Nordic supplier focused on the environment

Business area Industry offers everything from mineral aggregates, concrete, paving and temporary electricity to prefabricated concrete elements and frame assembly. Industry also assists with crane and machine rental, distribution of binder to the concrete industry, transportation as well as recycles 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 brands such as Swerock, Peab Asfalt, Lambertsson, Swecem, Byggelement and Smidmek.

The Business 2023

The Nordic construction market has been impacted by the weak housing market while demand on the civil engineering market has continued to be stable. As a supplier to the construction and civil engineering market, business area Industry has also seen less activity in 2023 in the form of lower volumes and fewer rentals. Peab’s ECO-products are essential to our efforts to reduce greenhouse gases. ECO-Betong (ECO-Concrete), ECO-Prefab and ECO-Asfalt are examples of products that are gaining terrain on the market and in demand from customers throughout the Nordic region. The ongoing conversion to electric vehicles and machines is also a vital part of Peab’s contribution to sustainable construction.

Focus on climate-adapted paving

Peab has a strong position in paving on the Nordic markets. Asphalt volumes have contracted as a result of reduced public budgets for road maintenance while the price level has been higher due to continued high prices for raw material, energy and fuel.

A growing number of projects are using ECO-Asfalt which is now available throughout the Nordic region. Our Danish and Finnish operations are leading the way in production with reclaimed asphalt pavement, with Sweden close behind. In Denmark reclaimed asphalt pavement is at 35 (31) percent and in Finland 31 (23) percent. We carried out the first asphalt paving with only electric machines like electric pavers, roller and trucks in Järfälla, north of Stockholm.

Greater access to circular material

We are always working to ensure access to raw material in Mineral Aggregates. We have our own quarries strategically placed throughout the Nordic region and C&D Recycling Wash Plants that recycle surplus material from construction and civil engineering projects. The C&D Recycling Wash Plants contribute to Peab’s climate work and sustainable building by preventing waste creation and promoting circular flows. During the year we electrified the C&D Recycling Wash Plant in Sundsvall regarding sorting excavated soil to further climate-adapt the recycling process.

In ECO-Ballast (ECO-Mineral aggregates) we offer 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 has both an environmental and health declaration.

ECO-Betong (ECO-Concrete) is gaining ground

Peab through Swerock is one of Sweden’s largest concrete supplier and is also in Finland. As a result of the weaker construction market volumes contracted during the year.

Customers’ demand for ECO-Betong continues to grow. In ECO-Betong part of the cement, which is negative for the climate, is replaced with slag which means up to 50 percent less carbon emissions. Peab produces slag under the brand Merit and manufactured more than 162 (141) thousand tons in 2023. 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.

Peab opened a new accredited concrete laboratory in order to continue to develop concrete with lower climate impact while maintaining the same quality. Together with business area Construction tests have been conducted with 60 percent of Merit in the concrete mix with good results.

Increased production of prefab products

Construction System’s climate improved ECO-Prefab and ECO-Stomme (ECO-Frame) are firmly rooted on the market. Progress has continued during the year on Peab’s investment of around SEK 500 million to automate the manufacture of concrete elements and halve the need for cement. The new plant in Ucklum was completed last fall and the one in Hallstahammar began operating at the beginning of 2024. This doubles Construction System’s production capacity and the two plants are now complete suppliers of highly industrialized products with lower climate impact. The investment also enables production of large flat concrete bases, which makes production more efficient for the construction industry’s actors.

Rental operations in transition

Due to lower activity in construction rentals in Peab’s rental operations have decreased. Transition is progressing by renting out more electric machines, and increasing fossil free transportation and digital services for more resource and energy efficiency.

More electric vehicles in transportation and machines

Part of our climate responsibility is to reduce carbon emissions generated by our vehicles and machines. During the year we continued to invest in electric vehicles in production as well as carry out tests in different hybrid and electric machines. In addition to lowering carbon emissions this improves the environment for both drivers and the surroundings.

Net sales

Net sales for the year decreased by seven percent and amounted to SEK 19,962 million (21,433). The reduction is related to the product areas paving and concrete. Adjusted for acquired operations and exchange rate effects net sales contracted by eight percent.

Profit

Operating profit improved to SEK 962 million (747) and the operating margin was 4.8 percent (3.5). The improved operating margin is mainly due to better earnings in paving. The continued high energy and fuel prices have been handled through higher prices to customers as well as adapting and streamlining operations. Operating profit for the year was lower in rentals due to a weaker construction market.

Capital employed at the end of the year was SEK 10,699 million compared to SEK 10,807 million at the end of last year.

Orders received and order backlog

The level of orders contracted during the year and amounted to SEK 11,186 million (12,788). The reduction is primarily due to Peab being more selective about the tenders paving in Norway submits. Order backlog on December 31, 2023 was SEK 3,954 million (4,273).