of Hyvinge Hospital outside Helsinki was also completed during the year. The wing contains specialized primary care and a number of treatment departments in 22,800 m2.

Our own housing development project Goldfinger with 109 apartments is being built on a peninsula in Helsinki. Goldfinger is a project characterized by inspiring architecture and smart living. It is expected to be finished in 2020. During the year a 2,000 m2 extension of the nursing home Kristinahemmet was completed in Kristinestad. Kristinahemmet offers the aged, the chronically ill and handicapped round the clock care.

Sustainable buildings

Building sustainably is an important part of being the Nordic Community Builder. Together with our customers we continually develop our sustainable offer. In 2018 Peab received a service license in Sweden to build Swan labeled buildings. The first project built under the service license was an elementary school in Vårgårda which will therefore be one of Sweden’s first Swan ecolabeled schools. We are building the sprawling office complex Platinan for Vasakronan in Gothenburg according to LEED certification and aim to achieve the highest level, Platinum. The rebuilding and extension of City Hall in Uppsala is underway and will be certified according to BREEAM, class level Excellent, and in Kiruna the new City Hall Kristallen commissioned by LKAB was completed and certified according to Miljöbyggnad Silver.

In Norway Peab has been commissioned to build Alta Senior Housing that has a strong sustainable profile since it is being constructed entirely in solid wood. The project comprises five buildings and a total area of 24,000 m2.

A LEED certified, 10,660 m2 office building is being built in Jyväskylä, Finland according to Peab’s Business Garden Concept. The idea behind the concept is to create space that is as flexible and adjustable as possible.

NET SALES AND PROFIT

Net sales for 2018 increased by six percent and amounted to SEK 28,340 million (26,726). The increase is spread over all the three countries and there is a greater portion of other building construction for both private and public customers in net sales.

Operating profit for 2018 amounted to SEK 670 million (602) and the operating margin was 2.4 percent (2.3).

ORDERS RECEIVED AND ORDER BACKLOG

Orders received increased during 2018 compared to last year and amounted to SEK 31,007 million (29,280). Included in orders received is the office project Platinan in Gothenburg for Vasakronan worth SEK 2,100 million. Orders received were well diversified in terms of products and geography. In the orders received other building construction compensated for lower volumes in housing projects.

Order backlog 31 December 2018 increased to SEK 29,776 million compared to SEK 26,805 million at the end of December 2017.

Project allocation of order backlog, 31 Dec 2018

Operating profit and margin

Net sales

Per product area, 2018
Per type of operation, 2018
Per customer type, 2018
Per geographic market, 2018