Wästbygg Group has three overarching goals for the business – sustainable business, long-term growth and good profitability.
SUSTAINABLE BUSINESS
Sustainable business is measured against two goals. By 2030, operations must be fossil-free with regards to electricity, heating, transport and waste. As a result of systematic work to reduce the climate footprint of all our workplaces, we have achieved a gradual reduction since the goal was set in 2017 through 2021. In 2022, we noted a slight increase in the climate load. We have not fully managed a growth of just over 50 percent and at the same time reduce CO2e emissions. In relation to turnover, however, emissions decreased by 30 percent.
The second goal is that, based on the company’s green financial framework, we should have an order backlog that is 80 percent classified as green by the year 2024 – which it was already at the end of 2022. At the end of 2023, this share amounted to 85 percent. For a project to be classified as green according to our framework, the building must either be environmentally certified or have an energy consumption that is at least 20 percent lower than the Housing Authority’s building regulations.
LONG-TERM GROWTH
Wästbygg Group’s goal for growth is for revenues to increase by ten percent annually, however, seen over time. Growth is therefore measured over the past three years, starting from the end of the year before the current three-year period. The KPI used is CAGR – Compound Annual Growth Rate. Growth shall be made with good profitability in mind. There is no inherent value in a large increase in volume, but the growth target must go hand in hand with a good operating margin and a high equity ratio. Revenues in 2023 decreased by 20 percent compared to the previous year, which gives a CAGR of 8,4 percent over the current measurement period. We had with us a record high order backlog in 2023 and have had a continued strong and stable order intake during the year.
GOOD PROFITABILITY
Profitability is measured by the KPI operating margin, which consists of earnings before interest and taxes (EBIT) in relation to revenues. The operating margin must exceed six percent over time. If so, we have stable profitability in Wästbygg Group’s operations.
The operating result for 2023 was significantly lower than desired and has not followed the increased growth. Write-downs have had to be made during the year in a few projects, among other things as a result of the significantly rising material prices, bankruptcies of subcontractors and a more pressured housing market. In addition, generally lower profit margins are reported in our self-developed housing projects as a result of higher interest rates. Another reason is that we have not been able to start production of new development projects at the planned pace as a result of the general wait-and-see tendency in the market.
