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, Swecem, Byggelement and Smidmek.

The business 2022

The high rate of production in the construction and civil engineering industry has had a positive effect on business area Industry during the year. However, the business has been impacted by the dramatic rise in prices for energy and fuel, particularly in Paving and Mineral Aggregates. We continue to strive for greater use of our ECO-products in construction and civil engineering market. There is a growing demand for ECO-Betong (ECO-Concrete) in Sweden and during the year it was launched in Finland. Construction to increase the production capacity of concrete elements in Construction System has begun after a decision to invest close to a half billion Swedish krona. As a consequence of this investment more ECO-Betong (ECO-Concrete) will be used in the future.

Climate adapted paving operations are gaining ground

Peab has a strong position in paving on the Nordic markets and asphalt volumes continued on a high level although they were somewhat lower than in 2021. However, the higher prices for energy, transportation and raw materials had a negative effect on business last year.

A growing number of projects are using ECO-Asfalt. In Sweden all asphalt plants have been converted to ECO-Asfalt and we are in the process of converting the plants in our other Nordic countries as well. Since launching ECO-Asfalt in 2015 carbon emissions from manufacturing asphalt have contracted by around 290,000 tons. Reclaimed asphalt pavement is also being used to a greater extent and has a positive impact on the environment. Our Finnish operations are leading the way in Peab where 33 (30) percent of all asphalt production in 2022 contained reclaimed asphalt pavement, followed closely by Denmark at 31 (28) percent. We established a new asphalt plant in Copenhagen during the year. It is both strategically located for asphalt production and is a hub for raw material freighting between Norway, Sweden and Denmark. All the asphalt plants in Denmark can now use reclaimed asphalt pavement in their production.

In Finland Peab acquired Asfaltti-System Oy, a company that works with manufacturing components and maintenance in the asphalt and concrete industry. The acquisition, with headquarters in Kouvola in southern Finland, strengthens business area Industry’s maintenance and service operations. Asfaltti-System Oy will provide services to Peab’s Nordic operations in both asphalt and factory concrete.

Greater access to circular material

The high rate of production in the construction and civil engineering industry has been positive for mineral aggregates operations, although volumes contracted in the second half of the year.

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 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 100 percent recycled raw material and has both an environmental and health declaration.

Investments in concrete

Peab through Swerock is a major Nordic concrete supplier. Concrete production continued to be high in 2022, although volumes were somewhat lower in Sweden but higher in Finland. During the year we opened a new concrete plant in Oskarshamn, Sweden in order to offer greater access on the geographical market. Concrete operations in Norway were divested in 2022.

In ECO-Betong (ECO-Concrete) part of the cement, which is negative for the environment, is replaced with slag which means up to 50 percent less carbon emissions. Peab produces slag through Swecem under the brand Merit and manufactured more than 140,000 tons in 2022 for concrete suppliers in Sweden. Every ton Merit reduces carbon emissions by 600-800 kilos depending on the replaced cement. This makes us less dependent on cement which is good for both the environment and reliable deliveries. For more information on Cementa’s long-term limestone mining on Gotland see section Risks and risk management.

Climate improved products and efficient logistic solutions

Construction System’s climate improved ECO-Prefab and ECO-Stomme (ECO-Frame) are firmly rooted on the market. It is apparent that the demand for prefabricated concrete elements and frames with less climate impact continues to grow. Therefore during the year Peab decided to make our largest investment ever to automate the manufacture of concrete elements and halve the need for cement. The investment of SEK 450 million doubles Construction System’s production capacity by expanding two plants. During the year Construction System also signed a five year contract with JM for the delivery of prefabricated concrete elements starting in 2023.

Green transition and digitalization in Rentals

Crane operations in Sweden, Norway and Finland developed well in 2022 with high activity on the market. We are working on sustainability in all every aspect of all other rental operations – everything from facilitating renting out electric machines and increasing fossil free transportation to digital services for more resource and energy efficiency. A major achievement during the year was developing a concept for construction barracks that are highly energy efficient and which has led to greater demand for them.

More electric vehicles in Transportation and Machines

Part of our climate responsibility is to reduce carbon emissions generated by our vehicles and machines. Therefore during the year we have continued to increase the number of electric vehicles in production, among them electric trucks, concrete mixer trucks and concrete pumps.

Net sales

Net sales increased by 14 percent and amounted to SEK 21,433 million (18,787). Adjusted for acquired and divested units and exchange rate effects, net sales increased by 12 percent. The increase was primarily related to Paving, Concrete and Construction System. The higher price for bitumen in Paving as well as higher material and energy costs in other product areas have affected prices to customers.

Profit

Operating profit decreased to SEK 747 million (938) and the operating margin was 3.5 percent (5.0).

The operating profit in Paving was lower as a result of higher energy and fuel costs that have not been fully recompensed through higher prices to customers, particularly in Norway, Finland and Denmark. Profitability was also lower in Mineral Aggregates compared to last year, while profitability improved in the other product areas in business area.

Capital employed at the end of the year was SEK 10,807 million compared to SEK 9,266 million at the end of 2021. The increase is mainly explained by the increase in working capital and machine investments as well as the expansion of two production plants for concrete elements.

Orders received and order backlog

Orders received during the year amounted to SEK 12,788 million (10,568). Order backlog on December 31, 2022 was SEK 4,273 million (3,886).