Public construction compensates when housing slows down

Operations in business area Construction are run via some 150 local offices all over the Nordic region, organized in twelve regions in Sweden, three in Norway and two in Finland. There are specialized housing production units in Stockholm, Gothenburg and the Öresund region. Construction maintenance operations are run in a nationwide organization in Sweden focused on big city regions. Other regions are responsible for all types of construction projects in their geographic area.

The Business 2022

The production rate in construction has been high throughout 2022, although the year was marked by disturbances in the supply chain and price hikes in energy and crucial input goods due to the war in Ukraine. At the beginning of the year the demand for housing was high but it slowed during the second half-year. Demand for public buildings has been good the whole year. The business area had a substantial level of orders received that are well spread across the Nordic region. More and more customers are asking for sustainable construction and buildings that are environmentally and climate certified. We are also transitioning production methods to protect the environment through energy efficient construction sites and more climate adapted transportation and machines.

The production rate in construction has been high throughout 2022, although the year was characterized by disturbances in the supply chain as well as price hikes in energy and crucial input goods.

Major housing shortage but the housing market is slowing

Housing still represents a large part of net sales in the business area. Together with our customers we work to choose more sustainable materials, energy efficient solutions and making production processes more sustainable.

In 2022 Construction received many housing projects all over the Nordic region. Among others, in Enköping Peab is building 160 rental apartments for Genova Property Group. The apartments will be designed according to the NärBo concept, which is Peab’s Swa­n ecolabeled modifiable, cost-efficient and sustainable Building Type Concept. In Norrköping Peab is building 46 apartments for Brf Kronomagasinet in terraced house style. The building is focused on sustainability with electricity from renewable sources, a wooden frame and a varied brick facade so it meshes with the port environment there. In Gothenburg 138 apartments are being built for Stena Fastigheter in the project Trägården stage 2. The project’s sustainability is profiled in the buildings’ frames constructed in a combination of concrete and glulam and facades that will be clad in wood paneling. ECO-Betong (ECO-Concrete) will be used in the situ concrete constructions, the buildings will be heated with district heating generated by return heating from the neighborhood and they will be Swa­n ecolabeled. Peab is also active in northern Sweden where an industrial transition to a more climate adapted society is underway. For example, we have been commissioned to build the block Gladan with 85 apartments and connected garage along with commercial space in Gällivare for LKAB.

In Tromsø, Norway Peab is building the housing project Norheim Terasse with 80 apartments that share an underground garage, roof garden and district heating. Concrete with low carbon impact is used in 50 percent of the Swa­n ecolabeled building’s foundation. Greenhouse gases are monitored in the project and experiences from it will be used in other Peab projects. In Oslo Peab is building the retirement home Tåsenhjemmet. The construction is made of solid wood and climate-improved concrete. Its energy supply will be a combination of solar panels, geothermal heating and heat pump and it will be certified according to BREEAM: Excellent, FutureBuild and NZEB.

In Helsinki seven high-rises with a total of 376 apartments are being renovated in Pihlajisto and Jakomäki for HEKA. Part of the renovation is making the buildings more energy efficient and installing solar panels. In Espoo Peab is building an apartment building with 400 apartments for NREP. The project is permeated with environmental and climate measures and the building will be heated with geoenergy that makes use of surplus heat and solar panels. In addition, parking spaces will be equipped with charging stations for electric cars and the building will be LEED certified.

Government investments in public buildings

Our order books have been filled with all kinds of community buildings in 2022. Peab has reinforced our position as one of Sweden’s largest school builders but we build schools in Norway and Finland as well. Some examples are the new Haganäs School in Åstorp and elementary school in Balsfjord in Norway, and the rebuilding of Särla School in Borås.

During the year Peab was commissioned to build several security classed facilities, among them Berga Jail in Helsingborg and Sörbyn Prison outside Umeå. Peab also completed work on three module buildings with 48 cells at the prison in Borås. All of the projects are for Specialfastigheter, which we have had a framework agreement with since 2019.

Peab is renovating the A Building of the Women’s Hospital at the Helsinki University Hospital. This renovation is part of a renovation program consisting of several stages aimed at modernizing the Women’s Hospital to meet future demands for patient-orientated and cost-effective operations.

Other major projects

Peab has been commissioned to renovate and rebuild the southern part of Sperlingens Backe at Stureplan in central Stockholm. The project is a partnership contract together with the customer Sturegallerian AB that comprises approximately 48,000 m² of the Sturekvarteret. The plan includes renovating and recreating old buildings, new offices and apartments and creating more open space as well as a new entrance to the Östermalmstorg metro station. The entire project will have the highest sustainability certification LEED Platinum.

In Norwegian Senja Peab built and turned over a new, land-based fish farming facility. This includes building service areas and a separate floor on top of the hatchery with diverse functions.

Net sales

Net sales increased by seven percent and amounted to SEK 28,999 million (26,980). The increase is attributable to all countries and is mainly explained by higher costs for material and energy, which has affected prices to customers.

Profit

Operating profit for the year amounted to SEK 629 million (711) and the operating margin was 2.2 percent (2.6). The operating margin declined in all countries. During 2021 and 2022 there have been significant price hikes for material and energy as well as delivery disturbances. They have for the most part been managed by raising customer prices as well as making adjustments and streamlining but since we have not been able to completely compensate cost increases they have had a negative impact on the operating margin.

Orders received and order backlog

Orders received during 2022 were SEK 27,732 million (30,903). Orders received are well spread among products and geographically although the proportion of housing was lower in 2022 compared to last year. Orders received included around SEK 2 billion for the project to renovate and build up the southern section of the Sperlingens Backe block at Stureplan in downtown Stockholm for Sturegallerian AB. Order backlog on December 31, 2022 decreased and amounted to SEK 29,064 million compared to SEK 30,142 million at the end of 2021.