Infrastructure investments positive for civil engineering

Local market, which represents more than half of net sales in business area Civil Engineering, works with landscaping, streets, pipelines, foundation work as well as construction of different kinds of facilities and water and pipeline systems. Infrastructure and heavy construction builds roads, railroads, bridges, tunnels and ports. Operation and maintenance handles national and municipal highways and street networks, tends parks and outdoor property as well as operates water and wastewater networks.

The Business 2023

The civil engineering markets in Sweden and Norway developed well during the year despite the weaker construction market. Public investments and the ongoing climate transition have contributed to a great deal of activity in both local market and infrastructure. There has been a high level of orders received in the business area with a substantial number of projects in varying sizes and many partnering and collaboration projects. At the same time customers are putting increasingly stringent climate and environmental demands into their projects.

There has been a high level of orders received in the business area with a substantial number of projects in varying sizes.

Local market

Business area Civil Engineering has a strong position on the local market in Sweden. A large number of projects, big and small, are carried out every year in different municipalities.

Nordic water and sewer networks as well as wastewater treatment plants are in considerable need of renovation and expansion. Many networks are old and need to be updated and expanded to meet the growing demands in communities. During the year Peab signed several new contracts concerning water and wastewater. Among them are the extension of the water and sewer system in Torsboda Industrial Park in Timrå, extension of the new hydropower plant in Karlshamn, the drinking water pipeline in Skurup and the water and sewer system on Langs in Norwegian Nittedal. In Trollhättan Peab is working on an expansion of the city’s wastewater treatment plant in stages. Within the framework of the collaboration project construction commenced during the year on the so-called Biosteget, a wastewater treatment plant in the mountainside. In future stages a new water treatment plant will also be built.

Two major city development projects are being carried out in Gothenburg, Masthugg Dock and Centralen in collaboration with the development department. Both projects comprise everything from street and water and sewer work to landscaping as well as district heating and electricity.

Peab completed a major city development project in Norwegian Lørensberg during the year comprising roads, parklands, a water and sewer network and a mass transit system.

Roads and infrastructure

There is a substantial need for better infrastructure in the Nordic region, especially considering the ongoing sustainability transition in our communities. Public investments in Nordic infrastructure therefore continue to be high.

Peab was commissioned by the Swedish Transport Administration to rebuild, and build a new stretch of, Highway 27 between Backaryd and Hallabro which will improve the traffic situation, safety and the residential environment. Highway 27 is an important connection from Karlskrona to Växjö and further on to Borås and Gothenburg.

Peab received the commission from the Swedish Transport Administration to restore E6 in Stenungsund after it was destroyed by a landslide. The project is quite extensive and will take time. The completion date of the restoration has not yet been established but the work has the highest priority because the highway needs be reopened for traffic as soon as possible.

In Malmö Styrman Bridge, a bridge in red cement, has been under construction during the year and will stand completed in 2024. It connects the city center with the new city borough Varvsstaden on Kockum’s old historical shipyard.

Peab has been commissioned to build a new bus terminal at Tromsø Airport which is Northern Norway’s largest with 760 daily bus departures. The new bus terminal will contribute to more efficient mass transit and lower greenhouse gas emissions. It will include a new enter and exit driveway, bridges, a district heating plant, waiting room, bus shelters and sanitation buildings.

At Bodø Airport Peab is working together with Avinor in the development and planning stage of constructing new runways. When the partners have agreed on the solutions and target price the implementation phase will begin. At that time the order will be included in Peab’s order backlog.

Ports and seas

Part of the ongoing climate transition entails more environmentally-adapted freight carriage to and from ports. In recent years Peab has developed an expertise in port and seaside projects and has received several new contracts during the year. Among them are projects for extending the docks in Orrskär and at Marenplan in Stockholm and rebuilding Öland Dock in Kalmar and the docks in Vaxholm outside Stockholm.

Peab is rebuilding the lock canal in Södertälje. The project includes replacing Sluss Bridge with a new openable bridge, exchanging the current lock gates for new ones that allow for a broader, longer canal.

Operation and maintenance

During the year Peab won operation contracts in Strömsund, Tingsryd and Södra Gotland for road maintenance from the Swedish Transport Administration for a total of about 3,500 kilometers of federal roads. These will be run by Peab for four years with an option for another two. This means a 24/7 response for snow plowing and anti-icing in the winter and in the bare ground road season repairing roads, fixing drainage and installing road signs and road barriers.

Peab also received several municipal operation and maintenance contracts during the year, among them for winter road maintenance and sand removal in Nacka Municipality and operation and maintenance of streets and parks in Österåker Municipality. The contracts are for seven respectively eight years, including options.

Net sales

Ac­tiv­i­ty in busi­ness area Civil En­gi­neer­ing has con­tin­ued to be high dur­ing the year. Net sales were slight­ly high­er com­pared to the last year and amount­ed to SEK 15,164 mil­lion (14,965). Ad­just­ed for ac­quired op­er­a­tions and ex­change rate ef­fects net sales de­creased by one per­cent.

Profit

Op­er­at­ing prof­it amount­ed to SEK 501 mil­lion (494) and the op­er­at­ing mar­gin was 3.3 per­cent (3.3). Civil En­gi­neer­ing re­port­ed a high and sta­ble op­er­at­ing mar­gin de­spite the ef­fects of high costs for ma­te­r­i­al and en­er­gy on con­tracts re­ceived be­fore the out­break of war in Ukraine.

Orders received and order backlog

Or­ders re­ceived dur­ing the year amount­ed to SEK 15,090 mil­lion com­pared to SEK 14,877 for the last year. Order back­log on De­cem­ber 31, 2023 amount­ed to SEK 13,905 mil­lion (13,939). Roads and other in­fra­struc­ture make up 28 per­cent (30).