Increased demand for sustainable construction

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 eleven 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 2019

Housing construction in Sweden continued to contract in 2019 while other building construction increased. A clear, pervading trend in construction projects is that more and more customers want buildings to be environment and climate certified.

Peab is one of Sweden’s largest housing construction companies and homes represent a substantial part of net sales in the business area. One example among all the housing projects underway during the year is the construction of 163 energy efficient apartments for rent for Enköpingsbostäder. The apartments will be Swan ecolabeled and the goal is that energy consumption in the building will amount to a maximum of 45 kWh/m2 per year.

Several office buildings all over Sweden have been under construction in 2019. The Point at Hyllie station in Malmö was completed at the end of 2019 and is with its 110 meters is the highest office building in the Öresund region. Peab’s ambition is to certify The Point according to Miljöbyggnad Gold. The office building Gårda Vesta will be Gothenburg’s highest when it is ready in the summer of 2021. This building will be certified according to BREEAM and the American standard Well Building. Peab is also building the big office block Platinan for Vasakronan according to LEED certification with the goal of achieving the highest level, Platinum. Platinan is expected to be ready in the summer of 2022.

Peab has had three of its own office buildings under construction in 2019. Peab Center Stockholm in Ulriksdal opened in November. Energy consumption is half of BBR’s (Boverket’s building regulations) requirements and the building is planned for BREEAM certification, level Very Good. Peab Center Malmö was completed in the beginning of 2020 with occupation planned for March 2020. The building was constructed according to Miljöbyggnad Silver. Construction of another Peab office building according to Miljöbyggnad Silver began in Helsingborg in 2019.

The need for new public buildings continues to be considerable. Peab is building a service building for Malmö Hospital and in Borås we continue to work on the renovation, extension and new construction of the psychiatric ward, infection ward and laboratory at Södra Älvsborg Hospital. New psychiatric offices are being built in Kalmar for Region Kalmar County. In December 2019 Peab finished building an elementary school in Vårgårda, the first project that was completed under the business area’s Nordic Swan Ecolabel licence.

During the year we started on the renovation and extension of the Members of Parliament Building in the middle of Stockholm. The total renovation of Medborgarhuset in Södermalm is progressing and it is expected to open its doors to the public in the spring of 2020. A nationwide blanket contract was signed with federal Special Properties covering major construction projects worth more than SEK 100 million. Construction Service, which received three new national customers; Skandia Fastigheter, Moderna Försäkringar and the Swedish Courts, is an important component in the business area’s aftermarket offer.

The Norwegian economy continued to be strong with a stable demand for housing and public premises. In Tønsberg in southeast Norway Peab was commissioned by Selvaag Bolig to build 64 homes with parking and commercial space. During the year Peab completed the new construction of Tromsøbadet in Nordnorge. The ongoing project Skir, also in Tromsø, contains 180 homes and will be ready at the end of 2021. The renovation and extension of Eikeli High School in Bærum near Oslo was launched in 2019. The building is going to be a certified BREEAM Excellent building and a Plus-Energy Building with innovative energy storage. This means the school will produce more electricity than it uses. The project will be carried out as a fossil-free construction site. In Oslo the work continues on our own developed apartments going up on Carl Berner Torg. In the autumn of 2020 there will be 111 homes ready for occupation. This is the first Peab project with a completely digitalized construction site and it will be certified BREEAM Very Good.

Peab is represented in most of the larger towns in Finland and construction operations have grown during the year. Housing production has not changed compared to previous years while other building construction has increased. In Helsinki our own developed office building Ultimes Business Garden II with 7,600 m² rentable office space was completed. Our own housing development project Goldfinger with 109 apartments in Helsinki will be completed in the beginning of 2020. In Helsinki the housing projects Golden Eye with 82 homes and Sumppari with 128 homes were launched during the year. Peab was commissioned to build another hospital for the real estate company Seinäjoen Terveysteknologiakeskus, in Seinäjoki. The project is expected to be completed in 2021.

Net sales and profit

Net sales for 2019 increased by four percent and amounted to SEK 29,416 million (28,340). The increase is spread over all the three countries. There continues to be a greater portion of other building construction for both private and public customers in net sales.

Operating profit for 2019 amounted to SEK 713 million (670) and the operating margin was 2.4 percent (2.4).

Orders received and order backlog

Orders received decreased in 2019 to SEK 26,155 million (31,007). Included in the comparable year is the office project Platinan in Gothenburg for Vasakronan worth SEK 2,100 million, which has a long production time. Orders received are relatively well diversified in terms of products and geography.

Order backlog 31 December 2019 was SEK 26,928 million compared to SEK 29,776 million at the end of December 2018.