Business segment structure
Business segment structure
The merger of YIT and Lemminkäinen took effect on February 1, 2018. As of February 1, 2018, YIT Corporation’s six reportable segments are as follows:
Housing Finland and CEE
The segment’s business comprises the development and construction of apartments and entire residential areas as well as leisure-time residences. The segment’s main focus is on self-developed projects, and YIT mainly sells the constructed apartments to both consumers and investors. Additionally, YIT develops and offers various living services and concepts. The segment’s geographical markets are Finland, the Czech Republic, Slovakia, Poland, Estonia, Latvia and Lithuania.
The segment’s business comprises development and construction of apartments and entire residential areas in Russia. YIT has operated in Russia in over 55 years with both self-developed and contracting projects. YIT focuses on self-developed housing construction, while maintenance, property management as well as additional services have lately become increasingly important in residential construction projects. Additionally, YIT has two industrial park projects in Russia.
In this segment YIT pursues both self-developed projects and contracting. For its self-developed projects YIT acquires users and tenants for the premises as well as develops, constructs and divests the premises. Self-developed projects typically include offices, retail premises, as well as logistics or care sector premises. In contracting, projects typically include public facilities, industrial properties and business premises. In addition to new construction, YIT also carries out renovation projects. The segment’s geographical markets are Finland, Estonia, Latvia, Lithuania and Slovakia.
The operations cover the construction of roads, bridges, railways, metro stations, harbours and parking facilities as well as building power plants, water supply and industrial plants. YIT also offers wind power plant foundation solutions as well as related services and maintenance. Additionally, YIT excavates tunnels and mines and reinforces soil using various methods. The segment operates in Finland, Sweden, Norway, Estonia, Latvia and Lithuania.
The segment’s operations include paving and production of mineral aggregates as well as stabilisation, crushing and waterproofing. The segment also maintains road and street networks. The company cooperates with its customers to produce paving for especially demanding works, such as airport runways with extremely high quality demands. Approximately half of the segment’s revenue originates from public procurement by states and municipalities. Paving and mineral aggregate production are capital-intensive businesses tying capital into machinery and equipment, plots and current assets. The Paving segment operates in Finland, Sweden, Norway, Denmark and Russia.
The Partnership properties segment was established on January 1, 2018. The objective of the segment is to improve visibility on the reporting of partnership projects, to improve the capability to execute major projects together with partners and to facilitate the creation of a project portfolio generating rental revenue cash flows. In the long term, YIT aims to continue its practice of divesting its holdings to final investors at the time it sees fit.
The income for the segment derives from investments, i.e. from rental income and in the future changes in the value of the assets following their completion as well as sales. Additionally, the segment will potentially have revenue from diverse service agreements associated with the possession or acquisition of its partially owned assets. The segment’s revenue is typically low. On the other hand, rental revenue received by joint ventures or associated companies, such as fund structures, or changes in the value of properties owned by them or capital gains from their realisation are reported in the income statement of the segment under revenue in “Share of results in associated companies”. These items account for the majority of the segment’s income. The segment may also receive interest income when funding its associated companies with loan capital.