Comments from the CEO

Even though 2020 was a dramatic year globally Peab’s development was robust. The level of orders received continued to be stable and a strong cash flow improved our financial position. Both the acquisition of the paving and mineral aggregates operations and the distribution of Annehem Fastigheter contributed to very good profits and clarifying our core business.

Group development

Net sales in 2020 increased by four percent and amounted to SEK 57,417 million (55,349), of which the acquired operations contributed by SEK 5,891 million. Operating profit was SEK 3,541 million (2,610), of which the effect of the acquired operations was SEK 250 million and the effect of the distribution of Annehem Fastigheter was SEK 952 million. The operating margin was 6.2 percent (4.7) and not including the effect of the distribution of Annehem Fastigheter, the operating margin was 4.5 percent. Last year included an income contribution of SEK 170 million from divestitures of properties in the partially owned company Acturum. Cash flow continued to develop well during the year, which contributed to reducing net debt.

Business area development

Net sales in business area Construction contracted by eight percent in 2020 and were SEK 26,989 million. Net sales were lower in Sweden but higher in Norway and Finland. Housing construction continues to decline while other public building construction is on the rise. The operating profit was 2.5 percent (2.4). Net sales in business area Civil Engineering contracted by four percent in 2020 with declines in Local market and Operations and Maintenance. However, the operating margin improved. Net sales and operating profit increased in business area Industry where as of April 2020 the Nordic paving and mineral aggregates operations acquired from YIT are included. Business area Project Development reported lower net sales primarily due to the drop in sales in Housing Development in Sweden. Operating profit included SEK 896 million from the effect of distributing Annehem Fastigheter. Last year included an income contribution of SEK 170 million from the divestiture of properties in the partially owned company Acturum. Production starts of our own developed housing and sales have been stable with a good geographic spread in Sweden, Norway and Finland. During the fourth quarter Housing Development signed contracts for the sales of several tenancy projects which will be on our own balance sheet under construction and recognized in profit/loss when turned over in the coming years. The relatively limited effect of the corona pandemic on Peab has mainly affected Property Development in operations connected to travel and tourism.

Order situation

Despite the current uncertainty on the market the level of orders received continues to be stable. For the full year 2020 it amounted to SEK 49,735 million (44,130), of which the acquired operations contributed by SEK 4,357 million. We are also happy to note that the orders continue to be well spread in both place and product. Order backlog was SEK 42,709 million (42,494), of which 32 percent will be produced after 2021.

Market and outlook for the future

After negative growth during 2020 due to the corona pandemic the Nordic countries are expected grow again in 2021. In general, we expect a stabel development in the markets we are active in. Housing construction will probably move horizontally in all three countries during the period 2021-​2022. Other building construction during 2021 is expected to increase in Sweden, decline in Norway and remain the same in Finland. The common denominator is continued strong public sector construction. Civil engineering investments are expected to grow in Sweden and Norway while they are expected to decline somewhat in Finland.

 

 

 

Ready for the next phase

The year 2020 will go down as an exceptional year characterized by the pandemic and its consequences. Nonetheless, for Peab the year was both successful and essential to our continued development. On April 1st we finalized the strategic acquisition in paving and mineral aggregates operations and on December 11th we distributed and listed the previously wholly owned subsidiary Annehem Fastigheter. These two events have clearly defined our core business as a focused and professional builder and developer in the Nordic region with a high level of our own resources. Now we are ready to enter the next phase of Peab’s development.

Owing to the fact that now we are fully a Nordic community builder with extensive local presence and four collaborating business areas, executive management and the Board has made a comprehensive review of Peab’s targets; everything from our mission, business concept and strategic targets to more concrete financial and non-financial targets. These targets were adopted and communicated yesterday and based on this we will present our way forward in greater detail on our Capital Market Day next Wednesday, February 10th.

We are confident about our future. The long-term external forces point in our favor. We have a strong business model and therefore everything we need to achieve our strategic targets to have the most satisfied customers, be the best workplace and the most profitable company in the industry – and now to lead in social responsibility.

I want to thank all our fantastic employees at Peab who have kept our business going during this special year and further strengthened Peab.

Dividend proposal

Based on the Group’s stable profitability and financial situation as well as the company’s order situation and investment needs the Board proposes a dividend of SEK 4.50 (-) per share for the financial year 2020.

 

Jesper Göransson
CEO and President