Collaboration – route to meeting targets

The strength in Peab’s business model – and thereby our ability to achieve our targets – grows when our business areas collaborate with each other in the processing chain on the local market. 

In order to further promote value creation after the changes in 2020, which entailed updating our mix of operations and increasing our Nordic presence, Peab revised its strategic targets at the start of 2021. Last year was therefore the first year we worked according to the updated strategy and updated internal and external targets. As of 2021 Peab reports the performance of our business by monitoring nine targets, of which three are financial and six are non-​financial. We particularly want to highlight the external targets and they are subset of internal targets and action plans.

Both the internal and external financial and non-​financial targets are categorized under the strategic targets; most satisfied customers, best workplace and most profitable company as well as the new, fourth strategic target, leader in social responsibility.

All the targets are measured in comparison with the construction and civil engineering industry. For more details concerning each target, please see www.peab.com/targets

Most satisfied customers

We will be a complete community builder that offers total solutions. We create value for our customers through expert and engaged employees.

Best workplace

We will be the obvious choice for anyone who wants to work in the industry. Everyone will be part of safe and including workplaces with good work conditions and opportunities to develop at Peab.

Most profitable company

With our engaged employees we ensure productivity and quality. Through our local presence, and the advantage of our size and mix of operations, we will become the most profitable company.

Leader in social responsibility

As the Nordic Community Builder with a local presence we take responsibility through innovations and making demands concerning the climate and environment, order and correctness in the industry and equal opportunity. Active social engagement in the community and focus on young people’s education are part of our fundamental values.

Most satisfied customers

Satisfied Customer Index (SCI)

Target: > 75 (reported annually)

SCI

It is imperative for a long-​term, sustainable relationship that Peab deliver on its obligations. A satisfied customer is a customer that comes back and is fundamental to our marketing. Our annual customer survey is a measure of how well we are meeting our customers’ expectations while also indicating where there is room for improvement. The Satisfied Customer Index (SCI) is a weighted measure between 0 and 100. This year’s SCI added up to 81 (80), which is a continued good result and higher than our target of 75. Customers’ perception of Peab as priceworthy has developed in a particularly positive direction and regarding our business areas Project Development is notable for its strong development.

Best workplace

Serious accidents

Target: Zero fatal accidents and a contracting trend, rolling 12 months, serious accidents classification 4 (reported quarterly)

Number

Our target of a continuously contracting trend of serious accidents comprises both our own employees and everyone at our workplaces. The number of serious accidents at our workplaces decreased to 28 (39), of which 10 involved our own personnel and 18 involved subcontractors. To achieve our target of a contracting trend in 2022 the number of serious accidents must be under 28.

Best workplace

eNPS

Target: > surpass industry benchmark (reported semi-anually)

eNPS

eNPS (employee Net Promoter Score) measures employee willingness to recommend Peab as an employer on a scale between -100 and 100. The eNPS value should be above the benchmark for the industry (industry and manufacturing). In the autumn survey the eNPS value for the Group rose by five points compared to the previous evaluation and was 24 (19). This is clearly above the Nordic benchmark which is 15 (10). The increase is primarily in Swedish operations while the value in Norway dipped slightly from a high level. The eNPS value rose particularly for female employees and was also slightly higher for skilled workers.

Most profitable company

Operating margin

Target: >6% according to segment reporting
(reported quarterly)

Development of the operating margin is going in the right direction with continued margin improvements in both construction contract operations and housing developments.

*Years 2015-​2018 not translated according to changed accounting principles for own developed housing projects. **Operating margin excluding the effect of the distribution of Annehem Fastigheter (SEK 952 million).

Most profitable company

Net debt/equity ratio

Target: 0.3-0.7 according to segment reporting
(reported quarterly)

Strong cash flow contributed to a net debt/equity ratio of 0.2, which is lower than the target interval of 0.3-0.7.

* Years 2015-2018 not translated according to changed accounting principles for own housing development projects.

Most profitable company

Dividend

Target: >50% of profit for the year according to segment reporting
(reported annually)

Based on Peab’s stable profitability, strong financial position and high level of orders the Board proposes a dividend of SEK 5.00 (4.50) per share.

*Years 2015-​2018 not translated according to changed accounting principles. ** For 2019, no cash dividend has been paid. The value of the distribution of Annehem Fastigheter at the time of the distribution in December 2020 amounted to 97 percent of the profit for the year 2019. *** The proportion is calculated without the effect of SEK 952 million on profit due to the distribution of Annehem Fastigheter. **** Board of Directors’ proposal to the AGM.

Leader in social responsibility

Carbon dioxide intensity: Climate targets for our own production

Tar­get: Re­duced emis­sions of GHG Scope 1+2 (tons CO2e/MSEK) of 60% by 2030 (re­port­ed an­nu­al­ly)

Scope 1 and 2 include direct and indirect emissions from fuel and energy consumption in our own production. The outcome for 2021 reveals that development is going in the right direction since carbon dioxide intensity in our own production has gone down by 40 percent compared to base year 2015. We are well on the road to converting the production we ourselves have control over.

Leader in social responsibility

Carbon dioxide intensity: Climate targets for input goods and purchased services

Tar­get: Re­duced emis­sions of GHG Scope 3 (tons CO2e/MSEK) of 50% by 2030 (re­port­ed an­nu­al­ly)

Scope 3 includes concrete/cement, asphalt/bitumen, transportation and construction equipment services, steel, waste management services and business travel. The outcome for 2021 reveals that development is going in the right direction if only by three percent for input goods and purchased services. This shows the challenge is greater when we are dependent on other parties for a reduction in our carbon footprint. It is therefore vital that we continue to make explicit and stringent demands as well as point out choices that are better for the climate in order to reduce emissions.

Leader in social responsibility

Equal opportunity recruitment

Tar­get: Share of women re­cruit­ed in production: skilled workers (SW) and white-​collar workers (WCW) > percentage of women graduated with, for us, degrees in relevant education (re­port­ed an­nu­al­ly)

Production management and production support (WCW), %
Production and processing (SW), %

The target in equal opportunity recruitment is focused on core skills in production and processing (SW) as well as in production management and production support (WCW). The target for 2021 was achieved for both categories.

How we achieve our targets

Ultimately it’s our 15,000 employees that create value for our customers, society and our other stakeholders and thereby create the conditions we need to achieve our targets. Together we focus on a number of strategic areas to develop our business in line with our business plan and strategies.

Higher processing ratio

Col­lab­o­ra­tion be­tween busi­ness areas rais­es the level of pro­cess­ing in our production. High­ly processed busi­ness is where projects and prod­ucts gen­er­ate rev­enue in several busi­ness areas. Hav­ing a high level of our own ex­per­tise and input goods im­proves steer­ing, ef­fi­cien­cy, qual­i­ty and safe­ty along with en­vi­ron­men­tal­ and other sustainability related performance.

Examples of progress in 2021:

  • Procedures developed for dialogue and collaboration between business areas in our Nordic regions.
  • Clarification of the continuous monitoring of collaboration between business areas through targets and measurements.
  • Complementary acquisitions in Norway in business areas Industry and Civil Engineering.

Operational efficiency

Op­er­a­tional ef­fi­cien­cy com­pris­es ex­pe­ri­ence and de­vel­op­ment, for in­stance, our best prac­tice con­struc­tion meth­ods, con­struc­tion tech­nol­o­gy so­lu­tions and other con­cep­tu­al ini­tia­tives. We take advantage of our years of ex­pe­ri­ence and extensive knowl­edge to promote efficiency in operations.

Examples of progress in 2021:

  • Continued development and work on our predesigned Building Type Concept, NärBo, with a tower block as a complement to the already existing low-rise apartment building. The concept has been very well received by customers and some twenty projects are under production.
  • Development and continued implementation of our installation and construction technology solutions.

Knowledge exchange

Peab’s size makes it pos­si­ble to take ad­van­tage of local ex­per­tise and can have an im­pact from a Nordic per­spec­tive. For instance, we can main­tain a ref­er­ence li­brary or take ad­van­tage of, and co­or­di­nate, spe­cial­ist com­pe­tence like when build­ing swim­ming pool fa­cil­i­ties. Dig­i­tal­iza­tion en­ables ef­fi­cient com­pi­la­tion of in­for­ma­tion and spread­ing knowl­edge.

Examples of progress in 2021:

  • Established cross-functional teams for various product segments such as ports and water, infrastructure, wooden houses, swimming pool facilities and wind power.
  • Completed and launched Group platform (common data warehouse) for efficient knowledge exchange.
  • Adopted new digitalization strategy with focus on usefulness in production.

Innovation and making demands

Our ECO-​products are ex­am­ples of in­no­va­tion. We have de­vel­oped ECO-​Be­tong (ECO-Concrete) by tak­ing a byprod­uct from an­oth­er in­dus­try, pro­cess­ing it and there­by re­duc­ing the ce­ment in our con­crete. We have con­vert­ed most of our as­phalt plants in Sweden to fos­sil free fuel for the manufacture of ECO-​As­falt and this process will continue in our other countries. We have cre­at­ed cir­cu­lar raw ma­te­ri­als such as re­cy­cled min­er­al ag­gre­gates.

In order to progress we also have to work with mak­ing de­mands on sup­pli­ers, car­ri­ers, politi­cians, au­thor­i­ties and cus­tomers. We have to strive for reg­u­la­tions that aug­ment re­cy­cling and pro­cure­ments that promote in­no­v­a­tive sus­tain­able so­lu­tions.

Examples of progress in 2021:

  • Greater use of Merit (that replaces cement) in concrete in our production plants.
  • Launched ECO-Asfalt in Finland, Norway and Denmark.
  • Launched ECO-Prefab and ECO-Ballast (ECO-Mineral aggregates) in Sweden.
  • All operations that produce prefabricated concrete elements have been converted and can offer products with ECO-Betong (ECO-Concrete).
  • Established Group function for R&D.

Investments within Project Development

Our fi­nan­cial po­si­tion en­ables us to fur­ther de­vel­op our project de­vel­op­ment busi­ness. We have the breadth and will de­vel­op the prod­ucts cur­rent­ly in de­mand on the mar­ket. We have a de­vel­op­ment rights port­fo­lio both on our own bal­ance sheet and in joint ven­tures. The busi­ness will there­fore pro­vide a sta­ble flow of our own hous­ing de­vel­op­ment projects. We will work with de­vel­op­ment projects that can be di­vest­ed on the in­vest­ment mar­ket.

Examples of progress in 2021:

  • Acquired property and development rights with exploitation possibilities.
  • Founded joint venture with SkiStar to develop mountainside locations.
  • Sold a number of rental apartment projects.
  • Started new building projects.