Business area Industry

Business area Industry is a complete supplier of the products and services needed to carry out a sustainable and cost-​efficient construction and civil engineering project on the Nordic market. Industry offers everything from mineral aggregates, concrete, paving and temporary electricity to prefabricated concrete elements. Business area Industry also assists with crane and machine rental, distribution of binder to the concrete industry, transportation as well as recycles production waste and rubble.

Business area Industry is run in six product areas: Mineral aggregates, Paving, Concrete, Transportation and Machines, Rentals and Construction System. All the product areas operate on the Nordic construction and civil engineering market.

Net sales and profit

The first quarter is the seasonally weakest quarter in Industry due to winter weather. Net sales for the first quarter 2020 amounted to SEK 2,215 million (2,230). Net sales increased in Paving and Mineral Aggregates while they were lower in Rentals and Construction System. Even adjusted for acquired and divested units, net sales were unchanged compared to the corresponding quarter last year.

Operating profit for the first quarter 2020 amounted to SEK -66 million (-44) and the operating margin was -3.0 percent (-2.0). The reduction was due to higher costs for maintenance as a result of expanded operations. There have also been additional acquisition costs of SEK 10 million for the takeover of operations from YIT due to a drawn out process. The operating margin for the latest rolling 12 month period was 6.9 percent compared to 7.0 percent for the entire year of 2019.

Capital employed in Industry was at the end of the period SEK 6,399 million compared to SEK 6,223 million at the end of the corresponding period last year.

Orders received and order backlog

Orders received during the first quarter 2020 was lower and amounted to SEK 1,399 million (2,280). Both Paving and Construction System have a lower order received compared to the first quarter 2019. The order backlog on March 31, 2020 amounted to SEK 3,409 million (3,981).

Acquisition of YIT’s Nordic paving and mineral aggregates operations

On July 4, 2019 Peab signed a contract to acquire YIT’s paving and mineral aggregates operations in the Nordic region. The transaction was conditional on approval from competition authorities as well as the fulfillment of certain contractual conditions. At the end of March 2020 the transaction was approved by the competition authorities and the acquisition was finalized on April 1, 2020.

Through the acquisition Peab will expand its presence in Sweden, Norway and Finland and become established in the paving business in Denmark.This will give Peab a unique and market leading position in this business in the Nordic region. The acquisition entails taking over some 1,700 employees, around 200 strategically located quarries along with 63 production asphalt plants in the Nordic region. The operations will be primarily integrated into the companies Peab Asfalt and Swerock and for Peab Asfalt it means establishing operations in Finland and Denmark. The acquisition also provides conditions for further expansion and development in other operations such as Recycling and Concrete.

The transaction is a combination of an asset deal and share purchase. The purchase price is expected to amount to around SEK 3,000 million for a debt-​free business and is fully financed.

The acquired business had net sales of SEK 6,005 million with an adjusted EBITDA of SEK 240 million in 2018.