Comments from the CEO

Group development

Group net sales amounted to SEK 58.6 billion for 2025 which is on par with last year. Operating profit amounted to SEK 2,626 million (2,763) and the operating margin was 4.5 percent (4.7). Civil engineering operations, premise construction and large sections of business area Industry continued to develop well while the low level of housing construction impacted operations in project development and construction system operations. Cash flow before financing was strong during the quarter and amounted to SEK 2.3 billion (1.7). Net debt was clearly lower than at the end of 2024, and per December 31, 2025 amounted to SEK 6.4 billion (9.1) making the net debt/equity ratio 0.4 (0.5).

The level of orders received was high during the fourth quarter including a major order from the Swedish Transport Administration for SEK four billion in business area Civil Engineering. The level of orders received for the entire year 2025 amounted to SEK 54.9 billion (56.5). Order backlog per December 31, 2025 increased by close to four billion Swedish kronor and was SEK 48.5 billion (44.9). We also continued to have a stable level of incoming phase 1 contracts which are preliminary agreements that can lead to construction contracts. The potential value of final construction contracts at the end of the year’s last quarter was around SEK 17 billion over the next two years (SEK 13 billion per December 31, 2024).

Business area development

Net sales contracted slightly in business area Construction in 2025. The portion of housing construction has contracted while premise construction has grown. The operating margin improved during the year to 2.2 percent (1.7). During the quarter we announced that construction operations have created a joint venture with KB Gruppen in Western Norway to take advantage of product and geographic synergies. Activity continued to be high in business area Civil Engineering in both Sweden and Norway. Net sales increased by six percent and the operating margin improved to 4.0 percent (3.0). Several Nordic governments have announced major investments in infrastructure, both new investments and operation and maintenance. In addition, public projects are being carried out in areas such as water and sewage and power supply as well as in investments related to the ongoing climate transition. In total, the operating margin for the construction contract businesses was 2.9 percent (2.3).

In business area Industry net sales contracted by seven percent in 2025. The decrease is primarily related to Finnish and Norwegian paving operations. Operating profit increased in the period to SEK 1,485 million (1,415) and the operating margin improved to 7.4 percent (6.6). As of this report we are increasing transparency in business area Industry by separately reporting the two underlying units Swerock/Asphalt respectively Construction system. The first unit had a strong operating margin of 8.6 percent (6.9) for 2025 while operations in Construction system continued to be impacted by the weak housing market.

Net sales in Project Development for 2025 amounted to SEK 4,345 million (4,270). Business area Project Development continues to be marked by less demand on the housing market in the Nordic region. Operating profit was SEK 238 million (728) and the operating margin was 5.5 percent (17.0). The operating margin in Housing Development was 0.2 percent (-2.7).

The market for new housing production has stabilized in 2025. Lower interest rates, expected relaxation of home loan regulations and price stabilization on the second hand market helps. However, supply on the second hand market continues to be high and consumers are cautious, which means the situation varies in different markets. Markets in metropolises and good micro locations are better than in other geographies. We see similar development in Sweden, Norway and Finland.

As we have previously communicated we work from the strategy of – given our financial targets – more production of own housing developments on our own balance sheet to later on convert them into tenant-owner apartments. Starting projects on our own balance sheet increases tied-​up capital and defers profit effects in segment reporting compared to our traditional method of pre-sales before production starts of our own development projects.

Target outcome

At the end of 2025 we report on all our nine external targets. The operating margin was 4.5 percent calculated on a rolling twelve month basis, which can be compared to our target of 6.0 percent. The net debt/equity ratio was 0.4 (0.5) per December 31, which is in the lower span of the target interval 0.3-0.7. Both customers and employees are satisfied with Peab and the outcome of both the CSI and eNPS exceed target levels. The trend in the level of serious accidents was up to the last quarter of the year clearly lower compared to the full year 2024 but unfortunately the number of accidents increased in the final quarter. In the strategic target of Leader in social responsibility our gender equality target and climate target in our own production continue to develop in the right direction while the climate target for input goods and purchased services is more difficult to achieve.

Market and prospects for the future

Despite geopolitical tensions the macroeconomic situation has stabilized in the Nordic region. In addition to the stabilization of the housing market we have noticed the effects of the ongoing infrastructure investments and the fact that governments in the Nordic countries have announced substantial plans for both investments and maintenance are palpable. All in all, the outlook for the Nordic construction and civil engineering markets is positive for 2026. In certain aspects Peab’s business benefits from the volatile world around us and the ongoing investments in the police, the penal system, security and defense related projects as well as the associated infrastructure projects.

Peab is in a favorable position with 12,000 competent employees taking on the growing opportunities in our markets. Our strong cash flow and lower net debt gives a lot of room for manoeuvre.

I also want to take this opportunity to heartily thank all my colleagues for the past year.

Dividend proposal

Tak­ing into con­sid­er­a­tion prof­it for 2025, our fi­nan­cial po­si­tion and fu­ture cap­i­tal needs, the Board pro­pos­es that Peab’s An­nu­al Gen­er­al Meet­ing de­cide on a div­i­dend of SEK 3.30 (2.75) per share di­vid­ed into two pay­ments. Cal­cu­lat­ed on the num­ber of out­stand­ing shares on December 31, 2025, this cor­re­sponds to 70 per­cent (38) of prof­it for the year ac­cord­ing to seg­ment re­port­ing, which is higher than our fi­nan­cial tar­get of more than 50 per­cent of prof­it for the year.

 

Jesper Göransson
President and CEO