YIT's financial statements bulletin for 2007: Strong and balanced profitable growth continued

YIT CORPORATION       FINANCIAL STATEMENTS BULLETIN       Feb 8, 2008 at 8:00 am

 

YIT Group's strong and balanced growth continued in 2007. The Group met all its published financial targets. Revenue increased by 13% and operating profit by 31% on the previous year. The order backlog also reached an all-time high level. The Board of Directors proposes raising the dividend per share for the thirteenth year in a row and that a dividend of EUR 0.80 per share be paid for 2007.

“Profitable growth continued in all our geographic areas of operation and business segments, even though uncertainties in the economy increased towards the end of the year. Brisk business premise construction increased the demand for building equipment system services in the Nordic countries. There was increase in deliveries of energy efficiency-related solutions and service agreements. In Russia, residential sales picked up considerably towards the end of the year. We expanded our network of branch offices in Russia by establishing a joint venture in Rostov-na-Donu,” says President and CEO Hannu Leinonen.

“Service and maintenance agreements that increase stability in the long-term accounted for 37% of the Group's revenue. In Finland, the rise in business premise and infrastructure construction kept construction activity growing as a whole, despite the slackening of residential demand, which has been strong for several years. Partnership agreements and our specific competence maintained the demand for our industrial services,” continues Leinonen.

Profitable growth in all business segments

In Building Systems, operating profit increased by 28% to EUR 112.2 million (2006: EUR 87.6 million). Operating profit margin rose to 6.8% (6.2%). Revenue increased by 17%. Order backlog grew by 18%.

Operating profit in Construction Services increased by 17% to EUR 200.6 million (EUR 170.8 million). Operating profit margin remained excellent, amounting to 12.3% (11.8%). Revenue increased by 13%. Order backlog grew by 29%.

Operating profit in Industrial and Network Services was EUR 41.2 million (EUR 18.0 million) and operating profit margin 8.4% (3.8%). Profitability improved compared to the previous year, even when excluding the non-recurring items resulting from the sale of the Network Services business and adjustment expenses from the operating profit. Revenue increased by 3% and order backlog by 19% on the previous year.

Revenue increased by 13 per cent

YIT Group's revenue for 2007 grew by 13%, without significant acquisitions, to EUR 3,706.5 million (2006: EUR 3,284.4 million). Finland accounted for 52% of revenue (55%), other Nordic countries for 33% (32%), Russia for 9% (7%) and Lithuania, Latvia and Estonia for 6% (6%). Revenue in Russia increased by 49% to EUR 322.6 million (EUR 216.9 million).

Operating profit increased by 31 per cent

The Group's operating profit increased by 31% to EUR 337.8 million (EUR 258.8 million). Operating profit margin improved to 9.1% (7.9%). Earnings per share increased by 30% to EUR 1.77 (EUR 1.36). Return on investment was 26.2% (24.8%).

The positive impact of non-recurring items from the sale of the Network Services unit on operating profit amounted to EUR 14.4 million and on profit after taxes EUR 9.0 million. Excluding these non-recurring items the comparable growth in YIT Group's operating profit was 25%, operating profit margin 8.7%, earnings per share EUR 1.70 and growth in earning per share 25%.

Stronger financial position

Cash flow from operations increased. The gearing ratio decreased to 62.9% (75.1%). Net debt was EUR 514.8 million (EUR 506.5 million). Financial expenses increased as a result of higher interest rates and increase in the amount of capital invested in Russia. Capital investment in Russia increased as a result of business growth, land acquisition and development and ongoing production. At year’s end, 33% (23%), or EUR 460 million (EUR 279 million), of the Group’s invested capital was tied up in Russia. The balance sheet total at the end of the year was EUR 2,461.3 million (EUR 2,117.8 million). The Group's equity ratio was 36.7% (34.5%).

Dividend proposal EUR 0.80

The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.80 per share (EUR 0.65) be paid for the 2007 financial year. YIT is raising its dividends for the thirteenth year in a row.

Order backlog grew by 25 per cent

The Group's order backlog is solid. At year's end was the order backlog was 25% bigger than the year before, reaching EUR 3,509.3 million (EUR 2,802.3 million). The order backlog has a healthy margin.

The number of personnel grew

At the end of 2007, the Group employed 24,073 (22,311) people. Of YIT’s employees, 48% work in Finland, 36% in the other Nordic countries, 9% in Russia and 7% in Lithuania, Latvia and Estonia. As a result of the sale of the Network Services unit, approximately 1,000 Finnish employees left YIT at the beginning of 2008.

Outlook for 2008

The demand for building system services is solid throughout the market area and the segment's order backlog is good. YIT aims at increasing its market share in building systems in all of the Nordic countries.

In Russia, strong demand for housing continues. YIT's strong order backlog and volume of ongoing residential production provide good prerequisites for meeting the targets set for the Russian business.

In Finland, construction remains at a good level on the whole but is more focused on business premise and infrastructure construction that have a strong order backlog. The outlook for residential production has weakened after last summer.

Industrial Services enjoy a good order backlog. Business opportunities are found particularly in outsourcing of industrial maintenance in Finland.

The economic outlook for YIT's area of operations remains favourable, even though uncertainties in the economy have increased.

Consequently, we estimate that the revenue and profit before taxes for 2008 will increase compared to the previous year.

Annual General Meeting

YIT Corporation's Annual General Meeting will be held on Thursday, March 13, 2008, from 1:00 pm (Finnish time) onwards at Finlandia Hall, Mannerheimintie 13 e, 00100 Helsinki, Finland. The full notice of the meeting, including the Board of Directors’ proposals to the Annual General Meeting, will be published as a separate stock exchange release on February 8, 2008.

Annual Report 2007 and Interim Reports in 2008

The Annual Report for 2007 will be published on YIT’s Internet site in Finnish and English during week of Feb 18th. Interim Reports will be released on April 25, July 25 and October 29, 2008. Financial reports and other investor information can be viewed on our site, www.yitgroup.com.

YIT Group's business segment structure was revised as of the beginning of 2008, with Construction Services being divided into two segments. The segments are Building Systems, Construction Services Finland, International Construction Services and Industrial Services. YIT will publish comparable figures for 2007 on the Construction Services Finland and International Construction Services segments as a stock exchange release before the publishing of Jan-Mar/2008 Interim Report.

Information sessions, webcast and conference call

An event for investment analysts and portfolio managers will be held at YIT’s head office in English on Friday, 8 February. The address is Panuntie 11, 00620 Helsinki, Finland. Investment analysts and portfolio managers can also participate in the event through a conference call. Conference call participants are requested to call a minimum of 5 minutes prior to the start of the event in Finland: +358 9 2313 9201 or UK: +44 20 7162 0025.

A webcast of the presentation given by CEO Hannu Leinonen in the analyst and portfolio manager event can be viewed live at www.yitgroup.com/webcast

The webcast replay will be available at the same address.

Time zone	The investor event, conference call and webcast presentation will start at	Recording of the webcast presentation will be available at
EEST (Helsinki)	10:00 a.m.	12:00 a.m.
CEST (Paris, Stockholm)	9:00 a.m.	11:00 a.m.
BST (London)	8:00 a.m.	10:00 a.m.
US EDT (New York)	3:00 a.m.	5:00 a.m.

 

YIT CORPORATION

Hannu Leinonen
President and CEO

For further information, please contact:
Sakari Ahdekivi, Chief Financial Officer, +358 20 433 2258, sakari.ahdekivi@yit.fi
Petra Thorén, Senior Vice President, Investor Relations, +358 40 764 5462, petra.thoren@yit.fi

Distribution: OMX Nordic Exchange Helsinki, main media, www.yitgroup.com