Internal collaboration is the road to profitability

Four collaborating business areas

Peab has a robust business model. With our four business areas we control a large part of the value chain which enables us to increase the level of processing within our own operations. It’s all about using our leverage in the vertical processing chain – from acquiring land to pro­duc­tion and operation – through good in­ternal collaboration, our own pro­duc­ts, technical solutions and business con­cepts.

Our purchasing function and our Procurement Council are two important functions for promoting the internal level of processing, as are discussions with existing and potential customers at an early stage. Our extensive local presence throughout the Nordic region sets the stage for higher internal processing and strengthens our ability to deliver where there is growth. To achieve this we can adapt our mix of operations, based on our four business areas, to local conditions and take advantage of our size and experience. We are continually making supplemental acquisitions to develop our business in this direction. In 2022 this included acquisitions in Fin­land and Norway in business area Civil Engineering and in business area In­du­stry as well as establishing joint ventures in business area Pro­ject­ Development in Fin­land. In addition to taking total responsibility for projects, we also work on parts of larger pro­jects where, in that case, every business area operates on its own.

Meanwhile, we have to continually strive to be more efficient in every aspect of our business. Our efforts to increase di­gi­ta­li­zation is a vital component in dri­ving our efficiency forward. We work continuously on streamlining our or­ga­ni­za­tio­n and during the year we in­ten­si­fi­e­d this endeavor due to the developments in the economy.

Three financial targets

Within the framework of this stra­te­gic target most profitable company, we measure our business through three fi­nan­ci­al targets based on segment re­porting over a nor­ma­l business cycle. They are that the operating margin will exceed six percent, the net debt/equity ratio will be in the interval 0.3-0.7 and that dividends will be at least 50 per­cent of profit for the year.

With our four business areas we control a large part of the value chain which enables us to increase the level of processing within our own operations.

The target for the operating margin is based on the prerequisites Peab had after the acquisition in business area In­du­stry and the distribution of the property portfolio in the form of An­ne­hem Fas­tig­he­ter – both during 2020 – as well as the successful work in the Group over several years to stabilize and strengthen the operating margin. The target also comprises various benchmarks for the operating margin per business area, with higher mar­gi­n demands on the ca­pi­tal in­ten­si­ve business areas In­du­stry and Pro­ject­ Development.