Comments from the CEO

In the beginning of 2019 our business has continued to be stable in a construction market where demand is generally good but conditions vary depending on location and product.

GROUP DEVELOPMENT

Net sales amounted to SEK 11,359 million (11,490) during the period. Operating profit was SEK 265 million (290) which meant an operating margin of 2.3 percent (2.5). Cash flow before financing was SEK 559 million (-390). Net debt was SEK 4,349 million compared to SEK 3,551 million at year-end. Excluding additional IFRS 16 Leases, net debt was SEK 3,534 million

BUSINESS AREA DEVELOPMENT

The first quarter is traditionally weak due to the season, primarily in Civil Engineering and Industry. Net sales in business areas Construction increased compared to the first quarter 2018 with an improved operating margin. Business areas Civil Engineering and Industry showed higher net sales and slightly lower operating profit. Business area Project Development reported both lower net sales and operating profit. Net sales and operating profit in Housing Development were lower due to the fact that fewer housing projects in Norway and Finland were turned over. Property Development continues to develop well with improved profit in our joint venture companies. No property divestitures of significance have occurred in the first quarter 2019.

ORDER SITUATION

The level of orders received in the first quarter 2019 was SEK 11.9 billion (12.9). From a high level of orders received in 2018 the level of orders received has dropped somewhat in all business areas except Industry where there is an increase in Asphalt. Order backlog continues to be high and amounted to SEK 47.5 billion (43.1).

MARKET AND OUTLOOK FOR THE FUTURE

Housing construction and other building construction in Sweden are expected to decrease in 2019. A stable demand for housing and higher other building construction is expected in Norway in 2019. On the construction market in Finland housing is expected to level out and other building construction is expected to increase in 2019. It looks like market conditions in the civil engineering market in Sweden and Norway will continue to be good, primarily driven by public infrastructure investments.

The stable economy in the Nordic countries, low interest rates and a significant underlying need provide a good foundation for the construction market in the foreseeable future. We have a strong order backlog in 2019 and with the wide range of our business we can handle a downturn in some product areas with an upturn in others.

 

Peab has a unique position through our four complementary business areas and all our employees who are welded together by a strong company culture. Our business model creates opportunities throughout the entire value chain in a construction project and provides us with a good platform to deliver comprehensive solutions to our customers. From this foundation we will continue to strive towards our strategic goals to have the most satisfied customers, be the best workplace and the most profitable company in the industry.

Peab started in 1959 which means Peab is 60 years old this year. Guided by our core values we continue our journey of contributing to positive community development on the markets where we are active.

 

Jesper Göransson
CEO and President