Better infrastructure drives civil engineering investments

Local market, which represents more than half of net sales in business area Civil Engineering, works with landscaping and pipelines, foundation work and builds different kinds of facilities as well as offers services in power and electricity distribution. Infrastructure and heavy construction builds roads, railroads, bridges, tunnels and ports. Operation and maintenance handles national and municipal highways and street networks, tends parks and outdoor property as well as operates water and wastewater networks. The business area collaborates over regional and national borders to share in the development of core skills and to create scale advantages in larger and more complex projects.

The Business 2021

The markets in Sweden and Norway developed well in both Infrastructure and Local market during the year. The level of orders received has been good in the business area with a well-balanced risk profile. During the year Peab acquired 90 percent of the shares in HGT AS. It’s a general contractor in civil engineering domiciled in Bergen and in 2020 had net sales of NOK 150 million. With this acquisition Peab strengthens its position in civil engineering in Norway.

The markets in Sweden and Norway developed well in both Infrastructure and Local market during the year.

Roads, railroads and infrastructure

There is a substantial need for better infrastructure in the Nordic region, especially because of the sustainability transition going on in our society. Public investments in Nordic infrastructure are therefore high.

During the year Peab signed a number of contracts with the Swedish Transport Administration, among them for restructuring Volvomotet in Gothenburg to augment safety and passability. The project includes widening a kilometer of Hisingsleden into a four lane road with a center guardrail. Peab is also revamping Tingstad Tunnel in Gothenburg for the Swedish Transport Administration. The project includes renovating the entire construction of the tunnel, replacing the surface of the walls and roof as well as repaving the road through it, all with the intention of extending the life of the tunnel. On Highway 35 outside of Linköping more than eight kilometers of road will be broadened and rebuilt into a divided 2+1 highway with a center guardrail. Outside Vara Peab is restructuring E20 along a seven kilo­me­ter stretch of road between Rib­bings­berg and Eling.

Peab has received a number of commissions as part of the public sector’s program to enlarge the railroad system in the Nordic region. In Hallsberg 13 kilometers double track railway and grade separated intersections are being built as part of the Godsstråket through Bergslagen line. Norweigan Bane NOR has commissioned Peab to re­no­vate Re­insvoll sta­tion on the Gjøvik­ line. The project includes building intersection tracks almost 600 meters long that enable two trains with double sets of interconnected carriages to pass each other. In Stockholm Peab is creating better conditions for mass transit. Peab is also building a concrete tunnel for Region Stockholm for the new subway line through the south side of the city.

Peab has been commissioned to rebuild a wastewater treatment plant in Henriksdal, Stockholm. The project comprises a new wastewater tunnel and a new plant along with rebuilding existing basins. Peab has been commissioned to build a new waterworks in Hindås outside of Gothenburg. The new waterworks will deliver 60 liters drinking water per second and contribute to a secure supply of drinking water to the people living in the municipality.

Operation and maintenance

Contributing to roads that are safe for traffic with good passability is essential to a functioning society. During the year Peab won a number of operation and maintenance contracts from the Swedish Transport Administration in, for example, Kungs­bac­ka, Kungälv, SE Värm­land, Väs­terås and Sveg for about 4,500 kilometers of road. This means snow plowing and anti-icing with a 24/7 response in the winter and during the bare ground road season repairing roads, fixing drainage as well as reparation and installation of road signs and road barriers. Peab maintains 23 of 108 operation areas run by the Swedish Transport Administration, making it one of the largest actors on the Swedish market in national road operation.

Ports and seas

Part of the ongoing transition entails more environmentally-adapted freight carriage to and from ports. In recent years Peab has developed expertise and knowhow in port and seaside contracts. In Norwegian Nordland Peab has been commissioned to rebuild four ferry berths to accommodate electric ferries trafficking northern Tysfjord. The project includes expanding docks to receive larger ferries and installing more charging stations with the accompanying technology infrastructure in order to charge electric ferries. Peab is also building a new container port adjacent to Tunadal Port in Sundsvall. In addition to the port the harbor basin will be dredged to allow entrance to larger, deeper ships.

Energy

Energy-related contracts are growing in business area Civil Engineering, particularly in wind power production where Peab is working with a number of installations.

Peab’s subsidiary ATS Kraftservice has signed a number of framework contracts during the year for electricity grid services. In Helsing­borg and Äng­el­holm Peab was once again entrusted by Öresunds­kraft to be their main supplier of service and maintenance, construction and local electricity grid services. In northern Norr­land, Stock­holm, Norr­kö­ping and Skåne Peab renewed contracts with Eon for local network pro­jects. Vattenfall once again entrusted ATS Kraftservice as their supplier of electricity grid services in northern Sweden and the Stockholm region.

Net sales

Net sales increased in 2021 by ten percent and amounted to SEK 14,180 million (12,843). Even after adjustments for acquisitions net sales increased by ten percent.

The increase in net sales refers to Local market as well as Operations and maintenance. Infrastructure and heavy construction had fewer major ongoing road projects in 2021 compared to 2020.

Profit

Operating profit for 2021 amounted to SEK 471 million (391) and the operating margin improved to 3.3 percent (3.0). Earnings in all the product areas were good during the year.

Orders received and order backlog

Orders received during the year increased by 16 percent to SEK 14,819 million (12,752). Order backlog on December 31, 2021 amounted to SEK 13,955 million (13,075). Street work, landscaping and energy rose while infrastructure projects contracted in order backlog compared to the end of 2020. Risk is well spread in order backlog since 85 percent (75) of projects are under SEK 500 million.