Prepared for the future

When we summarize 2023 we can conclude that the dra­mat­ic de­cline in the Nordic hous­ing mar­ket af­fect­ed Peab pri­mar­i­ly in busi­ness areas Project De­vel­op­ment and Con­struc­tion. This has resulted in an intensive effort in busi­ness area Con­struc­tion to shift operations from housing projects to other kinds of construction projects. On the other hand Civil En­gi­neer­ing, paving and pub­lic building con­struc­tion have been highly active and de­vel­oped well. At the end of the year we streamlined operations in construction production, hous­ing de­vel­op­ment, rental op­er­a­tions and cen­tral sup­port func­tions in order to be well-equipped to han­dle both a con­tin­ued weak hous­ing mar­ket and meet a grow­ing mar­ket.

Group net sales con­tract­ed by seven per­cent in 2023 and amount­ed to SEK 59 bil­lion. Op­er­at­ing prof­it amount­ed to SEK 1.9 bil­lion and the op­er­at­ing mar­gin was 3.2 per­cent (4.3). At the same time the variety of commissions, project sizes and geographies in the Peab Group, as well as the division between private and public sector customers, continues to be good. All this contributes to spreading the risks in our business and increase stability. This is also proof positive that Peab’s broad busi­ness model with four busi­ness areas and local roots close to customers enables us to meet fluctuating market conditions well.

Varied target outcome

The outcome of our nine external targets, financial and non-financial, was varied and impacted by the rather challenging market conditions. We achieved our tar­gets re­gard­ing the Cus­tomer Sat­is­fac­tion Index, rec­om­mend Peab as an em­ploy­er (eNPS) and equal op­por­tu­ni­ty re­cruit­ment in jobs close to pro­duc­tion. It is gratifying that our customers and employees continue to have such great confidence in Peab. We also reached our tar­get con­cern­ing se­ri­ous ac­ci­dents in 2023, al­though the level is still too high. The re­duc­tion in car­bon diox­ide in­ten­si­ty is going ac­cord­ing to plan for our 2030 tar­gets. We are well on the road to con­vert­ing the pro­duc­tion we our­selves have con­trol over. The chal­lenge is greater when we are de­pen­dent on other par­ties for a re­duc­tion in our car­bon foot­print and we work intensively with other actors to reduce emissions from input goods and purchased services.

At the same time the variety of commissions, project sizes and geographies in the Peab Group, as well as the division between private and public sector customers, continues to be good. All this contributes to spreading the risks in our business and increase stability.

Re­gard­ing our fi­nan­cial tar­gets, we fell short of our op­er­at­ing mar­gin target to sur­pass 6 per­cent. In 2023 the op­er­at­ing mar­gin was 3.2 per­cent. Our sec­ond fi­nan­cial tar­get, the net debt/eq­ui­ty ratio, was 0.6 at the end of the year, which is in­side the tar­get in­ter­val 0.3-0.7. We are in­tense­ly fo­cused on cash flow and net debt, and re­port­ed sig­nif­i­cant im­prove­ments in these at the end of 2023. The Board pro­poses Peab’s An­nu­al Gen­er­al Meet­ing de­cide on a div­i­dend of SEK 1.50 per share. This is equiv­a­lent to 30 per­cent of prof­it for the year, which is lower than our fi­nan­cial tar­get of 50 per­cent. The proposal is, however, con­sid­ered bal­anced based on Peab’s order sit­u­a­tion, earn­ing ca­pac­i­ty and fi­nan­cial po­si­tion.

Clear sustainability priorities

The non-financial targets are an expression of the responsibility we take and therefore define our material sustainability aspects as well. As a leading Nordic community builder we have a big impact – and thereby a big responsibility. This responsibility entails striving to choose the most sustainable way forward and driving sustainable development in our value chains and in the industry, and our targets are aimed at achieving this. In 2045 we will be climate neutral and along the way we have set two targets for carbon dioxide intensity by 2030. The matter of materials is key here and our own ECO-products are vital to achieving this target. We will also make use of all the competence society has to offer and ensure that our capable employees can work in safe and developing environments. We have therefore set targets for both equal recruitment and workplace accidents. In 2023 we started The Construction Year which is a trainee program for young women who want to try working for Peab in construction and civil engineering production. The first round was highly successful with thousands of applicants. The Construction Year is one of our activities to promote equality in the industry and there will be a new round of the program with new female trainees in 2024. With the same intention of making use of all the competence society has to offer we have been running independent high schools since 2006 through the Peab School.

We also strive to make our industry safe and sound, working for both healthy competition and governance throughout the supply chain. We actively work for our industry to be open, play fair and have humane working conditions. We have well-defined specifications, particularly concerning climate matters, and we collaborate with other actors in our industry. Working together and sharing solutions leads to finding the most long-lasting, sustainable ways forward.

Our work is based on the UN Global Compact which we support, and the 17 global goals for sustainable development as well as Peab’s Code of Conduct, core values, business concept, mission and strategic targets. Business plans are important and guide employees in realizing our sustainability aspects and incorporating them into their roles and daily operations. We have adopted a new business plan for the period 2024-2026 that clearly stakes out this intention. In addition, we have continued with our educational programs in areas like ethics, the environment, purchasing, the work environment and equal treatment while also preparing for the incoming sustainability directives CSRD and CSDDD.

With the future in mind

Mar­ket circumstances were challenging in 2023 and the prospects for the Nordic con­struc­tion mar­kets indicate a downturn in Swe­den and Fin­land with un­changed lev­els in Nor­way in 2024. The hous­ing mar­ket is ex­pect­ed to con­tin­ue to de­cline while civil en­gi­neer­ing mar­kets are ex­pect­ed to be sta­ble. Re­gard­ing hous­ing, hard­ly any new projects are start­ing up on the mar­ket. Con­sid­er­ing that there is still an un­der­ly­ing and growing need for hous­ing in the Nordic re­gion, the dras­tic re­duc­tion in hous­ing con­struc­tion is not good. It is vital to find a so­lu­tion to the long-​term man­age­ment of sup­ply­ing hous­ing, par­tic­u­lar­ly in Swe­den. In the meantime, Peab has a well-​dimensioned de­vel­op­ment rights port­fo­lio in at­trac­tive lo­ca­tions and in an­tic­i­pa­tion of mar­ket re­cov­ery we are fur­ther de­vel­op­ing and prepar­ing projects for start-ups in the fu­ture.

I want to ex­press a heart­felt thanks to all our employees, who con­tin­ue to de­liv­er quality to our cus­tomers day after day and thereby strength­en Peab and society. Every day they make local community building possible, no matter what the market circumstances are. Thank you so much!

I feel confident about the future. Peab’s busi­ness model with four busi­ness areas and local roots has served us well in good and hard times alike. We take ad­van­tage of the op­por­tu­ni­ties the current mar­ket provides while we in various ways prepare for making the most of future business opportunities. We build tomorrow’s sustainable communities aided by our broad expertise and in cooperation with the world around us.