Lemminkäinen Interim Report 1 January - 31 March 2017



January‒March 2017 (1‒3/2016)

  • Order inflow was EUR 424.3 million (400.5).
  • Order book at the end of the period amounted to EUR 1,566.8 million (1,449.0).
  • Net sales totalled EUR 240.3 million (216.8).
  • Operating profit amounted to EUR -32.9 million (-31.4), or -13.7% (-14.5) of net sales. The operating profit includes a EUR 3.4 million compensation related to the Helsinki Court of Appeal’s decision regarding breach of the Finnish environmental protection law.
  • Profit for the period was EUR -30.4 million (-27.9).
  • Earnings per share were EUR -1.34 (-1.31).
  • Cash flow from operating activities totalled EUR -48.9 million (-18.4).
  • Equity ratio at the end of the review period was 37.3% (36.0) and gearing 47.7% (61.8).
  • Interest-bearing net debt at the end of the review period was EUR 137.6 million (186.6).

Profit guidance for 2017

The profit guidance for 2017 remains intactLemminkäinen estimates that its net sales in 2017 will grow from 2016 (EUR 1,682.7 million). Operating profit (IFRS) in 2017 is expected to improve from EUR 45.1 million which reflects the operational performance in 2016.

Key figures, IFRS 1-3/2017 1-3/2016 Change 1-12/2016
Net sales M€ 240.3 216.8 23.5 1,682.7
  Paving M€ 42.9 31.9 11.0 648.5
  Infra projects M€ 79.6 65.0 14.6 426.2
  Building construction,
M€ 113.8 113.1 0.7 581.2
  Russian operations M€ 9.8 5.8 4.0 54.5
  Other operations and
  Group eliminations
M€ -5.9 0.9 -6.8 -27.7
Operating profit M€ -32.9 -31.4 -1.5 67.6
  Paving M€ -24.7 -25.4 0.7 20.8
  Infra projects M€ -3.6 -3.4 -0.2 12.5
  Building construction,
M€ 0.6 -0.8 1.4 17.2
  Russian operations M€ -1.0 -0.6 -0.4 -3.8
  Other operations M€ -4.1 -1.2 -2.9 20.9
Operating margin % -13.7 -14.5 4.0
  Paving % -57.6 -79.4 3.2
  Infra projects % -4.5 -5.3 2.9
  Building construction, Finland % 0.5 -0.7 3.0
  Russian operations % -10.5 -10.1 -7.0
Pre-tax profit M€ -37.1 -35.3 -1.8 49.2
Profit for the period M€ -30.4 -27.9 -2.5 38.0
Earnings per share
for the period, basic
-1.34 -1.31 -0.03 1.27
Earnings per share
for the period, diluted
-1.34 -1.31 -0.03 1.26
Cash flow from operating activities M€ -48.9 -18.4 -30.5 131.7

Key figures, IFRS 31 March 2017 31 March 2016 Change 3/17
vs 3/16
31 Dec 2016 Change 3/17
vs 12/16
Order book M€ 1,566.8 1,449.0 117.8 1,265.2 301.6
Operating capital M€ 392.9 450.4 -57.5 388.2 4.7
Balance sheet total M€ 931.0 949.6 -18.6 968.0 -37.0
Interest-bearing net debt M€ 137.6 186.6 -49.0 81.1 56.5
Equity ratio 1) % 37.3 36.0 39.5
Gearing 2) % 47.7 61.8 24.3
Return on capital employed,
rolling 12 months
% 11.6 3.6 11.3

1) Equity ratio, if hybrid bonds were treated as debt: 3/2017: 32.8%, 3/2016: 27.7% and 12/2016: 35.4%.

2) Gearing, if hybrid bonds were treated as debt: 3/2017: 68.0%, 3/2016: 110.1% and 12/2016: 38.8%.

President and CEO Casimir Lindholm:

“During the first quarter, our operating profit decreased slightly year-on-year, but operationally our performance improved,” says Casimir Lindholm, President and CEO. “In Paving, operating result improved in Finland and Norway. In Building construction, Finland, operating profit was supported by higher year-on-year volumes in non-residential construction in the Helsinki metropolitan area. In Infra projects, operating profit was on par with the comparison period. In Russian operations, a lower year-on-year number of sold development units weakened the result. Our Group operating profit was, however, burdened with a EUR 3.4 million compensation related to the Helsinki Court of Appeal’s decision regarding breach of the Finnish environmental protection law.”

“Our financial position strengthened year-on-year. Our operating capital decreased from EUR 450 million to EUR 393 million and our interest-bearing net debt declined from EUR 187 million to EUR 138 million. Although our financial position has improved, we will continue to manage our balance sheet and cash flow also going forward.”

“Our order book developed favourably during the first quarter. In Paving, our order book before the season start is on a higher level compared to last year. In addition, Building construction, Finland and Russian operations have strong order books. In Infra projects, order book growth is still needed.”

“The market outlook for our businesses remains positive. Housing sales is solid in Finland and the government and municipalities have confirmed future plans regarding large transportation infrastructure projects. In Sweden and Norway, States continue to invest in infrastructure construction. We have faced challenges in our operations in Sweden, but during the past months we have changed the management in both Paving and Infra projects, and will continue measures to improve local operations. Our focus this year remains on improving our operational efficiency in all operations.”

Market outlook

In Finland, the total volume of construction is expected to grow slightly in 2017. Residential construction overall is estimated to remain at a good level, although investor demand is expected to decline somewhat from the high levels witnessed in 2016. Demand for apartments will still be focused on small units in urban growth centres. Non-residential construction is estimated to remain stable, due to individual major projects and public sector works. Renovation is expected to grow moderately due to increasing urbanisation and public sector works.

Infrastructure construction is expected to grow approximately 2% in 2017. The Government's decisions regarding transport projects in the General Government Fiscal Plan as well as major cities’ investments in transportation infrastructure improve the outlook for both paving and infra projects. The state's planned investments in basic road maintenance are expected to keep demand stable for paving in 2017. Demand for infra projects is maintained by complex projects in urban growth centres and industrial investments but the competition is intense.

In Norway and Sweden, infrastructure construction is boosted by multi-year, state-funded traffic infrastructure development programmes. In both countries, infrastructure construction is expected to grow in 2017. Large-scale road and railway projects are ongoing or planned near urban growth centres in Sweden and Norway, which will increase demand for infra projects and paving. In addition, especially Norway is investing in the development and renewal of energy production.

In Denmark, demand for paving is expected to decline as public investments in road infrastructure are decreasing.

In Russia, economic growth is estimated to remain at a low level. The fluctuations in the price of oil are reflected in the currency exchange rate. In negotiated contracting in building construction, price competition is high but the reliability of the builder has become a competitive advantage. Construction and repair projects on major roads are expected to maintain demand for paving.

In the Baltic countries, the volume of infrastructure construction is expected to start growing moderately.


A Finnish-language briefing for analysts and the media will be held at 12:00 noon (EET) on Thursday 27 April 2017 at Lemminkäinen’s head office. The street address is Salmisaarenaukio 2, Helsinki, Finland. Lemminkäinen's President and CEO Casimir Lindholm will present the Financial statements bulletin. The presentation material can be found in Finnish and English at the company’s website, www.lemminkainen.com/investors.

Financial reporting in 2017

In 2017, financial reports are published as follows:

9 February 2017 Financial statements bulletin 2016
Week 9 Annual report 2016
27 April 2017      Interim report 1 Jan – 31 March 2017
27 July 2017 Half year financial report 1 Jan – 30 June 2017
26 October 2017   Interim report 1 Jan – 30 Sep 2017

Corporate Communications

Additional information:
Casimir Lindholm, President and CEO, tel. +358 2071 53304
Ilkka Salonen, CFO, tel. +358 2071 53304

Nasdaq Helsinki Ltd
Key media

Lemminkäinen is an expert in complex infrastructure construction and building construction in Northern Europe and one of the largest paving companies in its market. Together with our customers and 4,700 professionals we employ, we build a sustainable society. In 2016, our net sales were EUR 1.7 billion. Lemminkäinen Corporation’s share is quoted on Nasdaq Helsinki Ltd. www.lemminkainen.com