Profits down at Peab
24 November 2011
Nordic contractor Peab has reported operating profit of SEK962 million (€104 million) for the first nine months of 2011, down from SEK1.1 billion (€119 million) in the same period a year ago.
The lower result came despite a 14% year-on-year increase in net sales to SEK30.4 billion (€3.3 billion).
CEO and President Jan Johansson said the company had pushed on with its strategic plan to increase its presence in the Nordic construction and civil engineering markets.
"We have grown both organically and through acquisitions and invested heavily," Mr Johansson said, adding that the "intense expansion" had a short-term negative effect on the profitability of all the company's operations.
"We have also suffered a decline in profits in on-going production due to downwardly adjusted project forecasts in construction operations. In addition, profitability has been affected by cautious revenue recognition in big projects where production will
continue for quite some time," he said.
Orders received during the first nine months of the year increased by 8% year-on-year to SEK31.1 billion (€3.4 billion), while order backlog in construction and civil engineering grew by 22% since the beginning of 2011 to SEK32.9 billion.
Long-term confidence
Mr Johansson said the company was optimistic that long-term prospects for the Nordic construction market were good.
"On-going building construction continues to grow in Norway, particularly in new construction and renovation of apartment buildings. Continued growth is also expected in civil engineering construction in 2011. The forecasts in Finland point to mild growth in on-going building construction in 2011 while civil engineering construction is expected to shrink," he said.
