YIT is a leading construction and development company.
- Quarter highlights
- 12/30/2021
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IR Newsletter - Quarter highlights Q4/2021
This newsletter summarises YIT fourth quarter quarter in anticipation of the silent period and the publication of YIT’s interim report.
Key discussion points of the quarter
The most discussed topics with investors during the fourth quarter were the company’s new strategy, targets, and profitability improvement.
- YIT’s new strategy for 2022-2025 was launched at the Capital Markets Day in November. The objective of the strategy is to be the most reliable partner to all stakeholders delivering predictable, market-leading results. YIT plans to achieve this objective by seeking growth in the Housing business and completing transformation in other businesses. To support this, YIT redefined and clarified its business model and introduced three strategic priority areas: Focus, Productivity, and ESG.
- YIT will measure the success of its strategy by new Group financial targets to be reached by the end of 2025: operating profit margin of 6%, gearing of less than 50%, and stable dividend growth.
- In order to optimise capital employed, YIT decided to review the company’s strategic options regarding its operations in Russia. To secure the best possible value creation, YIT is reviewing alternative paths, including a potential sale of the businesses.
- YIT updated its result guidance for 2021 due to Lestijärvi wind farm sale and actions based on YIT’s new strategy: Group adjusted operating profit expected to be in the range of EUR 105-125 million.
- YIT concluded the co-operation negotiations concerning white collar employees in Finland. The organisational changes to operate according to the new operating model will be effective as of 1 January 2022. The estimated number of personnel to be reduced is at the maximum of 230 employees in the whole YIT Group and at the maximum of 190 employees in Finland.
Selected recent news
Group news
|
Type |
Project / Event |
Link to release |
| Governance | Change in the YIT Management Team: Juhani Nummi leaves the company | |
| Governance | YIT’s co-operation negotiations have concluded in Finland | |
| Finance | YIT extends the maturity of its credit facility by one year and links it to sustainability targets | |
| Governance | YIT Corporation's financial reporting and Annual General Meeting in 2022 | |
| ESG | YIT commits to Science Based Targets initiative as the first Finnish construction company | |
| Strategy | YIT to evaluate its strategic options in Russia | |
| Strategy | YIT announces new focused strategy to deliver predictable, market-leading results | |
| Result guidance | YIT increases its result guidance for 2021 due to Lestijärvi wind farm sale and actions based on YIT’s new strategy: Group adjusted operating profit expected to be in the range of EUR 105-125 million | |
| Governance | Change in the YIT Management Team: Pii Raulo leaves the company | |
| Finance | YIT extends the maturity of its credit facility by two years |
Segment news
|
Segment |
Project / Event |
Value |
Timing |
Link to release |
|
Business Premises |
YIT sells Rehau production facilities in Lithuania to the international real estate investment company Hili Properties |
The purchase price is not disclosed |
- |
|
| Business Premises | YIT has sold a business center in Lithuania to a real estate investment company | The purchase price is not disclosed | - | Release (22 Nov) |
| Property Development | YIT, HGR and Ilmarinen aim to establish a joint venture regarding real estate development activities in Keilaniemi | - | - | Release (2 Dec) |
| Business Premises |
YIT signs contract for the Tiistilä school and daycare centre implementation phase | Approximately EUR 40 million | To the order book in Q4/2021 | Release (16 Dec) |
| Property Development | YIT starts negotiations to withdraw from the Trigoni project | Write down of EUR 15 million | In Q4/2021 | Release (22 Dec) |
| Property Development | YIT and Sirius Capital Partners to establish a co-investment for Finnish residential investments | - | Will be entered in the order book when the project-specific agreements are signed | Release (22 Dec) |
| Infra | YIT starts construction of part 2B of the Tampere Tram as part of the Tramway Alliance | Approximately EUR 37 million | To the order book in Q1/2022 | Release (23 Dec) |
Silent call
YIT’s Q4 silent call for analysts was held on Tue 21 December. CFO Tuomas Mäkipeska went through the highlights of the quarter followed by Q&A session. They key topics in the Q&A were:
Q: You mentioned that there are margin reduction in every segment. Does this include also Housing?
A: Yes, as mentioned, there are two kinds of projects: older legacy projects in which we have pressure to reduce margins, and some projects that are not in the core of the new strategy. This applies to all our segments, including Housing.
Q: What kind of non-core projects you have in Housing?
A: That is something we are not disclosing at this point, but we have looked at our project portfolio according to our new strategy and concluded that in every segment, there are those kinds of projects that may not continue in the future.
Q: Should we assume that the Housing projects are in locations that you don’t want to be present?
A: Yes, for example.
Q: Are there similar legacy projects in Business premises? Are those also due to the locations or other factors?
A: There are other factors as well in Business premises and in Infra segments, not so much dependent on the location. For example, constructional issues and so on. There are several factors impacting if the project is in line with our new strategy.
Q: How does the investors demand in Housing look in different regions. The rental marketing in the capital regions is quite poor currently, so what kind of development do you see in the demand side?
A: As mentioned, there are minor deviations in demand between the regions, but if we look at the big picture, the overall demand in Finland and also in the CEE countries is very strong. We have extremely low number of completed unsold apartments at this point, which is a good indicator of the market. Overall, the market looks promising, and we are looking forward to seeing if the market demand continues to be strong during the next year as well.
Q: During the quarter, you have sold couple of projects in Tampere, in Helsinki and in the Baltics. Will there be any significant impact on Q4 result or will the result be booked while projects are executed?
A: No deviation from normal. No big swings in Q4 result because of those.
In case you missed the silent call, you can find the podcast recording on our website
Earnings release
YIT’s Q4 Financial statements bulletin will be published on Friday, 4 February around 9 a.m. (Finnish time).
The news conference will be held on the same day at 10 a.m. (Finnish time).
Materials will be available on our website
If you have any questions, please don’t hesitate to contact us.
YIT Investor Relations team
investorrelations@yit.fi
You can find all our IR Newsletters on our website
