Net sales and profit 

Translated comparative figures after changed accounting principles

As of fiscal year 2020 Peab consolidates projects with Swedish tenant-owned housing associations at the time the final homebuyers take possession of their apartments. This means that Peab recognizes the projects on the balance sheet as work-in-progress under the asset item project development properties, and as interest-​bearing liabilities. Revenue and costs for the projects will be recognized as homebuyers take possession of their apartments. In conjuncture with this change Peab now recognizes all our own developed housing projects in Sweden, Norway and Finland according to the completion method. According to previous principles Peab did not consolidate projects with Swedish tenant-owned housing associations from the time land transfer and turnkey contracts were signed, and revenue and expenses were recognized over time as the projects were successively completed.

To create clarity and enable the market to follow Peab’s development regarding our own housing developments, revenue and expenses will continue to be recognized over time as the projects are successively completed. This applies to the business area Project Development and the unit Housing Development and refers to Swedish tenant-owned housing associations and own single homes, Norwegian condominiums and share housing and Finnish residential limited companies. Revenue and expenses for our own housing developments in Norway and Finland along with our own single homes in Sweden were previously recognized at one point in time in segment reporting as well. Financial key ratios such as capital employed, the equity/assets ratio, net debt and the debt/equity ratio as well as earnings per share are presented in segment reporting with consideration taken to the above prerequisites. Net debt in segment reporting includes the unsold portion of housing projects. Segment reporting is also the model Peab uses for its internal steering.

In conjuncture with changing segment reporting for housing projects Peab has also changed the segment reporting of additional leases according to IFRS 16 (previously operational leases). The change means that leasing fees are recognized in operating profit as a cost linearly over the leasing period in segment reporting for all business areas and application of IFRS 16 for additional leases is only given as a total for the Group.

In the following report amounts and comments are based on segment reporting if not otherwise specified. All comparative figures for 2019 are translated if not otherwise specified. For more information concerning translated comparative figures see note 1 as well as www.peab.se/ifrs.

Annehem Fastigheter

In February 2020 Peab’s Board proposed, in addition to the ordinary dividend, an extra distribution of all the shares in a newly founded company, Annehem Fastigheter, containing all Peab’s wholly owned, fully developed commercial properties. As a result of the spread of the coronavirus, its effects on external circumstances and on financial markets, Peab’s Board decided to withdraw the proposal to the AGM. The Board intends to summon an extraordinary General Meeting to decide on distribution of the real estate company when the situation has stabilized and conditions are more favorable. Annehem Fastigheter is therefore reported as a separate unit outside of segment reporting. Previously Annehem Fastigheter was included in business area Project Development and the unit  Property Development. The change applies per January 1, 2020 and no comparative figures have been translated. For more information, see the section Annehem Fastigheter.

Net sales and profit

Group net sales for the first quarter 2020 amounted to SEK 11,638 million (11,663).

Net sales in business area Construction decreased by two percent. The proportion of housing projects continues to diminish while other building construction for the public sector is growing. Net sales in business area Civil Engineering decreased by five percent and the reduction is largely due to Operation and maintenance. Net sales in business area Industry were relatively unchanged compared to the same period last year. Net sales in Mineral Aggregates and Paving increased while net sales in Rentals and Construction System declined. Net sales in business area Project Development decreased by nine percent and the reduction stems from both Housing Development and Property Development.

Of the quarter’s net sales SEK 2,651 million (2,230) were attributable to sales and production outside Sweden.

Operating profit for the first quarter 2020 amounted to SEK 211 million (266) and the operating margin was 1.8 percent (2.3). In business area Construction the operating margin was 2.2 percent (2.3).

In business area Civil Engineering the operating margin improved and was 1.5 percent (1.2). Operating profit was lower in business area Industry compared to the corresponding period last year. 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 in business area Project Development increased in Housing Development to 8.1 percent (6.7) while the operating profit in Property Development was lower. Some operations in Property Development were affected negatively by around SEK 20 million by the coronavirus pandemic which has led to lower operating profit compared to the first quarter 2019. We have had higher costs in Group functions for, among other things, consultants connected to development of our new digital system.

Depreciation and write-downs for the first quarter were SEK -266 million (-248).

Eliminations and reversal of internal profit in our own projects have affected operating profit during the quarter net by SEK -1 million (-13).

Net financial items amounted to SEK -70 million (10) of which net interest was SEK -3 million (-12). Net financial items include exchange rate differences of SEK -81 million (11). The exchange rate differences have primarily occurred in the accounts as an effect from the revaluation of receivables from subsidiaries in Norway and Finland, and have no cash flow effect.

Pre-tax profit was SEK 141 million (276).

Profit for the period was SEK 121 million (228).

Seasonal variations

Group operations, particularly in Industry and Civil Engineering, are affected by fluctuations that come with the cold weather during the winter half of the year. Normally the first quarter is weaker than the rest of the year.