Comments from the CEO
Peab continues its strong development despite the uncertainty in the world around us. Net sales increased in the second quarter by twelve percent at the same time operating profit and the operating margin have grown. We present a high level of orders received for the quarter and order backlog continues to be record high.
Construction contract operations in Construction and Civil Engineering report growth and robust profitably. Contracts we received during the quarter include building new swimming pool facilities in Helsingborg, Växjö and Gislaved, a new data center in Kouvola as well as contracts for road maintenance through both new and extended operation contracts. We also have a stable inflow of preliminary contracts that start at the planning phase and a number of contracts that have shifted into the production phase and which have been order registered during the quarter.
In business area Industry Swerock/Asphalt is growing profitably and operations in Construction systems continue to develop positively despite the low level of housing construction.
Operations in business area Project Development continue to stabilize. Housing Development reported higher operating profit for the second quarter due to more production-started homes. No major property transactions occurred in the unit Property Development.
Opportunities to production start and sell new homes are clearly concentrated to major cities and specific micro locations. During the second quarter we started up 501 of our own developed homes, most of them in the Stockholm region. In line with our strategy to start housing projects on our own balance sheet, during the quarter we started in Stockholm a project in Solna with 144 apartments and another in Lilla Essingen with 143 apartments. The model to build homes on our own balance sheet and then convert them to tenant-owned apartments entails more tied up capital and deferred profit generation but it is considered the best way to create value in the Group in the current market situation.
Market prospects are more or less the same since the last quarter with continued good demand on the Nordic construction and civil engineering markets. Development follows the pattern in previous quarters where demand is good in all segments except housing and commercial offices. The housing market in Sweden continues to successively recover but recovery in Norway and Finland is somewhat slower than indicated by earlier assessments.
After the second quarter 2026 we report on four of our nine external targets: recommend Peab as an employer, serious accidents, operating margin and net debt/equity ratio. Unfortunately the number of serious accidents has increased during the latest rolling twelve month period. We continue to work with a laser focus on work environment issues to turn the tide in this negative development. On the other hand, we are happy to note that employees enjoy working at Peab and are more than willing to recommend us as an employer. The outcome of the eNPS score is far over the Nordic industry’s benchmark.
The operating margin improved to 4.8 percent calculated on a rolling twelve month basis, which can be compared to our target of higher than 6 percent. Per the 30th of June the net debt/equity ratio was 0.5 which is in the middle of the target interval. During the quarter Peab’s Board of Directors adopted a new repurchasing program for a maximum of SEK 500 million until the 2027 Annual General Meeting. Repurchasing will enable covering the costs and delivery of Peab’s long-term Performance Share Program and can be used in financing acquisitions.
At the end of the quarter we entered into an agreement with the Nordic Investment Bank for a six-year loan of 125 million euros. The loan strengthens our financial base and is an important recognition of our ability to contribute with our broad operations, access to our own input goods, a high portion of our own employees and our local presence to the Nordic countries’ total defense.
Despite turbulence in the world around us and uncertainty concerning economic developments Peab continues its solid progress. Our broad business model serves us well, which during the second quarter is manifested in a continued high level of orders received, increased net sales and robust profitability.
Jesper Göransson
President and CEO