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YIT’s first quarter was exceptional in many ways. The positive aspects included the strong profitability of the Housing Finland and CEE segment, good consumer housing sales and the bright and unchanged outlook. The synergies deriving from the merger were specified further. According to the new assessment, the synergies will be greater and be achieved faster than previously estimated. The new Partnership properties segment, which YIT reported on for the first time in Q1, increases the transparency of the Group’s partnerships and the ownership of assets.
The result for the quarter was weighed down by weakened project margins in the Housing Russia, Business premises and Infrastructure projects segments. The adjustments were mainly due to a review of the project portfolio following the new organisation. Based on the review we booked a significant number of weakened project margins in the project portfolios of both of the merged companies.
The quarter was particularly exceptional due to the reporting changes related to the merger. YIT and Lemminkäinen merged at the beginning of February and the new reporting practices and segment structure were confirmed in conjunction with the merger. The Group now has six reporting segments, none of which are exactly the same as before the merger. Even the Paving segment was not brought over from Lemminkäinen in its previous form, as YIT’s road maintenance business was added to it.
YIT previously used percentage of completion (POC) reporting, which means that revenue recognition for self-developed consumer projects was based on multiplying sales by the percentage of completion. The Group’s primary reporting method is now based on IFRS principles, with revenue from residential projects for consumers recognised only upon completion. While the entire Group now uses IFRS reporting, it will continue to provide POC figures for its housing segments to make it easier to monitor the development of the business. As a result of the change in reporting practices, reporting is affected by the timing of the completion of residential projects, which was not the case in the past.
The official reporting period includes YIT’s figures from the beginning of January and Lemminkäinen’s figures from the beginning of February. However, there are no directly comparable comparison figures available for this combination, as the official reference period is YIT’s first quarter of 2017 without Lemminkäinen. To facilitate more relevant comparisons, the Q1 interim report features pro forma 2018 figures that include Lemminkäinen’s figures for January 2018, and the figures shown for the comparison period are pro forma 2017 figures under the new segment structure. Consensus was also calculated based on IFRS pro forma 2018 figures. Please refer to our website for analyst recommendations and assessments.
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There has not been a decline. YIT has sold, and continues to sell, projects in the CEE countries to YCE Housing I, a fund that YIT partly owns.
When projects are sold to the fund, they are reported as investor sales. YIT continues to sell projects owned by the fund to consumers through the same
organisation as self-developed residential projects.
However, as the apartments sold to consumers from the fund cannot be reported again as sales, these sales will be itemised as “of which apartments sold to consumers from the fund”.
In Q1, a total of 172 apartments were sold directly to consumers in the CEE countries, and a further 113 apartments were sold to consumers from the fund. A year ago, the corresponding figures were 250 apartments sold directly to consumers and 30 apartments sold through the fund.
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