Inside information: YIT plans to sharpen its operating model and seeks efficiency gains
YIT will launch a transformation program to improve the company’s performance and competitiveness. The target is to simplify the organisational structure and operating model, increase agility and strengthen customer focus.
The program is designed to generate efficiency gains. The targeted, inflation-adjusted run-rate cost savings are expected to be at least EUR 40 million by the end of 2024. More than half of the planned run-rate cost savings are expected to be achieved already during 2023. These efficiency gains will come on top of the cost savings announced at Capital Markets Day in November 2021, when YIT outlined plans to achieve annual cost savings of EUR 15–20 million by 2023. YIT has achieved annual cost savings of over EUR 20 million by the end of 2022.
“Our goal is to strengthen YIT and make a step change in simplifying the way we run our business. The planned structure and operating model would provide us with a clear focus, increased transparency, and operational efficiency”, said Heikki Vuorenmaa, President and CEO, YIT Corporation.
The planned new organisation would consist of three agile and customer-focused business segments: Housing, Business Premises, and Infrastructure. Operations in the current Property Development segment would be allocated to the three other segments and the Group. In addition, YIT plans to change its legal structure and incorporate its business segments as separate limited liability companies to increase flexibility, accountability, and clarity.
In addition to simplifying the organisational structure, YIT will evaluate opportunities to save costs by e.g., reducing IT and facility expenses, as well as increasing efficiency in procurement, project management and productivity.
The program costs are estimated to be EUR 50–70 million and they will be recorded in adjusting items and not presented in adjusted operating profit. YIT will provide updates on the progress of the program in connection with its financial reporting.
Change negotiations to begin
As part of the program, YIT will initiate change negotiations in Finland. The negotiations concern salaried and senior salaried employees as well as directors in Finland. Potential reduction needs related to these change negotiations do not concern salaried employees working in production jobs at construction sites nor employees. With the transformation program, also new jobs and roles are expected to be created. The planned changes could result in a reduction of approximately 150 jobs at most in Finland.
The planned measures and changes related to the transformation program may be subject to local consultation requirements in other YIT countries with employee representatives and trade unions, where applicable. Processes and timelines will vary from one country to another.
YIT Corporation is publishing its Financial Statements Bulletin for 2022 today, Friday, 10 February 2023. Heikki Vuorenmaa, President and CEO of YIT Corporation, and CFO Tuomas Mäkipeska will cover the program and its financial impacts in connection with the results news conference today, 10 February 2023 at 10:00 a.m. EET (8:00 a.m. GMT).
The news conference will be held as a live webcast that can be followed on the company’s web site at http://www.yitgroup.com/webcast. A recording of the webcast will be available at the same address later that day.
For further information:
Media: YIT Press Desk, tel. +358 44 743 7536 or e-mail: firstname.lastname@example.org
Investors: YIT Investor Relations, tel. +358 44 581 7979 or e-mail: email@example.com
Distribution: Nasdaq Helsinki, major media, www.yitgroup.com
YIT is the largest Finnish and a significant North European development and construction company. For 110 years, we have been creating better living environments for our customers: functional homes for sustainable living, future-proof public and commercial buildings and infrastructure for smoother flow of people, businesses and society. We employ 5,500 professionals in nine countries: Finland, Sweden, Norway, Estonia, Latvia, Lithuania, the Czech Republic, Slovakia and Poland. Our revenue in 2021 was EUR 2.7 billion. YIT Corporation's share is listed on Nasdaq Helsinki Oy. www.yitgroup.com