Business area Project Development

Housing development

April – June 2017

Continued strong demand on the housing market has had a positive effect on both net sales and operating profit for the second quarter. Operative net sales increased by 43 percent in Housing Development and amounted to SEK 1,916 million (1,337). Operative operating profit increased to SEK 157 million (92) and the operative operating margin improved to 8.2 percent (6.9).

The number of start-ups of our own developed homes has increased during the second quarter and amounted to 968 units (623) with a good geographic spread where most of the production starts are outside of the capital city areas. The number of sold homes was 669 (457).

Development rights at Kvarnholmen in Nacka were acquired in the second quarter for SEK 600 million from the half-owned company Sicklaön Bygg Invest AB. The development rights allow Peab to develop attractive homes in Kvarnholmen in the coming years.

January – June 2017

Continued strong demand on the housing market has had a positive effect on both net sales and operating profit for the first half-year. Operative net sales increased by 31 percent in Housing Development and amounted to SEK 3,460 million (2,637). Operative operating profit increased to SEK 285 million (166) and the operative operating margin improved to 8.2 percent (6.3). The operative operating margin improved to 9.2 percent during the latest rolling 12 month period compared to 8.5 percent for the entire year of 2016.

The number of start-ups of our own developed homes has increased during the first half-year and amounted to 1,517 units (1,165) with a good geographic spread. The number of sold homes during the first half-year 2017 was 1,184 (953). The number of own developed homes in production at the end of the period was 5,169 (4,000). The level of sold homes in production was 70 percent compared to 69 percent at year-end 2016. The number of repurchased homes per 30 June 2017 was 37 (61).

Development rights for housing

Property development

Net sales and operating profit from operations are derived from acquisitions, development, maintaining and managing wholly owned property, shares in the result from partly owned companies as well as capital gains/losses from the divestiture of completed projects and shares in partly owned companies.

April – June 2017

During the second quarter 2017 net sales were SEK 106 million (1,031) and operating profit was SEK 5 million (102). No major property transactions have occurred during the quarter. Partial sales of properties in Hyllie, Malmö for an underlying property value of SEK 777 million and capital gains of SEK 104 million were included in the second quarter 2016.

Profit from partially owned companies has improved compared to the corresponding quarter last year.

January – June 2017

During the first half-year 2017 net sales were SEK 765 million (1,107) and operating profit was SEK 95 million (106).

Operating profit included capital gains of SEK 75 million from the divestment of Peab’s participation in joint venture companies to Catena. Peab and Catena have for a long time collaborated on four development properties in Skåne owned as 50/50 companies, which were divested during the first quarter. In December 2016 Peab and Fabege agreed that Peab would in January 2017 sell a number of assets in Arenastaden and Ulriksdal in Solna. The transactions took place on 12 January 2017 and the divestments in Ulriksdal affected net sales during the first quarter by SEK 577 million. The transactions had no net effect on profit since the divestitures in Ulriksdal had a positive effect of SEK 180 million on profits while the divestitures of the assets in Arenastaden had a negative effect of SEK 180 million. The second quarter 2016 included the partial sales of properties in Hyllie, Malmö with an underlying property value of SEK 777 million and capital gains of SEK 104 million.

Profit from partially owned companies has improved compared to the corresponding period last year.

In capital employed in Property Development operations property for a booked value of SEK 923 million are included and consist in part of an office building in Helsinki, Finland and office buildings in a business park in Ängelholm. Investment property amounts to SEK 792 million and consists primarily of a hotel in Västerås under construction, commercial premises in Sigtuna and Märsta as well as a business park in Ljungbyhed.

Peab has decided to invest SEK 453 million in a new office building in Ulriksdal in Solna. The office building will be nine stories tall with around 12,500 m2 office space and is the first of five to be built in Ulriksdal. The office building will be ready to move into in the fourth quarter of 2019.

Significant joint ventures

Peab’s significant joint venture companies Fastighets AB Centur, Tornet Bostadsproduktion AB, Fastighets AB ML4 and Point Hyllie Holding AB are developing well and via them Peab has built up considerable indirect holdings in investment property and development property for both commercial and residential purposes. Ongoing returns are in the form of shares in the profit from joint ventures recognized in operating profit and interest income on lending. Changes in market values that effect booked values in joint venture companies are not reported in Peab’s profit.

Point Hyllie Holding AB has decided to build The Point, a 29-story office building in city district Hyllie in Malmö. The Point will have 20,000 m2 in office space and the ground floor will contain shops, a lobby and lounge. Construction began in April 2017 and the building will be ready to move into at the end of 2019.