Comments from the CEO
Peab continued to grow and strengthen profitability during the third quarter. Operating profit and the operating margin improved in all four business areas during the quarter. Cash flow was strong which contributed to a lower net debt/equity ratio.
Construction contract operations in Construction and Civil Engineering report continued growth and higher profitably for the period January to September. A large part of net sales in business area Construction consists of premise construction for the public sector and industrial construction projects. There has also been continued good demand for this kind of project and during the third quarter we registered orders included renovation of the town hall in Botkyrka as well as our fourth project for Hitachi Energy where we will rebuild and extend production and offices in Landskrona. Activity continued to be high in business area Civil Engineering, in large part due to the many major infrastructure projects we are working on. The level of orders received was slightly lower in the business area during the quarter but order backlog continues to be high. We have a stable inflow of preliminary contracts in both Construction and Civil Engineering that start at the planning phase to later continue onto the production phase. At the end of September the value of these preliminary contracts amounted to SEK 20 billion.
In business area Industry both Swerock/Asphalt and Construction systems have grown profitably during the period. Paving operations had high earnings during the quarter with full activity in all our four Nordic countries. High activity in paving together with many major ongoing infrastructure projects contribute positively to operations in Swerock. Construction systems continues to develop well despite the low level of housing construction.
Operations in business area Project Development continue to stabilize. Net sales, however, contracted during the period January to September compared to the corresponding period last year as a result of less processing in ongoing housing projects. Meanwhile Housing Development reported higher operating profit for the third quarter because we have production-started and converted more homes. During the quarter we started a housing project in Halmstad and converted two housing projects, one of which is in Nacka. Opportunities to production start and sell new homes are clearly concentrated to major cities and specific micro locations. We started a project in Finnish Tampere on our own balance sheet during the quarter with the intention of selling and converting it later, in line with our previously communicated strategy. No major property transactions took place during the quarter in Property Development.
Market prospects are more or less the same since the last report 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 still somewhat slower.
After the third quarter 2026 we report on three of our nine external targets: serious accidents, operating margin and net debt/equity ratio. There are still too many serious accidents. We continue to work intensely on work environment issues to turn the tide in this negative development. The operating margin improved to 5 percent calculated on a rolling twelve month basis, which can be compared to our target of higher than 6 percent. Per the 30th of September the net debt/equity ratio was 0.4 which puts it in the lower level of the target interval of 0.3-0.7.
Despite the continued turbulence in the world around us and uncertainty concerning financial developments Peab continues its solid progress. Our broad business model serves us well which our higher net sales and strengthened profitability are proof of.
Jesper Göransson
President and CEO