Peab AB (publ)

Hej och välkomna till dagens presentation av PEABs halvårsrapport 2025. Jag som pratar heter Johan Hartma och är er chef på PEAB. Med mig idag har jag PEABs vd och konserthjef Jesper Göransson och PEABs CFO Niklas Winkvist. Som vanligt så presenterar Jesper och Niklas dagens rapport och därefter har ni möjlighet att ställa frågor. You can either ask questions manually by pressing square 5 on your mobile devices. Or you can write the question directly in the form on the website. And then I will read the questions later. I give the instructions also when Jesper and Niklas' presentation is finished. Good, that was all. With those words, I hand over to you Jesper first.

Thank you, Johan. We will now look at the market prognoses. The market prognoses are unchanged since the previous quarter report. If we look at housing investments, the arrows point upwards in the same calendar for 2025. It is expected that the housing markets will increase, but this is due to low levels. And if you look at it from a more historical perspective, we can see that when it comes to housing construction in Sweden, it looks like the market has found a new level that is around 30,000 startups per year. And then we come from the top earlier up to between 65,000 and 70,000. So it's a halved level, but it still feels like it has stabilized there. And for us, the starting point has simply been and has been that we adapt to where the market exists. And predominantly, we see that the conditions are better in the metropolitan areas. Another trend that we also see clearly is that the opportunity to sell apartments increases as the project approaches its completion. That trend remains. And based on that, we have continued to work based on the strategy that, given our financial goals, increase the number of self-developed households in our own balance sheet, which we then consider to be converted to housing rights as we approach the completion of the project. If we look at the rest of the building, starting local investments, we also see a stability here, even here in the unchanged banking sector as a pre-existing contract. There is a variation here, offices, commercial buildings are generally weaker, while the public sector continues to keep up with the investment levels, and this applies to all three countries. The last mentioned can always be from schools, both healthcare facilities, police, criminal protection, security and defence related projects. So it is also a trend that has existed for some time and that we see continues to remain and that is below and keeps up the markets for local investment. Instructional investments, also here it has changed a bit compared to earlier. Stability, increased levels of investment and here it is mainly infrastructure, railways, but also increased investments in ports and danger zones, which has become a new driving force for growth, as well as energy-related projects. The construction business is also expected to benefit from the increased investment in security and defence related projects with infrastructure. If we then add this to the total housing and construction investment, we see A market that is expected to rise in all three countries by 2025. This is the same assessment we made for the first quarter. Then we look at our business areas and we start with business area construction. Here we see a weak decrease in revenue. We landed on 6 million in revenue compared to 6.3. The decrease is explained primarily by the fact that we have a lower activity in terms of housing production, which I have talked about earlier. We have compensated a very large proportion of that turnover, but not fully managed to shift to other types of projects. The result increases during the quarter, it has grown to 137 million, which in combination with the approaching turnover, makes the margin increase and it fell to 2.3%, which is an increase of 1.9%. If we look at the order situation in construction, we see a quarter with a high and stable order volume of 6.6 billion. The order block for construction is now a bit over 27 billion. Some projects that have taken place during the quarter. We have a transformer factory in Ludvika. We have a trailer that is being built in Halmstad. Vård- och omsorgsboende i Stockholmsområdet. Och sen har vi bostäder i Esbo. Och lite mer finfördelat per produkttyp så ser vi här då att bostäder är i nettoomsättningen nere på 25%. Medan vi i orderstocken ser att andelen bostäder ligger på 31%. Så det känns som att vi har hittat lite grann en ny nivå här. Och samtidigt så fortsätter som jag sa tidigare ordergången på andra typer av byprojekt som är god. and everything from construction of industrial premises to schools and care and care facilities with more. Then we have the office here, which is the gray, dark gray top piece, which is 12% of the area and 14% of the area. And as I said, the office is generally weak, but here we have a reconstruction project of the boardroom in Stockholm that is there, and then we have LKAB's new office that we help to build in the kurs, so it's a little special. If we look at the business environment, we have an increase in revenue. We ended up with 4.4 billion, which is 4% up. We see here public investments in the form of investment in infrastructure, ports, roads, railways and so on, which seems positive. We have a good spread between geography and product areas. And we combined the increased revenue with the increase in the result. We ended up with 204 million SEK per quarter. And that means that we have a margin that increased quite a bit, up to 4.6%. If we look at what we call the entrepreneurial activities, that is, construction and construction together, then the margin for the individual quarter ended up at 3.3%, which is an increase of 2.7%. A little about the order situation on the construction side. We had an order once on 4.1 billion, which is a fairly normal quarter. In the comparison quarter, as you can see here, we were up to almost 8 billion. And in that quarter, 2024, we registered a project where we are going to build Bodö's new airport. It is 3.3 billion, one of the larger projects we have taken. So the comparison is of course very high. I think that this year's Andra kvartal är ett mer normalt kvartal. Orderstocken för anläggningsverksamheten landade på 20,7 miljarder. Och lite projekt för kvartalet. En trafiklösning i Trondheim. En förbyggfart i Bor. En dubbelspårig järnvägsetapp i Sundsvall. Och sen ska vi bygga en kaj i Karlskrona. And also here, if we look at the product areas, we see that we have a good spread between the different product areas. The street and land work is for 36% of the turnover and is down to 25% in the order stock. It is connected to the reduced housing building. If we look at roads and other infrastructure, it is for 28% of the turnover, but it is for a total of 37% in the order stock. And behind this increase are the big winning projects, for example Bodö Airport or E20 outside Mariestad and the like. And it is also a number of projects that have been extended for several years, so we are extending our value stocks here. Sustainable development is at 17% of the turnover and 19% of the value stock. Business and industry. Here we see a turnover that goes down a little bit. We are landing at 5.7 billion. and the decline is related to storage and construction systems. The turnover for the business model has increased to 544. This is an increase from 449. This means that we have a margin of 9.6% for the quarter. Storage, load and concrete had higher results levels compared to the corresponding quarter of 2024. And then we have construction systems and housing operations that are negatively affected by the weaker housing market. The order situation, we had an order once at 3.6 billion, a little lower compared to last year. On the other hand, we had a little more in the head, so it was a little sluggish between the quarters, depending on when these projects are ordered. The decrease in this quarter is related to the Norwegian housing operations, especially that we are working on and setting up. We have an order stock in the industry of SEK 7.4 billion. And 54% of the turnover in the business sector is now real estate. And then we also see that we have large businesses both in concrete and ballast. And what has shrunk is the construction system, which has had challenges due to the fact that the housing market has been weaker. If we look at the drop-off here, the industrial industry is a business that binds relatively a lot of capital. We have been capital efficient and have kept the capital binding at a relatively constant level. And that in combination with the increase in the result makes it possible to increase the drop-off of capital. And we ended up at 14.2% when we closed the quarter, compared to 9.3% for one year. Business model and project development is the business model that has stood for the biggest change in recent years and that has decreased in size due to the fact that the housing market has gone down. We have a fairly unchanged turnover per quarter of 750 million. We have a result per day that in principle is plus minus zero. It's a little better than last year. We had some project starts that made it a better result. As I said earlier, we are increasing the proportion of projects in our own balance account, which also means that we get a reduced result calculation. Those projects are calculated first when they become housing project in traditional terms. This quarter we had no real-estate benefits from the sale of properties and portions of GDP companies, so it was zero. Let's take a look at the production data. We started 280 homes during this quarter, 108 of which were housing rights, which in turn was 85% of them were conversions from homes and self-balance accounting. Here we see how this method works, that we start first with self-balance accounting, and thanks to Ben Ambrose's completion, we can start selling, and then it can also become a purely concrete housing rights project in a more historical sense. Vi startade också 190 hyresrätter, varav 166 var i ett vård- och omsorgsboende som vi gör tillsammans med Heba på Lilleäsingen i Stockholm. Vi har startat 67 bostäder i egen balansräkning för talet, men sen så konverterar vi ju de här 85 som går upp till bostadsrätterna, vilket gör att nettotalet blir minus 18, men totalt sätts så 280. But again, we can see that this is a new way of working. It requires a slightly different methodology than what we have been used to. We have gone from a series of producers and households to being more project specific. We get more results and gain more capital, but it is a way to adapt to how the market works right now. The sales are rolling in. We have landed on about 150 in the quarter. We were also at 150 in this quarter. We also sold 166 rental rights. This is the project with Heva that I mentioned. And then we sold 15 from our own balance sheet. So the total number sold was 331 compared to 136. Vi har 1200 bostadsrätter i produktion. Vi har 270 hyresrätter i produktion. Och sen har vi 605 bostäder i egen balansräkning. Det gör att vi totalt just nu har 2100 egenutvecklade bostäder i produktion och 40% av dem är sålda. Retired. We have 332 apartments and apartments that are retired. It is a little lower than the Q1 this year, but it is up from the annual shift. Rent rights remain at a constant level, 306, so we have 638 homes in production, finished and retired in total. The property development business. There are no new projects that have started, but this is the same project that we have had before. We have a ongoing project in Malmö, down at Varstaden. And we have a recently completed project, an office project in Gothenburg. And then we have four completed properties at Varstaden in Malmö that we got with us when we shared a tour with Balbo. Here we see that we have a capital bond that It is also relatively constant. Here we have invested money during the first half of the year in our own balance account. We have made some money in other ways. And of course, due to the fact that the business is poorly improved here, we also get a little better return on investment capital, even though it is still at low levels. So that was the business community's results. And then I start, Niklas, to draw the concern.

Thank you very much. As I said, we look at the company as a whole. And we had a marginal decrease in turnover in the quarter. It rose to just under 15 billion, compared to 15.2 last year. On the other hand, we saw a strong increase in the turnover, rising to 760 million. compared to 619, and thus also an improvement of the turnover margin from 4.1 to now in the quarter up to 5.1%, which is a strong turnover margin. It is also a joy that the development of the turnover margin is also through all four business areas where we see margin improvements. We also have a turnover margin in the quarter of 5.1%, despite the fact that we have significantly lower results in our project development activities. So it shows the strength that we have in these four business months. Over the next 12 months, we have a turnover of 58 billion, with a margin of 4.7%, which is the same margin we had when we closed in the fiscal year 2024. When it comes to the geographical distribution, it looks like before, roughly 70% in Sweden, a little more in Finland than Norway, 15% in Finland, we are at 11% in Norway, and as I said, in Denmark, we have 3% of the turnover, where we are the only one operating our laying operations. We have also seen a steady increase in the number of public customers, especially in construction, construction and industry. If we look at the industry, asphalt installation is a large part of the state and municipalities that are customers. And today, the public customers are more than half the turnover, 56%, which is an increase compared to a year ago when it was 53%. So this is a good level. Den här fördelningen den bidrar ju som vi sagt tidigare till stabiliteten, den minskar koncernens konjunkturkänslighet. Det är också så att tittar vi framåt så är det ju offentligt husbyggande och anbyggningsinvesteringar förväntas vara stabila marknader och då de verksamheterna är en stor del av koncernens verksamhet idag. If we look at the order entry and the order stock, we have a stable and high order entry during the quarter, with a good spread over the business areas and also over our product segment. When we compare with the previous year, we had an order entry in the second quarter of 13.2 billion against 16.4, but as mentioned earlier, Last year we took in Bodö Airport and it was a single order of 3.3 billion, which also extends over time. We have continued to have a high order volume of almost 52 billion, approximately one billion higher than last year. In addition, the order volume has extended over time. 73% of our project is smaller than 500 million in size. This gives us a diversified order stack and also a good risk distribution. If we look at the order stack over time, we see that, as we said, it has been extended in time. 59% of the order stack will be executed in 2026 or later. But if we look at the current year, we have 1.3 billion more in the order book that will be executed this year than at the corresponding time last year. So for the remaining half year, we have 1.3 billion more in the order book than we had last year. We have also, as we said earlier, we have these earlier dialogues with the orderers within the entrepreneurial activities, so-called phase 1s. And the value of these phase 1s goes up, last June, to 16 billion, an increase from the year shift when they went up to 13 billion. And this is phase 1s that we estimate can be ordered within the next two years. Vi har ett negativt kassaflöde om 560 miljoner i kvartalet. Det här är också säsongsmässigt normalt. Vi har, som vi sagt tidigare, normalt sett ett svagt kassaflöde, ofta negativt i första och andra kvartalet. Och sen återhämtas det med starka kassaflöden i kvartal 3 och 4. Specifikt i detta kvartalet så är det an increased capital flow, especially when it comes to project development and business industry. If we look at business industry, it is a normal seasonal increase in capital flow. When it comes to project development, we see an impact of what we have talked about earlier, where we bind capital in projects in earlier phases i.e. housing and own balance calculation, where the result calculation comes at a later time. We have an unchanged net debt. It rose to 9.5 billion SEK at the half-year shift compared to 9.6 billion SEK earlier this year. Specifically during the quarter, we have paid out the first part of the issuance to the property owners of 431 million SEK. In net debt, we also take up the unsold part of the project financing for the newly developed housing project. It is now at 1.9 billion SEK. One year back, it was at 2.3 billion SEK. Som en avgående post i vår nettoskuld så hade vi också per halvårsskiftet fodran på URV, avseende mål och skande 9, som låg där med en miljard i räntebärande fodran. Den reglerades då den 2 juli, vilket innebär att den tillgängliga likviditeten då ökade den 2 juli, men nettoskulden var oförändrad. Målavstämningen. Som ni vet, vi har fyra målområden med totalt nio externa mål och vi efter halvårsskiftet så stämmer vi av fyra av de här målen eller avrapporterar fyra av dem och de två finansiella kommer jag då att ta här och sedan lämna över till Jesper. Vi har ett rörelsemarginalmål To have a margin of over 6%. We have also said that it is based on having some kind of normal conjuncture for all of our business areas. Right now we have three business areas that deliver fully, but a weaker market for housing development. But in this market, we deliver a moving margin of 4.7%, which is a stable level. This is also what we had for the whole of 2024. And the net profit margin Den fluktuerar normalt sett över året på samma sätt som kassaflödet. Vi har ett finansiellt mål att den ska ligga inom 0,3 till 0,7. Efter stängningen av andra kvartalet låg den på 0,6, alltså inom målet. Då lämnar jag över till Jesper igen.

We also have two non-financial goals. The first is serious failures, where we meet the trend of a rolling 12. We are going to have a falling trend. The comparison number is 33. That was what we had under 2024. And the rolling 12 after the first two quarters of 2025, we are at 29. So it's a falling trend. 20 of them were owned by individuals, 9 were under entrepreneurs. En trend som går på rätt håll och ett viktigt område för oss att hela tiden arbeta oförtrådligt vidare med. Det andra icke-finansiella målet är ENPS, eller att rekommendera PR-index, det vill säga hur pass villigt man som anställd är att rekommendera PR som arbetsgivare. Här ser vi den märkningen som gjord här under våren, sommaren, en tydlig förflyttning. Vi gick från 28 och ökade med fyra stycken indexenheter upp till 32. And what we are facing is the industry's benchmark, which was a shift from 2017 to 2018. So here we are making a big shift relative to the benchmark or the market in general. And what came up in the survey that explains this big increase compared to the benchmark is the collaboration with colleagues, the community, the belonging to a strong business culture, and that is the strengths of MP. And I think it feels both fun and inspiring. Another thing I think is worth mentioning is that we had participants of over 90%, 90.9% of all of our employees answer the survey. So it's a high level of commitment. It's really fun. If we summarize the second quarter or the first half of 2025, we have stable market views on the Nordic construction and construction market. They are unchanged as per the previous quarter report. Vi har anpassat vår verksamhet till nya förutsättningar på bostadsmarknaden. Vi har en organisation som har krympt, men vi har också en organisation som jobbar annorlunda med projekt än tidigare, där vi bygger egen bok till vissa delar och sen konverterar efterhand från serieproducent till mer with project-oriented operations. We have a good development in construction, local construction and parts of industrial operations. We have a stable order flow. We have a high order flow. A slightly lower turnover in the quarter, but we increase both the results and the margin. The gap between Södermalm and Skanevia is now finally regulated. And last but not least, I am happy that we have the breadth in the business, both when it comes to business and geography. like me, and it has felt good even in this quarter. So that was the first half of 2020.

Great, thank you very much Jesper and Miklas. Then we are ready for questions. If you want to ask a question, you can press square five on your phone units. And if you then want to withdraw the question, it is square six. And then there will be a little pause in between. when the questions are registered. So we'll see if anyone wants to ask questions. Nothing, I think.

The next question comes from Stefan Andersson from Danske Bank, a Danish-Swedish subsidiary. Please.

Please, Stefan.

Amen, hey, fuck, I'm an, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, uh, order backlog to work with H2. If you say straight out that you should have a higher top line in H2, it will be a quite dramatic turn. Is it because you have been early in the project, so that the mixer has been a little unlucky here for a while, or have I misunderstood a little how we communicate?

Niklas, I can say that it is true that when you look at the order stocks and what is left to produce, it is during this half year that it will happen. So it is in the short term that you should see that development. Then it may be that we have been early in the project, what plays into it is these phases 1 and others that we have, where it happens sometimes that a job that does not give so much turnover. And then when the project is well started, they go up in full operation in one go. So it's true that we have a high turnover rate for what will be completed in half a year.

We also have the Norwegian construction business that we have brought down essentially. So there you have a turnover rate that disappears.

Yes, that's right. But has it been in the industrial part?

Yes, in the industrial part. It's a more constant business that has been closed down.

And then the next question, which is a little more fun, is that you are shocked by the margin, especially in the facility. And then I got a little bit of a scratch on how I should. I'm sorry, let me finish the first question. If you look at the second half of the year, I think you should think that it is behind heavy then in the second half of the year or fairly evenly distributed when it comes to the top line development.

It's hard to comment on that. We don't want to give specific prognoses.

I understand. Next question. The margin was phenomenal. I wonder how I should look at it. You don't write anything about one-offs. I understand that it differs between quarters, but historically you have had quite small swings. marginals. It has slowed down a little slowly upwards or downwards, usually faster downwards than upwards. Is this an extension in Q2? Or is there anything you would like to say so that we don't go too much into Q3 and Q4 margins?

If I start, I agree and think it was a strong margin during the quarter. The companies show improvements all together. Then we have the project development company, which is the difference between the 5 and 6 percent that does not exist right now, and we have to work with that. Then I would prefer not to get into any discussions that can lead to, or I don't do it, that can lead to any forecasts. I just note that we had a good quarter, a good strong margin. Then you have to think a little bit about it from Niklas's point of view and how the portfolio can have changed and so on. I am clear that I do not believe that the stock market will recover quickly, I have said that for many quarters. And then what can be up and down is if there would be exit results within the property development side or not. It will come when it comes. Last year, for example, we had a lot of money with us in Q4 when we shared a tour.

Yes, I'm still talking about the installation, but thank you for that comment.

Yes, then you got it in full instead of the installation.

But just to reinforce that, of course, we don't leave any prognosis, but if you want to look at trends within the entrepreneurship business and especially within the institution, if you look at the rolling 12, you see more of a trend. It can be a bit difficult if you look at individual reports, but the rolling 12 usually speaks its clear language.

That was actually the last question that I may not get as much answer to, but we can see if you can elaborate a little on what you have in your portfolio. It's just that, I understand that we can count on the housing itself. Then if we look at what is not housing and is there, a more commercially oriented project that could be sold. I understand that you are not guided by whether it could be transactions during the second half of the year or not, but if we look more at What do you have there that is about to be completed? If we take the larger pieces, what do you have in that phase?

There is a list of the projects. We have a completed office in Gothenburg. We have four completed projects down in Malmö. And then we have a little different, of course, then. But you can say that, as you yourself say, we don't give any prognoses when we might do some business. But then it is also the case that our business model is not to be long-term owners of speed, but we are going to build them, develop them, maybe own them for a while, but then make sales. So that's probably what you have to think about.

And now you're looking at the possibility of starting something. It's pretty cold now. Now I'm talking again about commercial.

It's not really the market today. It can be found in some special segments, but then we're not on commercial as we used to with the office. Now we're more interested in housing or LSS or something like that, which is actually a combination of housing, although it's a commercial contract.

Thank you very much for that, Stefan.

The next question comes from Kevin Shirvanpour from CEP.

Good afternoon.

First and foremost, I have a follow-up question on the investment margin. I also think it was remarkably strong in the quarter. As I said, you can't give any explicit forecasts, but I'm just thinking in the second half of the year, is there anything that speaks to the fact that this margin improvement, if you think in relative terms, can continue during the second half of the year? For example, through volumes or something else?

I think we should continue where Niklas was and note that the best way to follow up on any activity is to look at the rolling twelve. instead of looking at individual quarters. Although I appreciate that this quarter was a strong quarter, but I think we have to stick to that and stick to it, David.

Okay, so we can interpret it as that on a 12-month basis, we have a margin of about 3.5%, approximately, that you are working on, or as indicative.

Vi har ju ett internt mål i vår lantmålverksamhet att vi ska kunna tjäna 3,5 % och rullande 12 nu ligger vi på 3,4 % på anlägg.

Okej, ja, men det är bra. Och sen också bara en fråga, det är väl kanske egentligen gällande den här nedskrivningen ni hade då avseende Målås Scandinavia. Det hade en ganska stor inverkan på income per share, then I think, can this have any impact on the allocation for 2025, if you think that you have a policy of at least 50% of profit per share, but that profit per share comes down significantly?

Yes, now we are not going to get into anything that is management and company demo issues, but you can say that we have an allocation goal that says that we are going to share 50% of the year's results. And here you are right, there is a reporting aspect to this, where we get this kind of financial network. On the other side, the board and the board members will also take into account the financial position of the company in general. And this means a bonus of 1 billion in money in the P&F. And then we'll see what...

And then I might just mention a bit of a closing question. When it comes to industrial operations, there is also good profitability. I think you have previously mentioned that there has been a certain positive impact from increased costs when it comes to road maintenance. How sustainable do you think these investments are? Do you expect it to continue for a longer period or is it temporary?

If you look into them, infrastructure propositions and the like, which are in different countries, they are long-term of their character. And we don't see anything there other than that this points to that this is a long-term need for investments, both in new investments and in maintenance. But of course, that can change over time, but everything indicates that this is something that will be for quite a long time.

Okay, thank you very much.

Those were the questions I had. Thank you very much for that, Kevan. Then I wonder if it was the last question. Should we give a last chance here if anyone wants to ask a question now? No, I don't think there will be any more questions. So, then we are done for today and thank you so much for your participation today. I would like to welcome you to the next presentation when we publish the report after the third quarter. That is on the 24th of October. When we talk about the upcoming date, I would also like to flag that we will hold a capital market update on November 25th. So also mark November 25th in your calendars. Med det så vill vi tacka så mycket för idag och önskar er en fortsatt fin sommar. Tack så mycket.