Business area Industry

Profitable growth in a good construction and civil engineering market

Key ratios

2018 2017 2016
2018 2017 2016
Net sales, MSEK Nettoomsättning, Mkr 13,284 12,761 12,161
Operating profit, MSEK Rörelseresultat, Mkr 977 867 753
Operating margin, % Rörelsemarginal, % 7.4 6.8 6.2
Orders received, MSEK Orderingång, Mkr 5,111 5,152
Order backlog on 31 December, MSEK Orderstock per 31 december, Mkr 2,246 2,533
Capital employed on 31 December, MSEK Sysselsatt kapital per 31 december, Mkr 6,432 5,781 5,416
Number of employees on 31 December Antal anställda per 31 december 3,484 3,452 3,385
Concrete, thousands of m3 1) Betong, tusentals m3 1) 1,294 1,221 1,101
Asphalt, thousands of tons 1) Asfalt, tusentals ton 1) 2,706 2,619 2,589
Gravel and Rock, thousands of tons 1) Grus och Berg, tusentals ton 1) 14,681 14,799 13,109
1) Refers to sold volume

Business area Industry is a complete supplier of the products and services needed to carry out a sustainable and cost-efficient construction and civil engineering project on the Swedish, Norwegian and Finnish markets. Industry offers everything from gravel and rock material, concrete, asphalting and temporary electricity to prefabricated concrete elements. Business area Industry also assists with crane rental, import and distribution of binder to the concrete industry, machines and transportation as well as recycles production waste.

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, Swecem, Skandinaviska Byggelement, Glacell, ATS Kraftservice, Lättklinkerbetong, Smidmek, Virtanen, Kranor and Ferdigbetong.

With local roots the companies take on jobs big and small. The business area is run in six product areas: Asphalt, Concrete, Gravel and Rock, Transportation and Machines, Rentals and Construction System.

THE BUSINESS 2018

The Nordic construction and civil engineering market developed positively in 2018 although there was a long, hard winter in the beginning of the year that primarily affected product areas Gravel and Rock and Asphalt. A high production rate the rest of year contributed to strong growth in 2018.

Development through complementary acquisitions

Asfaltpartner i Väst Produktion AB (Aspa), with operations in Västra Götaland, concentrated to Gothenburg and Borås, was acquired during the year as part of Peab Asphalt’s strategy to be the best asphalt supplier in West Sweden. We strengthened our position in Norrland as an electricity supplier through the acquisition of Hoffmans Entreprenad AB.

Volumes in Swerock continue to be good

Swerock’s markets in Sweden, Norway and Finland continued to be good in 2018. Concrete production was in high gear during the year despite a slowdown in housing production in Sweden, primarily in the big city regions. Contracting volumes in housing were compensated by other building construction and civil engineering projects. An environmentally friendly concrete factory was launched in Kållered. The factory’s heating system is run on bio-oil and has a closed water system.

In Finland a new concrete factory opended in Esbo outside Helsinki and Swerock was established as a brand and it was well received on the market.

Production in Gravel and Rock has been stable with high volumes in several of our quarries. Establishing sites that include Concrete, Asphalt and Recycling strengthens our position on the market and creates better synergies in production. Opening new quarries in strategic places continues to be a priority.

Vehicles and machines in Transportation and Machines have been in great demand in 2018. Transportation and Machines includes Recycling which creates new sustainable material from residue products generated by construction and civil engineering projects and by industrial processes. This is accomplished by generating little waste and environmentally recycling what is produced. This includes handling and sorting polluted soil, masses, concrete and asphalt residue along with construction and demolition waste. Recycling volumes continued to grow in 2018.

Record volumes for Asphalt

Asphalt operations continued to develop positively with stable and strong production in the asphalt plants. Contracts with the Swedish Transport Administration, Swedavia, and a growing number of municipalities have put Asphalt in a strong market position. Establishment of our own Polymer Modified Bitumen (PMB) factory in Västerås during the year guaranteed the quality and supply of binders. Our well-established laboratories make sure that product quality is high and we develop new products and production methods.

In 2018 the concept ECO-Asfalt® represented more than 95 percent of Peab’s total production in stationary plants in Sweden. Carbon dioxide emissions are estimated to have been reduced in 2018 by 42,000 tons (39,000), which is equal to approximately 32,000 cars (30,000) driving 1,300 Swedish miles each (100 g COequiv./km). Read more about ECO-Asfalt® and our other environmental and sustainable initiatives in the section Environment.

Strategic new sites and greater efficiency in Construction System

Streamlining operations in Construction System continued in 2018. Production has been concentrated to fewer units and localized closer to our customers in order to better meet demand. During the year we invested in increased capacity in the hollow core slab factory in Hallstahammar and Smidmek expanded its operations in the Gothenburg area which resulted in several new, major orders.

High demand in Rentals

Lambertsson showed profitable growth during the year and the unit that grew most was traffic equipment. The number of depots rose with new establishments in Borås, Solna, Nacka and Trollhättan. The increasing focus on sustainable offers has led to higher investments in so-called green machines to reduce emissions. During the year the digital service LambertssonOnline was launched. This digital tool visualizes ongoing machine rentals, sorts, filters and notes end dates directly in cell phones. Activity in crane operations in Sweden (Lambertsson), Norway (Kranor) and Finland (Virtanen) was very high in 2018.

NET SALES AND PROFIT

Net sales for 2018 increased by four percent and amounted to SEK 13,284 (12,761).The favorable construction and civil engineering markets have had a positive effect on every product area. Even after adjustments for acquisitions and divestments net sales increased by four percent. The increase in net sales was generated in all the product areas except Transportation and Machines where net sales contracted.

Operating profit for 2018 amounted to SEK 977 million (867). The operating margin improved to 7.4 percent (6.8). The increase in operating profit is primarily due to Asphalt as well as improvements in Construction System.

Capital employed in Industry at the end of the year amounted to SEK 6,432 million (5,781). The increase stems primarily from more investments in machines.

Orders received and order backlog

Orders received during 2018 amounted to SEK 5,111 million (5,152). Order backlog on 31 December 2018 amounted to SEK 2,246 million (2,533).

Net sales

Per product area, 2018
Per geographic market, 2018
Share of net sales, 2018

Operating profit and margin

Capital employed per product area, 31 December 2018