Strategy for 2019-2021 - Performance through cycles
The target of YIT’s new strategy is to improve profitability and to strengthen financial stability. The company’s strategic priorities, sources of growth and structural profitability, include urban development and non-cyclical businesses.
YIT’s Board of Directors confirmed YIT's new strategy for 2019–2021 in September 2018. The strategy and its implementation were be discussed in more detail in the Capital Markets Day held in Helsinki, Finland, on September 27, 2018. The presentations can be found at http://www.yitgroup.com/cmd.
Megatrends urbanisation, sustainability, and digitalisation as a basis for the strategy
Due to urbanisation people move to growth centres and further to the metropolitan areas. Urban structures become more dense near the public transport hubs where cities expand upwards and underground through various versatile projects, instead of expanding horizontally. The importance of sustainability is emphasised as people’s mindset and legislation change. The circular economy gains a stronger foothold, and traditional ownership will be partly replaced by shared ownership and the sharing economy. The demand for renovation construction and services will increase. Digitalisation provides opportunities to improve customer experience and enhance productivity. Collecting, analysing and using data create new business opportunities.
Strategic priorities: urban development and non-cyclical businesses
The development of YIT’s businesses is based on two strategic priorities: urban development and non-cyclical businesses. The company targets to increase these businesses actively both via investments and organically.
For urban development, YIT can fully utilise its strengths: project development, design and planning management, and management and coordination of complex projects. Managing the entire construction value chain from planning to maintenance brings the greatest productivity and customer benefits. Self-developed projects, life-cycle projects, different turnkey contracting models and cooperative projects including alliances, enable a holistic approach to the achievement of benefits.
Non-cyclical businesses are based on long-term service contracts and lease agreements as well as on demand that is growing steadily or at a trend rate. At YIT, these businesses include paving, mineral aggregates business, road maintenance, renovation projects, real estate investment, property management and living services. The company’s target is to generate an annual, steady, operating profit of approximately EUR 100 million from its non-cyclical businesses from 2019.
The cornerstones of success support the strategic priorities
The four cornerstones of YIT’s success are: (1) top performance, (2) capital efficiency, (3) success with customers and partners, and (4) happy people.
YIT and Lemminkäinen merged on February 1, 2018. The target of the integration is to gain EUR 40–50 million in total synergy benefits by the end of 2020. Common ways of working are created as part of the integration, and they form a suitable basis for scaling the good practices of productivity pilots. Productivity is sought by decreasing waste and turnaround times, without compromising quality. Targets are set segment-specifically. Productivity is improved through, for instance, planning management, applying lean principles, the use of BIM (Building Information Model), the increased use of prefabricates, and the closer cooperation of planning, procurement and production.
YIT’s target is to decrease its net working capital and to release capital in selected geographical areas by selling slow moving assets on the balance sheet. In Russia, the company will decrease the risk level and develop its business model in a less capital-intensive direction. YIT’s target is to further release capital employed in Russia by approximately EUR 100 million (RUB 8 billion) from the earlier target level. In the Partnership properties segment, invested capital is estimated to increase by approximately EUR 150 million during the strategy period.
Success with customers and partners
Knowing the customers and understanding their needs help YIT develop improved solutions and better services. To boost innovation, accelerate development, and ensure the implementation of large-scale projects, YIT will continue to expand and strengthen collaboration with its partner companies. The company will improve the customer experience by increasing customer understanding, the use of data, conceptualisation and active daily customer work, and aims for an annually increasing net promoter score (NPS, net promoter score).
Profitability and continuity are ensured by the most competent people in the field. YIT strives to create a working community where the company culture, management, tools, and atmosphere support commitment and satisfaction. Openness within the working community, working methods that encourage participation, personnel development, and compensation and benefits policies are some of the keys to support the company’s success. YIT’s target is to be the most desired employer in its field among both students and professionals.