Other information

Sustainability

A safe work environment is the foundation of our business. The conditions of our workplaces should be secure and safe for everyone at them, despite the fact that there are risk-​filled aspects of our operations.

Serious accidents

To prevent accidents and incidents at our workplaces we continually develop quality assured work methods and educate our employees. Focus is on planning and risk assessment in connection with running projects going forward as well as learning from reported risk observations, incidents and accidents.

The number of serious accidents* 2020 amounted to 51 regarding our own employees and 43 regarding subcontractors at our workplaces. Peab has a high number of own skilled workers compared to other actors in the construction and civil engineering industry as well as many subcontractors. At the end of 2020 Peab had 15,252 employees, of which 8,224 were skilled workers. As of 2021 Peab will update the definition of serious accidents and thereby the measuring and monitoring of workplace accidents.

Risk observations

Every remedied risk is one less potential accident, which is why we work intensively to raise the number of reported and remedied risk observations*. The goal for 2020 was 45,000 reported and remedied risk observations. The number during the year 2020 was 61,200.

* For definition see section Alternative performance measures and definitions.

Other

  • A healthy construction industry and fair competition are essential to the future of the industry. Peab works systematically with this issue and during the quarter implemented third party controls of suppliers at our construction sites according to a new method.
  • In collaboration with Volvo Lastvagnar Peab company Swerock started test driving completely electric transportation solutions for the construction industry. Swerock will run a concrete mixer truck and a hook lift truck in daily operations during two years. This is a major step in more climate smart transportation.
  • Another subsidiary, Skandinaviska Byggelement, has begun to carry concrete elements by train from Katrineholm. The first wagons carrying concrete elements went from Katrineholm to Gothenburg. In addition to Katrineholm, the company uses the railroad for transportation from Ucklum.
  • Subsidiary Swecem is building a terminal in Skellefteå to store Merit, which is a by-product from the steel industry and replaces cement in the production of ECO-Betong, thereby considerably reducing CO2 emissions. The Swedish Environmental Protection Agency gave Swecem an investment grant via ”Klimatklivet” for 40 percent of the total investment of SEK 30 million. The new terminal contains a 5,000 m3 silo and a loading hall for trucks. It will be completed in the summer of 2021.
  • Peab’s ECO concept that includes ECO-Betong and ECO-Asfalt is expanding with two other brands. Peab Construction System is launching ECO-Prefab and ECO-Stomme in climate-improved concrete. A higher level of slag as binder (Merit) reduces CO2 emissions by 35 percent. The products will be launched on full scale in the beginning of 2021.
  • Peab and Tibnor have taken a comprehensive approach to the environmental impact of steel in construction through Environmental Product Declarations or EPDs. This means Peab can track the environmental impact of the steel from the steelworks, carriage and processing all the way to delivery at the construction site. This facilitates aware purchasing choices.

Risks and uncertainty factors

Peab’s business is exposed both to operational and financial risks. How much risks affect Peab’s profits and position depends on how well the company handles daily operations. In addition, as a construction and civil engineering company, Peab is vulnerable to external risks such as developments in the economy, climate effects and changes in circumstances due to amendments in laws and regulations, and other political decisions.

In the beginning of 2020 the coronavirus spread over a large part of the world. Governments and central banks are implementing different forms of crisis packages to reduce the negative financial effects. The entire global economy is affected but it is difficult to say how deeply and for how long. So far the effects of the coronavirus on Peab’s operations have been limited. We closely follow developments in order to assess the effects in the long run. For more information see the section Coronavirus under Important events during the period.

Managing operative risks is a continuous process considering the large number of projects the Group is always starting up, carrying out and completing. Operative risks are managed in the line organization in the business areas through established procedures, processes and control systems. Peab’s business is largely project-​related. There are a number of different contract forms where risk levels vary depending on the type of contract. However, with any type of contract ambiguities can arise concerning the terms, which can lead to delimitation issues that create a dispute with the customer.

On December 13, 2019 Peab’s supplier Nynas AB applied for a company reorganization and on March 12, 2020 Nynas AB applied for a further extension of three months which was granted. Thereafter further extensions were applied for before Nynas AB received approval by their creditors of their composition proposal in November 2020. The decision to determine Nynas’ composition became legal in Södertörn Court in January 2021. This meant that Nynas’ company reorganization could be formally ended and that Nynas’ creditors will be paid according to the composition agreement. Nynas AB is an essential supplier of bitumen which is used as a binder in the manufacture of asphalt. If Nynas AB had not been able to reach an agreement and could not fulfill its obligations it would have caused considerable disturbances in the Nordic paving market and affected all the companies involved in asphalt paving, including Peab which is a major actor. Peab has chosen to complement with other suppliers to ensure deliveries of bitumen.

Financial risks are primarily associated with the company’s need for capital, tied up capital and access to financing. Financial risks are managed on Group level. For further information about risks and uncertainty factors, see the Annual and Sustainability Report 2019.

Important events during the period

Dividend proposals and carried out distribution of Annehem Fastigheter

In conjuncture with the year-end report 2019 Peab’s Board decided to propose to the AGM an unchanged ordinary dividend of SEK 4.20 per share and an extra distribution of the shares in a newly founded real estate company (Annehem Fastigheter).

When the decision was made the global spread of the coronavirus had not yet begun. It has thereafter developed into a pandemic, which in turn has created enormous uncertainty concerning global financial developments.

On March 24, 2020 the Board reviewed the decision of an extra distribution of all the shares in Annehem Fastigheter. The Board put off the decision to actually distribute and list the company until there was less uncertainty and circumstances improved. The strategy to create the company, distribute and list it did not changed.

On April 7, 2020 Peab’s Board also decided to withdraw in its entirety the proposal to the AGM for an ordinary dividend of SEK 4.20 per share. The Board and executive management have reviewed the situation focusing on identifying measures needed to be taken for different scenarios on the Nordic construction market. Their main purpose is to be able to create the prerequisite conditions to handle overhead in a contracting business and at the same time safeguard long-term production capacity. Examples of measures are furloughs and training.

The Board’s ambition have been to regularly evaluate the dividend capacity and depending on developments make a decision on both an ordinary dividend and when distribution of all the shares in Annehem Fastigheter can take place. Based on market assessments and the development presented in the second quarter report Peab’s Board decided in August 2020 to propose a new date for the distribution of Annehem Fastigheter. Peab’s Board further decided not to put forth a new dividend proposal but let the AGM’s decision of no cash dividend for 2019 remain unchanged.

On October 19, 2020 the Board summoned an Extra General Meeting on November 12, 2020 and Peab’s shareholders adopted its proposal to distribute Annehem Fastigheter. Distribution was carried out in December 2020. The distribution ratio was 1:5 which means that one share in Peab entitled to one share right of the same sort in Annehem Fastigheter, and five share rights entitled to one share of the same sort in Annehem Fastigheter. The first day of trading was December 11, 2020 and the first trading price was SEK 35 per share. For more information see the section Annehem Fastigheter and note 6.

Changes in Peab’s executive management

In the spring of 2020 Peab’s acquisition of YIT’s paving and mineral aggregates operations in the Nordic region was finalized. As a result of the acquisition the importance of operations in Industry in the Group have grown at the same time Peab has increased its presence in Sweden, Norway and Finland and established itself in paving in Denmark. Peab has thereby transitioned from being a Swedish company with operations in Norway and Finland to becoming a Nordic company based in Sweden.

Today Peab has 15,000 employees. We now have a greater geographic spread and our local presence is stronger, which makes it possible for us to develop within the framework of what we call locally produced community building. Through Peab’s four collaborating business areas we can, as far as possible, ensure that we use local resources in the form of our own employees, our own input goods and subcontractors.

Business area Industry changes
Business area Industry consists of a number of companies that deliver input goods and services to the construction industry. Due to the acquisition from YIT our operations have grown extensively and therefore need to be steered and led at company level rather than business area level. The industrial companies will continue to report externally as one business area. Operatively they will be led by MDs that report to two members of executive management responsible for them, Roger Linnér and Niclas Winkvist. Karl-Gunnar Karlsson will leave his role as Business Area Industry Manager and therefore executive management. Karl- Gunnar has been appointed MD for Swerock.

Chief Strategic Officer appointed
In order to ensure scale advantages, effectiveness and sustainable products, at the same time we develop our local business, we have to streamline the way we lead and steer. Digitalization will continue to enable this work going forward. In order to support executive management’s work with these matters Johan Dagertun has been appointed CSO.

Johan Dagertun was most recently MD for Construction System in business area Industry and has previously been a business controller in Finance and Treasury at Peab.

After these changes have been made Peab’s executive management will consist of the following members:

  • Jesper Göransson, President and CEO
  • Niclas Winkvist, CFO, part of business area Industry
  • Roger Linnér, COO, part of business area Industry
  • Stefan Danielsson, Business Area Construction Manager
  • Lotta Brändström, Business Area Civil Engineering Manager
  • Göran Linder, Business Area Project Development Manager
  • Camila Buzaglo, CCO
  • Johan Dagertun, CSO

The Nomination Committee proposes new auditors

Peab AB’s Nomination Committee proposes that the accounting firm EY be elected new auditor with Authorized Public Accountant Jonas Svensson as lead auditor. The proposal is made in compliance with the obligatory auditor rotation. KPMG has been Peab’s auditor until and including the financial year 2020.

Important events after the period

New financial and non-financial targets

Through the strategic transactions in recent years Peab has more clearly become a community builder that, through four collaborating business areas and local presence, is active throughout the Nordic region. Our business model provides us with unique opportunities to, with our own resources and control over the entire value chain, meet our customers’ needs and the expectations of the world around us. In order to further promote value creation we have revised everything from our mission, business concept and strategic target areas to internal and external financial and non-financial targets.

Both the internal and external financial and non-financial targets are categorized under the previous strategic targets; Most satisfied customers in the industry, Best workplace in the industry and Most profitable company in the industry as well as the new, fourth strategic target, Leader in social responsibility in the industry. We consider the external targets particularly important and they are a subset of our internal targets and action plans. As of 2021 Peab will externally report the performance of the business by monitoring nine targets, of which three are financial.

Revised mission: We improve everyday life where it’s lived.

Revised business concept: Peab is the Nordic Community Builder with a local presence. Focusing on our own resources and local partners we develop, do the groundwork and build everyday life where it’s lived.

Peab’s external targets as of 2021:
  • Most satisfied customers in the industry; SCI > 75
  • Best workplace in the industry; eNPS >Benchmark, Serious accidents: Zero vision for serious accidents through a continuously contracting trend
  • Most profitable company in the industry; Operating margin > 6 %, Net debt/equity ratio 0.3 – 0.7 Dividend > 50 % of profit for the year
  • Leader in social responsibility in the industry; Carbon dioxide intensity, own production: 60 % reduction by 2030, Carbon dioxide intensity, input goods and purchased services: 50 % reduction by 2030, Equal opportunity recruitment: Number of women recruited should always exceed the education market

The Nomination Committee’s proposed Board members
The Nomination Committee of Peab AB proposes reelection of Board members Fredrik Paulsson, Malin Persson, Karl- Axel Granlund, Liselott Kilaas, Lars Sköld, Kerstin Lindell and Anders Runevad as well as election of Magdalena Gerger. Mats Paulsson and Göran Grosskopf have both declined reelection for age reasons. Anders Runevad is proposed to be elected Chairman of the Board.

Proposed dividend

A dividend of SEK 4.50 (-) per share is proposed for 2020. Excluding the 1,086,984 shares owned by Peab AB per February 3, 2021, which are not entitled to dividends, the proposed dividend is equivalent to a total dividend distribution of SEK 1,327 million (-). Calculated as a share of the Group’s reported profit for the year (excluding the effect of the distribution of Annehem Fastigheter of SEK 952 million), the proposed dividend amounts to 66 percent (-). The proposed dividend is equivalent to a direct return of 4.6 percent based on the closing price on February 3, 2021.

Annual General Meeting

The Annual General Meeting of Peab will be held on May 6, 2021 at Grevieparken in Grevie.

Nomination Commitee

At the Annual General Meeting held on May 6, 2020, Göran Grosskopf, Malte Åkerström, Mats Rasmussen and Ulf Liljedahl were appointed to the Peab Nomination Committee and Ulf Liljedahl was named its Chairman.