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.

Acquisition of 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 2,000 employees, around 200 strategically located quarries along with 63 production asphalt plants in the Nordic region. The operations are 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 amounted to SEK 3,184 million for a debt-​free business and is fully financed.

The acquired operations had net sales of SEK 5,878 million with an adjusted EBITDA of SEK 282 million in 2019.

Net sales and profit

July – September 2020

Net sales for the third quarter 2020 increased by 63 percent and amounted to SEK 6,233 million (3,820), of which the acquired operations contributed by SEK 2,765 million. Not including the acquired operations net sales contracted by nine percent and amounted to SEK 3,468 million. The reduction stems primarily from Transportation and Machines as well as Rentals.

Operating profit for the third quarter 2020 amounted to SEK 471 million (360) and the operating margin was 7.6 percent (9.4). Not including the acquired operations, operating profit was SEK 294 million and the operating margin was 8.5 percent. The lower operating profit stems primarily from Rentals and Construction System.

The acquisition of the paving and mineral aggregates operations was finalized on April 1, 2020, which means the acquisition occurred when the season started. The underlying operations in the acquired companies contributed by SEK 273 million in the third quarter. Depreciation on surplus values for, among other things, customer contracts in the order backlog taken over and fixed assets amounted to SEK -96 million. Depreciation on surplus values for customer contracts in the order backlog taken over will be high throughout 2020 and part of 2021. All in all operating profit for the third quarter was affected by SEK 177 million related to the acquired operations.

January – September 2020

Net sales for the period January-September 2020 increased by 41 percent and amounted to SEK 13,791 million (9,747), of which the acquired operations contributed by SEK 4,506 million. Adjusted for the acquired operations, net sales contracted by five percent to SEK 9,285 million. Net sales increased in Mineral Aggregates and Concrete while they decreased in Transportation and Machines, Rentals and Construction System.

Operating profit for the period increased to SEK 708 million (574) with an operating margin amounting to 5.1 percent (5.9). Not including the acquired operations, operating profit was SEK 500 million and the operating margin was 5.4 percent. The lower operating margin is due to a lower profit in Rentals and Construction System. The operating margin for the latest rolling 12 month period was 6.2 percent compared to 7.0 percent for the entire year 2019.

The underlying operations in the acquired companies contributed by SEK 422 million. Depreciation on surplus values for, among other things, customer contracts in the order backlog taken over and fixed assets amounted to SEK -159 million. Depreciation on surplus values for customer contracts in the order backlog taken over will be high throughout 2020 and part of 2021. In addition, acquisition costs and transfer tax in Finland have charged profits in total by SEK -55 million. All in all operating profit for the period was affected by SEK 208 million related to the acquired operations. Because the acquired operations have a very clear seasonal pattern the first quarter is characterized by considerable deficits since the season starts in the second quarter. If the acquisition had taken place on January 1, 2020 profit in the first quarter would have been affected by SEK -297 million and the underlying operations would have had an accumulated operating profit per September 30, 2020 of SEK 125 million.

Capital employed in Industry was at the end of the period SEK 9,529 million compared to SEK 7,002 million at the end of the corresponding period last year. The increase is due to the acquired operations.