After a year characterized by stable development we started 2020 with a well-filled order backlog amounting to SEK 42.5 billion (45.8) and a strong financial position. Keeping in mind the dramatic start of 2020 due to the spread of the coronavirus it is important to underline that our lasting stability is built on a business model where our four business areas complement each other, give Peab breadth and spread risks. This provides us with a unique platform that ensures long-term growth.

We can look back on a 2019 where net sales grew by three percent to SEK 54 billion. Operating profit was unchanged at SEK 2.6 billion with an operating margin of 4.8 percent compared to 4.9 percent for 2018. Our business areas developed stably during the year and adjusted for costs for acquisitions in business area Industry as well as eliminations we strengthened profitability. More construction on property on our own balance sheet and via joint ventures as well as our investments in Industry in machines and operations have affected tied up capital, cash flow and net debt. We have continued to underpin our strategic investments with a high equity/assets ratio amounting to 31.7 percent, well over our goal of 25 percent. The Board proposed an unchanged ordinary dividend of SEK 4.20 per share as well as an extra distribution of all the shares in a real estate company, Annehem Fastigheter, according to a Lex Asea. The extra distribution of Annehem Fastigheter demonstrates Peab’s capacity to, through our four collaborating business areas, generate substantial value for our shareholders. However, as a result of the uncertainty that the coronavirus pandemic caused at its onslaught during the first quarter 2020, the Board chose to withdraw the distribution proposal and delay the extra distribution of Annehem Fastigheter until the uncertainty has subsided and conditions have improved. However, Peab continues to believe that a distribution of the properties is the solution that will over time provide shareholders with the greatest value. The Board’s ambition is to regularly evaluate dividend capacity and depending on developments be able to make a decision on both the ordinary dividend and the right time to distribute Annehem Fastigheter.

Hard to interpret market prospects and greater preparedness

In general, economic development in the Nordic region has slowed down during the year but nonetheless continued low interest rates and a significant underlying need provide a good platform for the construction market over time. However, the spread of the coronavirus changed everything in the blink of an eye. Its effects on people, companies and communities are far-​reaching and governments all over the world are passing relief packages to counteract the negative effects of drastically reduced consumption. At the time of writing this there is considerable uncertainty concerning economic developments, although a significantly weaker business cycle in the next few years is anticipated. How profound and lasting these effects will be globally hinges on how quickly countries can contain the virus while mitigating the negative consequences on national economics.

The short-​term effects of the coronavirus on Peab’s business are limited but how we will be affected in a longer perspective is hard to say. Up to now this development has had relatively little effect on Peab and most of our operations are running. However, we are preparing for a considerably weaker market situation and planning for different kinds of measures to make cost adjustments while ensuring our production capacity, and thereby our competitive capacity on the Nordic construction market. Some of these measures are short-term layoffs and training programs. At the same time we know that in the long run more construction and civil engineering is needed in our Nordic countries. We are also have an advantage since we are the local company with the big group resources. With our four business areas we can collaborate locally while we have access to most of the input goods and personnel we need within Peab. This gives us good control over the construction process and makes us less susceptible to production disruptions.

Everything we do is based on working sustainably

For Peab responsible entrepreneurship means working sustainably. Our sustainable work is based on the UN’s Global Compact (which we support and intend to continue to support), the global goals for sustainable development, our core values, business concept, vision, strategic goals and our Code of Conduct. We established our focus areas and business plan for 2018-2020 taking the sustainable aspects Social, Environment and Economy into consideration. We also identified risks in each sustainable aspect – preventative work we continued to develop in 2019. Our focus areas and business plan goals guide us when we implement and concretize our sustainable work so that every employee can include it in their role and daily work. In order to facilitate working sustainably we have continued to hold extensive programs to raise the competence of our employees in sustainable areas like ethics, the environment, purchasing, the work environment and equal treatment. Every employee at Peab should have the knowledge and tools to do the right thing.

Locally produced community building

Peab is the local construction and civil engineering company with the big group resources. We have a unique business model where 14,000 employees that share the same core values are united in four business areas and together create total solutions for our customers in Sweden, Norway and Finland. What is unique about Peab’s business is that it is so local. We actually call it locally produced. This means that we, through the collaboration of our business areas, can use local resources in the form of our own personnel, our own input goods and local subcontractors to create the most local and sustainable business possible.

Peab’s locally produced community building contributes to sustainable solutions for both people and the environment. Through our own ECO-Betong™or ECO-Asfalt® we can offer innovative, more sustainable material that we produce ourselves, and through recycling and reuse in connection with local projects we can contribute to achieving our environmental goals. Our local, social concept Peab Life then takes our locally produced community building to the next level. Taking a local community responsibility we create opportunities for youths through summer jobs, internships or access to activities and fellowship in community organizations. Over nearly 14 years, our own Peab School has educated more than 1,200 youths in a profession, delivering them to the world of adults and the labor market. Through our various integration projects hundreds of newly arrived immigrants have gotten internships or jobs somewhere in one of the many places Peab works.

Working together for a healthy and safe industry

On our own and together with others in the industry, Peab works actively to ensure our industry is characterized by healthy competition and humane working conditions. The labor market is becoming more and more open and the competition for competent personnel is tough, which creates challenges we have to deal with together. Ethical, healthy conditions must always prevail for both domestic and foreign labor. The same set of rules for everyone, tough demands, openness, transparency and systematic control are all vital parts of this work. An example of an important tool to improve security is the new ID06 card that is required for entrance to any Swedish construction site. The purpose of the card is to counter rogue companies and their use of illegal labor. Peab has pushed for the new rules and was one of the initiators. All our workplaces require ID06.

The industry should be healthy and it should be safe. Anyone at one of our workplaces should be there under safe and secure conditions, in both the physical and the social environment. We are involved in the industry’s new safety training park, monitoring the working environment is just as prioritized as financial monitoring and we put special emphasis on preventative, systematic work. This focus generates results. In 2019 we redoubled the number of significant, preventative risk observations. A risk taken care of is one less potential accident. As a result of this work there have been half as many serious accidents in recent years, which I am extremely happy about. Having the working environment constantly on management’s agenda reminds every employee to put the working environment first on their agenda as well. We have to help each other every day to see the risks in time and always work safely. Nothing is more important. Healthy competition and safe workplaces continue to be prioritized areas in 2020.

The Nordic Community Builder expands by being locally produced

In July 2019 Peab signed a contract to acquire YIT’s paving and mineral aggregates operations in the Nordic region and we finalized the acquisition on April 1, 2020. The acquisition means we increase our presence in Sweden, Norway and Finland and become established in paving in Denmark. This gives Peab a market leading position in this business in the Nordic region. At the same time the importance of industrial operations for the Group will also increase and sensitivity to fluctuations in the business cycle will lessen, which is right in line with our business model of four business areas that complement each other. The expansion is based on the fact that through this deal we strengthen Peab on the local market in the countries where we are active, which creates even better conditions for us to run locally produced community building. I am proud of this unique investment and look forward to further reinforcing Peab’s position as the Nordic Community Builder.

Together we are community builders

In 2019 Peab celebrated 60 years of community building. It gave us a good opportunity to look back and be proud over how that little family company now, after the acquisition from YIT, consists of some 16,000 employees who go to work every day to continue to develop Peab. We have amazing employees, a unique history and strong shared values. We have common goals and a far-reaching business model.

Diversity among our employees, regardless of their nationality, gender, competence or other factors, is crucial to our competitive capacity and something I personally feel very strong about. With our core values as a cohesive factor and driven by engagement we make a fantastic team. For me, this is Peab.