Greater need for public sector construction 

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. Other regions run all kinds of construction projects in their geographic area.

The Business 2023

For business area Construction the year 2023 has largely been characterized by a lull in demand for housing construction resulting from high inflation and higher interest rates. Demand for public premises has been good but it has not been able to compensate for the low demand in new production of housing and order backlog has therefore diminished during the year. We have worked continuously to reduce costs and adapt operations to the current market situation. Meanwhile demands from customers for sustainable construction and energy efficient buildings continue to grow.

A positive decision for Peab in the case between Peab and Unibail Rodamco Westfield regarding the contract for Mall of Scandinavia in Solna was handed down on June 30, 2023. After that Unibail Rodamco Westfield petitioned the Swedish Court of Appeal to set aside the judgment in its entirety in a so-​called protest action. During this process the judgement is suspended, which means it cannot be enforced and therefore payment has been deferred. After a thorough legal trial through arbitration lasting nearly seven years Peab cannot see any grounds for a protest action. Peab received the contract for Mall of Scandinavia in December 2010 and the mall was completed and ready for inauguration November 2015. Peab believed it was entitled to compensation for added expenses generated by extensive changes in the project made during the production phase. For details see Other information and appropriation of profit on page 89.

Fewer production-starts in housing projects

Housing represents a large part of net sales in business area Construction, even though demand for housing projects has been considerably lower in 2023. Customers are increasingly aware of the need for sustainable construction and energy efficient buildings. Currently a majority of the buildings built are environmentally certified and provide tenants with better opportunities to live more sustainably, for example by being close to mass transit, having car pools and charging stations as well as safe and pleasant residential environments. For exampel, in Gothenburg 397 apartments were production-started at Högsbohöjd for Stena Fastigheter. The project has a clear environmental profile where the concrete elements are made of ECO-Betong (ECO-Concrete), some material is reused and the buildings will be Swa­n ecolabeled. In Verkkosaar in Helsinki Peab is building two apartment buildings with 65 apartments, a commercial unit and 26 parking spaces. The buildings will be heated with geothermal energy which is energy efficient, economic and reduces carbon emissions.

Public investments in community buildings

During the year the federal agency Specialfastigheter extended the framework agreement with Peab for major construction contracts for another three years. All Specialfastigheter properties are built to meet high security and classified information demands. New police stations in Gothenburg and Malmö as well as the new National Archives of Sweden were production-started under the framework contract.

In Sweden Peab received contracts for fire and rescue stations in Norrköping and Hallstahammar. In Finland Peab will build a new fire and rescue station in Mellungsby in Helsinki. In recent years Peab has built several new swimming pool facilities all over Sweden and in 2023 we received contracts for new pools in Hässleholm, Haparanda and Nacka.

Peab is one of the foremost school builders in the Nordic region. In 2023 some of the orders we received were for construction of a new elementary school in Höllviken and in Lundby outside of Gothenburg as well as the renovation of Kumla School in Tyresö. In Finland Peab is building an extension to a school in Lempäälä and in Vasa Peab is renovating and extending university premises. In Norway, the second preschool in the country to be Swan ecolabeled was completed for Harstad Municipality.

Collaboration early on is vital

Partnership projects where Peab gets involved at an early stage and participates in planning are increasingly common. Some examples of these in 2023 are the collaboration with Jernhusen on a new central station in Gothenburg, with Skellefteå Municipality on the competence center Artic Center of Energy (ACE) on Campus Skellefteå and with Regionfastigheter on the addition of the Infection, Women’s and Neonatal Health Care Center at the Skåne University Hospital in Lund.

A milestone was reached in Peab’s partnership with SSAB when the world’s first building with fossil free steel was inaugurated in Lund. The building is a 6,000 m² industrial plant and the steel was used to produce sandwich panels in sections of the building’s walls.

Net sales

Net sales for 2023 amounted to SEK 27,780 million (28,999). The lower demand for new housing production has not been fully compensated by other types of projects, which is apparent in all the countries we operate in. Housing generated the largest portion of net sales with 39 percent (43).

Profit

The decision in the case between Peab and Unibail Rodamco Westfield regarding the contract for Mall of Scandinavia in Solna (MoS) was handed down on June 30, 2023. The judgement had a positive effect on operating profit of SEK 400 million in the second quarter.

In order to handle the diminished housing market we are streamlining construction production and shifting to other kinds of projects. During the fourth quarter a review has resulted in provisions and write-​downs in housing projects received before the outbreak of war in Ukraine that have been affected by price hikes and are almost completed as well as a number of projects in Norway. All in all this has charged business area Construction by SEK -465 million, of which write-​​​downs of goodwill in Norwegian construction operations amounted to SEK -125 million. Operating profit excl. MoS was SEK 41 million (629) and the operating margin was 0.1 percent. (2.2). Operating profit was SEK 441 million and the operating margin was 1.6 percent

Orders received and order backlog

Orders received during 2023 were SEK 22,779 million (27,732). There is a greater portion of other building construction and a lower portion of housing projects in orders received. Order backlog on December 31, 2023 amounted to SEK 24,469 million (29,064). The portion of housing projects in order backlog has contracted and represented 32 percent (45).