Sales up at Peab

Swedish-based contractor Peab has reported that its business has “developed in the right direction” in the third quarter and for the first nine months of the year.

The company said it could see the results of the measures it had taken to improve profitability and lower levels of tied up capital.

It reported that net sales for the nine months from January to September 2014 amounted to SEK31.66 billion (€3.42 billion) compared to SEK30.16 billion (€3.26 billion) for the same period a year earlier.

Its operating profit for the period was SEK1.29 billion (€139.53 million) compared to SEK36 million (€3.89 million) last year, when the operating profit was charged with one-off costs of SEK920 million (€99.51 million).

Peab claimed improved operative operating margin, rising to 4.1% rather than 0.1% 12 months earlier.

Its orders received during the period were down to SEK24.23 billion (€2.62 billion) from SEK26.95 billion (€2.92 billion). Order backlog was down too, at SEK27.55 billion (€2.98 billion) rather than SEK30.52 billion (€3.30 billion).

Jesper Göransson, CEO and president, said, “Demand on the Swedish construction market is good, where new housing production is the strongest segment. A high level of activity and the same degree of building construction start-ups is also expected in 2015.

“Housing construction in Norway is expected to shrink in 2014 although at a slower rate than first expected. Premise construction in Norway is strong but is expected to slow in 2015. Housing construction development in Finland has been weak in 2014 as a result of the country’s tight economy and this low level of activity is expected to continue into next year.”

He said the civil engineering market was expected to be stable in Sweden and Norway, but development was expected to be weaker in Finland.

The company said that the action plan that was implemented in 2013 was having the intended effect.

Göransson said, “Our action plan is the foundation for more effective operations and a more profitable Peab. We see effects on profit according to plan in production, such as lower overheads and higher earnings. Based on stable market conditions, we continue to work on increasing customer focus on the local market.”