YIT's Interim Report January-March 2009: Revenue for the whole year will decrease clearly but profit before taxes will be positive

YIT CORPORATION     INTERIM REPORT    April 24, 2009 at 8:00

YIT'S INTERIM REPORT, JANUARY 1 – MARCH 31, 2009:

In January-March:

• Revenue decreased by 11 per cent to EUR 823.7 million (1-3/2008: EUR 927.0 million).
• Operating profit decreased by 72 per cent to EUR 22.1 million (EUR 78.6 million).
• Operating profit amounted to 2.7% (8.5%) of revenue.
• Profit before taxes decreased by 97 per cent to EUR 2.2 million (EUR 70.3 million).
• Earnings per share decreased to EUR 0.02 (EUR 0.40).
• Return on investment was 14.3% (28.1%).
• Gearing ratio was 88.5% (60.6%).
• Operating cash flow after investments amounted to EUR 10.3 million (EUR 51.0 million).
• Order backlog decreased by 16 per cent to EUR 3,045.0 million (EUR 3,627.0 million) at the end of the period. Order backlog includes the residential projects that were halted in October 2008; the value of which in the order backlog at the end of March 2009 was EUR 322 million.
• Number of personnel at the end of March was 25,239 (23,644).

Development compared to the previous quarter:

Building and Industrial Services

• The segment’s profitability developed relatively steadily in January-March compared to the last quarter of 2008. The operating profit margin was 5.3 per cent (10-12/08: 6.5%). Operating profit amounted to EUR 28.6 million (EUR 46.0 million). Revenue decreased by 25 per cent and operating profit by 38 per cent compared to previous quarter.
• Service and maintenance operations accounted for EUR 281.2 million (10-12/2008: EUR 273.8 million) or 52 per cent of the segment's revenue.
• The building system deliveries focused on renovation and reconstruction and public sector investments.
• Demand for industrial investments focused on the energy industry. During the period, several agreements were made in industrial export projects.

Construction Services Finland

• The segment’s profitability improved compared with the previous quarter. Operating profit margin was 8.7 per cent (10-12/08: 7.0%). Operating profit amounted to EUR 20.9 million (10-12/08: EUR 18.8 million). Revenue decreased by 11 per cent and operating profit increased by 11 per cent compared to the previous quarter.
• Residential consumer sales picked up, and YIT sold 276 (10-12/08: 158) residential units to consumers in January-March. The price level remained stable. The merchandise inventory decreased, and at the end of March YIT had 921 (12/08: 1,118) unsold residential units that were completed or under construction.
• Construction of business premises was concentrated on completing the ongoing projects and acquiring tenants for new, ongoing and completed projects.
• The development of infrastructure construction remained favourable.

International Construction Services

• The segment’s operating loss was EUR -23.8 million (10-12/08: EUR -9.2 million). The decline in operating loss was caused by the low volume of residential sales and adjustments made in project margin forecasts. Revenue was 36 per cent less than in October-December 2008.
• In Russia, residential sales picked up in February-March compared to the previous months, and YIT sold 323 (10-12/08: 299) residential units during the quarter. Apartment prices stayed for the most part at the same level as at the turn of the year.
• At the end of March, YIT had 6,874 (12/08: 8,407) apartments under construction in Russia. Of those apartments 2,523 (12/08: 3 120) were sold and 4,351 (12/08: 5,287) were unsold. In October 2008 YIT decided to halt the construction of 2,485 apartments and these apartments are not included in the under construction figures. At the end of March YIT had 867 (12/08: 247) completed but unsold residential units.
• Invested capital in Russia amounted to EUR 508.6 million (12/08: EUR 545.2 million) at the end of March representing 33 per cent (12/08: 33%) of the Group’s invested capital.
• Strong need for apartments continues in Russia and the development of residential sales is also supported by reduced supply as several developers have suspended projects in the current market situation. YIT wants to maintain its credibility as a reliable partner in Russia. We will complete all the housing projects that have been started and estimate that we will be able to sell the apartments with positive gross margin.
• In the Baltic countries, a weak market situation continued. YIT decreased the number of its unsold apartments. At the end of March YIT had 243 (12/08: 296) unsold residential units that were completed or under construction.

Outlook for 2009

YIT Corporation estimates that in 2009 the Group revenue will decrease clearly but profit before taxes will be positive.

In Building and Industrial Services, revenue and operating profit are estimated to decrease and the profitability to weaken somewhat. Approximately half of the segment’s revenue is derived from service and maintenance operations, where demand will develop relatively steadily in spite of the uncertain market conditions. The target is to increase service and maintenance operations. The demand for renovation will continue to grow. Investments in industry and commercial real estate will decrease.

In Construction Services Finland, revenue and operating profit are estimated to decrease clearly. Profitability will be at a moderate level. Residential construction is estimated to decrease, and focus will be on interest-subsidised and market-financed rental housing production. Decreased interest rates, higher rents and need that piles up due to reduced supply will support the demand for owner-occupied housing. Construction of new business premises is estimated to clearly decrease. The number of infrastructure projects will be stable or grow as a result of public sector stimulus measures.

In International Construction Services, revenue is estimated to decrease clearly and the operating profit is estimated to be negative. The target is to stabilise operations. We estimate consumer demand to remain unchanged in Russia, provided that the price of oil and exchange rate of the ruble will stay at their current levels at minimum. The decreased supply, as several constructors have suspended their projects may decrease the pressure to lower selling prices. The devaluation of the ruble brings down the costs of completing the apartments that are under construction in euro terms and has an effect on YIT’s revenue and earnings development in euro terms. The weak market situation in the Baltic countries will continue.

In the Financial Statements bulletin published on February 9, 2009 YIT said that the Group's revenue and profit estimate for 2009 will be specified at a later time.

Information sessions, webcast and conference call

There will be two information sessions on the interim report on Friday, April 24, 2009:

• An event for investors and analysts at 10:00 am (Finnish time, EEST) in English
• A press conference at 1:00 pm in Finnish.

Both events will be held at YIT's head office, address Panuntie 11, 00620 Helsinki, Finland.

The information session in English can be viewed live at YIT's web site, www.yitgroup.com/webcast. The webcast replay will be available at the same address starting at approximately 12:00 p.m. Participants are asked to call the assigned number +44 (0) 20 7162 0077 at 9:55 (Finnish time, EEST) at the latest, i.e. a minimum of 5 minutes before the conference call begins.

The presentation materials of the events will be available after the release of the interim report at www.yitgroup.com/investors.

Schedule in different time zones

Time zone	Interim Report  published	The investor event, conference call and live webcast	Recorded webcast available
EEST (Helsinki)	08.00 a.m.	10.00 a.m.	12.00 a.m.
CEST (Paris, Stockholm	07.00 a.m.	09.00 a.m.	11.00 a.m.
BST (London)	06.00 a.m.	08.00 a.m.	10.00 a.m.
US EDT (New York)	01.00 a.m.	03.00 a.m.	05.00 a.m.

 

The Interim Report for January-June 2009 will be published on July 24, 2009, and the Interim Report for January-September on October 28, 2009. Financial reports and other investor information can be viewed on YIT's website, www.yitgroup.com. The materials may be ordered via the Internet site, by sending an e-mail to InvestorRelations@yit.fi or by telephone at +358 20 433 2467.

 

YIT CORPORATION

Juhani Pitkäkoski
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: NASDAQ OMX Helsinki, main media, www.yitgroup.com