Nordic supplier focused on the environment

Business area Industry offers everything from mineral aggregates, concrete, paving and temporary electricity to prefabricated concrete elements. Industry also assists with crane and machine rental, distribution of binder to the concrete industry, transportation as well as recycles production waste and excavated soil. The business area is run in six product areas: Mineral Aggregates, Paving, Concrete, Transportation and Machines, Rentals and Construction System.

Business area Industry contains a number of strong brands such as Swerock, Peab Asfalt, Lambertsson, Cliffton, Swecem, Byggelement and Smidmek.

The Business 2021

In recent years Peab has worked to develop our own environmentally adapted ECO-products used in construction and civil engineering projects. Our ECO-concept entails reducing the use of fossil fuels and augmenting circular flows. In addition to the brands ECO-Asfalt and ECO-Betong (ECO-Concrete) we have added ECO-Ballast (ECO-Mineral aggregates), ECO-Prefab and ECO-Stomme (ECO-Frame) to our products available on the market. During the year, ECO-Asfalt was launched in Finland, Denmark and Norway and is thus available throughout the Nordic region. Read more under the section Environment.

Climate adapted paving operations are gaining ground

Peab continues to have a strong market position in Paving in the Nordic region and carried out a number of municipal and state paving contracts as well as work for private customers. A growing number of projects are using ECO-Asfalt and reclaimed asphalt pavement. Paving with reclaimed asphalt pavement saves natural resources. We also reduce transportation since we place mobile asphalt plants close to roadwork. Finland is in the lead where 28 percent of all asphalt production in 2021 contained reclaimed asphalt pavement, followed closely by Denmark. The oil-based binder bitumen is a vital raw material in Paving. In order to replace bitumen we have continued our work on developing asphalt with lignin during the year. Lignin is the natural binder in wood and is a byproduct from forestry. So far we have paved five test stretches with lignin in asphalt in Sweden and one in Finland.

Greater access to circular material

We are always working to ensure access to raw material in Mineral Aggregates. With C&D Recycling Wash Plants we can recycle surplus material from construction and civil engineering projects and in 2021 business area Industry started up its third facility in Jessheim, Norway. The synergies in establishing concrete and asphalt plants and recycling operations close to mineral aggregates are significant.

In ECO-Ballast (ECO-Mineral aggregates) we offer safe products with properties equivalent to virgin mineral aggregates. The raw materials can be byproducts from industrial processes or come from surpluses in construction or civil engineering projects such as excavated soil or blasted rock from tunnel blasting. ECO-Ballast is made of at least 50 percent recycled raw material and is both CE marked and has an environmental and health declaration.

During the year business area Industry made a number of supplementary acquisitions. In Trøndelag Peab acquired Frøseth AS with 40 employees, nine quarries, an asphalt plant and modern machines and equipment. Frøseth has operations in paving, mineral aggregates, transportation and recycling. In 2020 the acquired business had net sales of NOK 104 million. Another acquisition was a concrete and mineral aggregates business with two quarries and a concrete factory near Luleå.

ECO-Betong (ECO-Concrete) factory for the future

Peab is a major Nordic concrete supplier. Concrete production was high in 2021, although it varied from region to region.

During the year we opened a new concrete plant in Malmö where the environmental has been a top priority throughout the process – from operation and production to finished products and shipping. The plant heating system is fossil free, the mineral aggregates and binder partially consist of recycled material and process water is recirculated. The new factory is quiet and dust free which improves the work environment.

In ECO-Betong part of the energy intense cement is replaced with slag which means up to 50 percent less carbon emissions. Concrete containing slag has been thoroughly tested internationally and has many technical advantages. We produce slag under the brand Merit in a completely new plant in Oxelösund, which during the year successively increased production. Investing in new terminals for binder in Oxelösund, Skellefteå and Helsingborg as well as expanding silo capacity in our existing concrete plants makes our progress with ECO-Betong possible. All this reduces our need for cement which is good for the environment and delivery reliability. This is particularly important considering the uncertainty around Cementa’s long-term limestone mining on Gotland. For more information see section Risks and risk management.

More electric vehicles in Transportation and Machines

Part of our climate responsibility is to reduce carbon emissions generated by our vehicles. Therefore during the year we have increased the number of electric vehicles in production. In partnership with Volvo Trucks we are test driving an electric concrete mixer truck and a electric hook lift truck. Using Volvo’s electric trucks lowers carbon emissions compared to diesel driven trucks by more than 80 tons annually per truck, calculated on 8,300 Swedish miles per year. We also have a hybrid roller, around 30 electric light trucks and 15 hybrid concrete mixer trucks. More and more construction machines are run on the fossil free fuel HVO. During the year we also invested in the first electric truck with a platform and hydraulic ramp.

Environmentally adapted range in Rentals

Crane operations in Sweden, Norway and Finland developed well in 2021. We were one of the first companies in the world to use electric mobile cranes on caterpillar tracks. This new crane also reduces noise and exhaust emissions at workplaces. In addition, we have developed more customer-adapted concepts focused on the environment, the work environment and energy efficiency. Investments in fossil free machines increased during the year.

Investment in sustainable frames and prefab

Construction System’s ECO-Prefab and ECO-Stomme (ECO-Frame) have been well received by the market. Investments in green transportation, green electricity in production and rebar made of recycled steel as well as a greater portion of Merit in concrete means we can now offer products with up to 50 percent lower climate impact.

Net sales

Net sales for 2021 amounted to SEK 18,787million (18,720). Adjusted for acquisitions, net sales contracted by one percent compared to last year. Net sales increased in Mineral Aggregates, Concrete and Construction System while they decreased in Transportation and Machines and Rentals. Volumes were lower in Paving during the year but due to a higher bitumen price net sales were on par with last year.

Profit

Operating profit amounted to SEK 938 million (1,105) with an operating margin of 5.0 percent (5.9). Peab acquired YIT’s Nordic paving and mineral aggregates operations on April 1, 2020. The acquired operations have a very clear seasonal pattern where the first quarter is characterized by considerable deficits since the season starts in the second quarter. If the acquisition had taken place on January 1, 2020 profit in the first quarter would have been affected by SEK -297 million. Depreciation of surplus values related to customer contracts in taken over order backlog and fixed assets charged operating profit by SEK -80 million (-189). In the comparable year acquisition costs and transfer tax charged profits by SEK -55 million. The long, cold winter at the beginning of 2021 had a negative effect on profit in the businesses in Industry since the season started later than in 2020.

Capital employed at the end of the year was SEK 9,266 million compared to SEK 8,822 million at the end of 2020. The increase is due to machine investments and business combinations.

Orders received and order backlog

Orders received during 2021 increased to SEK 10,568 million (9,893). In 2020 orders received in the acquired paving and mineral aggregates operations were included as of April 1, 2020.

Order backlog on December 31, 2021 amounted to SEK 3,886 million (3,921).