Net sales and profit

January – September 2019

Group net sales for January-September 2019 amounted to SEK 38,696 million (37,388), which was an increase of three percent. After adjustments for acquired and divested units net sales increased by four percent.

Net sales in business area Construction grew by four percent and the increase was related to our Swedish operations. Net sales includes a greater portion of other building construction. In business area Civil Engineering net sales were unchanged compared to same period last year. Net sales in business area Industry grew by three percent with an increase in all product areas except Construction System where net sales fell. In business area Project Development net sales decreased which is attributable to Housing Development. The reduction is primarily due to lower net sales in the Swedish operations.

Of the period’s net sales SEK 7,013 million (7,461) were attributable to sales and production outside Sweden.

Operating profit for January-September 2019 improved to SEK 1,813 million (1,710) and the operating margin increased to 4.7 percent (4.6). The operating profit was affected positively by SEK 17 million through additional IFRS 16, Leases during the period. The operating margin for the latest rolling 12 month period was 5.0 percent compared to 4.9 percent for the entire year 2018.

The operating margin in business area Construction was 2.4 percent (2.3) during January-September 2019. Earnings were lower in business area Civil Engineering during the period and the operating margin amounted to 2.5 percent (2.8). The level of profitability in Operations and maintenance was lower compared to previous years. The operating margin in business area Industry was 5.9 percent (6.1). The lower operating margin was due to higher costs in Rentals stemming from some supplemental establishments made to raise local presence that have not yet begun to generate their full revenue capacity. In addition, the business area has been charged with acquisition costs of SEK 40 million concerning YIT’s paving and mineral aggregates operations. The operating margin in business area Project Development was higher than the corresponding period last year. In Housing Development operating profit increased slightly in Sweden during the period which was for the most part countered by more turned over projects in Norway and Finland. The operating margin in Housing Development was 9.0 percent (8.1). In Property Development Peab’s partially owned company Acturum divested a number of properties in the second quarter. The divestitures had a positive effect of SEK 170 million in profit contributions from partially owned companies.

Eliminations and reversal of internal profit in our own projects have affected operating profit net by SEK -89 million (-20). As a result of more construction on property on our own balance sheet including housing projects in Norway and Finland, apartments for rent in Sweden, Peab’s own offices as well as other commercial property, a higher level of profit has been eliminated than in previous years. Elimination is reversed in connection with the external divestment of a project.

Depreciation and write-downs for the period were SEK -924 million (-743). Depreciation was affected by SEK -122 million through additional IFRS 16, Leases during the period.

Net financial items amounted to SEK -27 million (-31), of which net interest amounted to SEK -69 million (-35). Net interest was affected by SEK -21 million through additional IFRS 16, Leases during the period. Net financial items included positive effects from, among other things, dividends and currency exchange rates.

Pre-tax profit was SEK 1,786 million (1,679).

Profit for the period improved to SEK 1,501 million (1,394).

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.