Peab profit slips

16 February 2012

Swedish contractor Peab reported operating profit of SEK1.5 billion (€169 million) for 2011, down from SEK1.6 billion (€178 million) in 2010, after expansion costs and lower construction returns took their toll.

The lower result came despite a +15% year-on-year increase in net sales to SEK44 billion (€5 billion), and a 5% increase in order backlog since the beginning of 2011 to SEK28 billion (€3.2 billion).

Peab said it was in a phase of expansion, which has had a negative effect on profitability in all its operations. In addition, the company's construction division has suffered a decline in profits due to downwardly adjusted project forecasts and weak revenue recognition in big projects.

Sales in the company's construction division rose 15% year-on-year to SEK28 billion (€3.2 billion), but operating profit sank to SEK599 million (€60.1 million) compared to SEK835 million (€95 million) in 2010.

Meanwhile, the civil engineering division reported net sales for 2011 of SEK11.5 billion (€1.3 billion), up 8% year-on-year, and operating profit edged up to SEK390 million (€44 million), compared to SEK356 million (€40 million) in 2010.

Mixed forecasts

Peab forecast that building construction in Sweden would drop by 9% in 2012, while the civil engineering market would increase by 2%, fuelled by the need to invest in energy and communication, particularly in the Stockholm and Gothenburg regions.

In Norway, the company forecast a 5% reduction in building construction this year, but civil engineering construction is forecast to rise by 8%, driven again by energy-related investments.

And in Finland, the building construction market is expected to drop by 2% over the next 12 months, while civil engineering is forecast to increase by a marginal 1%.

Peab CEO and president Jan Johansson said, "It is difficult to assess the future of markets in 2012. While we continue to see a good range of new projects we are on our guard about the effects the debt crisis may have on construction and civil engineering in our markets."

Latest News
Emerson Crane uses Grove AT to replace air exchanger
The crane rental company completed a one-day air exchanger swap-out project in mid-April at a large food processing facility in Iowa.
Haulotte device provides machine deep dive
MyCompanion provides comprehensive information about the machine and working environment
Schmidbauer to lift and move 50,000 tonnes of cable
First Enerpac gantry joins fleet of German lifting and transport specialist