YIT’s Financial Statements Bulletin 2018

YIT Corporation Stock Exchange Release February 1, 2019 at 1:00 p.m.

Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year and are of the same unit. YIT reports in accordance with IFRS principles. YIT and Lemminkäinen merged on February 1, 2018. In this Financial Statements Bulletin 2018, comparison figures are pro forma figures. More information regarding the presentation of financial information is available at the end of the explanatory statement of the interim report.

Both operating profit and cash flow were strong in the fourth quarter. Good order backlog gives a solid foundation for this year.

Group reporting, IFRS


  • Revenue grew by 13% and was EUR 1,269.0 million (1,123.6).
  • Adjusted operating profit* amounted to EUR 99.6 million (60.4) and adjusted operating profit margin was 7.8% (5.4).
  • Operating profit amounted to EUR 82.7 million (37.1) and operating profit margin was 6.5% (3.3).
  • Order backlog grew by 5% year-on-year and was EUR 4,433.8 million (12/2017: 4,218.3).
  • Reported operating cash flow after investments amounted to EUR 204.5 million.

January– December

  • The merger of YIT Corporation and Lemminkäinen Corporation was completed on February 1, 2018.
  • Revenue decreased by 3% and was EUR 3,759.3 million (3,862.5).
  • Adjusted operating profit* amounted to EUR 134.5 million (138.9) and adjusted operating profit margin was 3.6% (3.6).
  • Operating profit amounted to EUR 91.3 million (77.4) and operating profit margin was 2.4% (2.0).
  • Reported operating cash flow after investments amounted to EUR 148.6 million.
  • Order backlog grew by 5% year-on-year and was EUR 4,433.8 million (12/2017: 4,218.3).
  • The company now estimates the total annual synergies related to the merger to have an impact of EUR 45–50 million by the end of 2020. Of this, EUR 40 million will be achieved already starting from the first quarter 2020.
  • Adjusted earnings per share were EUR 0.32 (0.35) and earnings per share were EUR 0.16 (0.13).
  • The Board of Directors’ proposal to the AGM: dividend per share EUR 0.27 (0.25).

* The adjusted operating profit reflects the result of ordinary course of business and does not include material reorganisation costs, impairment charges or other items affecting comparability. Adjusted operating profit is disclosed to improve comparability between reporting periods. Adjusting items are defined more precisely in note 4.4 in the tables section.

Kari Kauniskangas, President and CEO:

The fourth quarter’s financial performance was one of highest in YIT’s history: the adjusted operating profit was a record-breaking EUR 99.6 million, while operating cash flow amounted to EUR 204.5 million. We carried out two significant property transactions in December: we sold the Tripla Workery offices in Helsinki’s Pasila district as a whole. In addition, YIT and our joint venture Regenero, sold the Tietotie 6 property in Espoo’s Otaniemi district. The sale of the Tripla Workery offices is the single largest office property transaction in YIT’s history. In addition to the property sales, the result for the quarter was supported by the completion of several consumer housing projects in Finland and the CEE countries.

The closing of the paving season went well, and the effect of the business restructuring measures made earlier in the year in Norway and Sweden was seen in the year-end result. The result for the fourth quarter was burdened by project write-downs and risk provisions made to old projects particularly in the Infrastructure projects and Housing Russia segments, totalling approximately EUR 10 million. In both segments, changes to tendering practices were implemented in the first quarter, hence the profitability and contract terms of new projects in the order backlog are at healthy levels.

The year 2018 was successful for YIT in many ways. YIT and Lemminkäinen merged at the beginning of February. In addition to actual business operations, significant resources were focused to the integration of the companies and creating the foundation for a new YIT by establishing a common company culture. The synergies achieved from the merger began to show in the Group’s result in 2018 in line with the set targets. We specify the previously given overall synergy estimate from EUR 40-50 million to EUR 45-50 million by the end of 2020. In September, we announced our new strategy for 2019–2021. The strategy’s target is to improve profitability and to strengthen financial stability. The core of the strategy is urban development and it is built on YIT’s key strength: development and implementation of self-developed projects.

In 2018, self-developed projects and their successful sales in Housing Finland and CEE, Business premises and Partnership properties segments brought in the lion’s share both of the segments’ revenue and profit, as well as the entire Group’s profit. The construction and leasing of the Mall of Tripla have proceeded very well and ahead of our targets.

During the year, the result of the Infrastructure projects and Housing Russia segments was weak, and Paving segment’s result was modest. There were, however, several successes within these segments. As we enter this year, we have confidence also in these segments due to the large number of measures implemented last year to improve the financial performance. In addition to the measures we have taken, our strong and healthier order backlog and good financial position give us a solid foundation for this year.

I thank our customers for their trust and cooperation in 2018, as well as our personnel and partners for working with such commitment and enthusiasm to achieve our goals.

Key figures, IFRS

EUR million  Reported  
Pro   forma
Pro   forma
Change  Reported  
Pro   forma 112/18  Pro   forma
Revenue  1,269.0  1,269.0  1,123.6  13%  3,689.4  3,759.3  3,862.5  -3% 
Housing Finland and CEE  354.0  354.0  270.7  31%  1,143.5  1,157.9  1,156.2  0% 
Housing Russia  126.7  126.7  200.3  -37%  270.2  274.1  421.0  -35% 
Business premises  438.7  438.7  279.7  57%  1,024.7  1,045.2  902.2  16% 
Infrastructure projects  176.3  176.3  202.7  -13%  590.5  612.4  686.0  -11% 
Paving  189.6  189.6  191.2  -1%  712.9  723.2  768.9  -6% 
Partnership properties  0.0  0.0      0.0  0.0     
Other items  -16.3  -16.3  -21.0  22%  -52.4  -53.4  -71.8  26% 
Operating profit  78.5  82.7  37.1  123%  94.6  91.3  77.4  18% 
Operating profit margin, %  6.2%  6.5%  3.3%    2.6%  2.4%  2.0%   
Adjusted operating profit  99.6  99.6  60.4  65%  152.5  134.5  138.9  -3% 
Housing Finland and CEE  28.5  28.5  15.3  86%  104.1  103.3  83.0  25% 
Housing Russia  -3.8  -3.8  18.5  -31.8  -32.8  4.9 
Business premises  56.1  56.1  34.7  62%  68.1  67.8  51.5  32% 
Infrastructure projects  -1.4  -1.4  5.8  -4.7  -7.6  17.4   
Paving  -0.7  -0.7  -6.9  90%  14.5  2.7  4.7  -43% 
Partnership properties  27.9  27.9  0.2  26.9  26.9  -0.5 
Other items  -7.0  -7.0  -7.3  4%  -24.6  -25.8  -22.0  -17% 
Adjusted operating profit margin, %  7.8%  7.8%  5.4%    4.1%  3.6%  3.6%   
Housing Finland and CEE  8.1%  8.1%  5.7%    9.1%  8.9%  7.2%   
Housing Russia  -3.0%  -3.0%  9.2%    -11.8%  -12.0%  1.2%   
Business premises  12.8%  12.8%  12.4%    6.6%  6.5%  5.7%   
Infrastructure projects  -0.8%  -0.8%  2.9%    -0.8%  -1.2%  2.5%   
Paving  -0.4%  -0.4%  -3.6%    2.0%  0.4%  0.6%   
Partnership properties       
Adjusting items  21.1  17.0  23.3  -27%  57.9  43.2  61.5  -30% 
Profit before taxes  70.6  74.7  30.8  142%  59.1  57.2  50.7  13% 
Profit for the review period**  50.4  53.7  10.8  397%  39.2  33.3  26.3  27% 
Earnings per share, EUR  0.25  0.26  0.05  414%  0.19  0.16  0.13  22%  
Operating cash flow after investments   204.5  n/a  n/a    148.6  n/a  n/a   
Net interest-bearing debt at end of period  562.9  562.9  666.9    562.9  562.9  666.9   
Gearing ratio at end of period, %  53.6%  n/a  59.9%    53.6%  n/a  59.9%   
Equity ratio at end of
  period,   % 
38.1%  n/a  40.2%    38.1%  n/a  40.2%   
Pro forma return on capital employed (ROCE, rolling 12m), %  n/a  n/a  n/a    n/a  5.6%  n/a   
Order backlog, end of period  4,433.8  4,433.8  4,218.3  5%  4,433.8  4,433.8  4,218.3  5% 

* Comparisons include pro forma figures with Lemminkäinen’s financial statements for the accounting period of January 1‒January 31, 2018.

** Attributable to the equity holders of the parent company.

1–12/18 1–12/17 Change
Dividend per share, EUR  0.27 ***   0.25   8% 

*** Board of Directors’ proposal to the Annual General Meeting.

Guidance for 2019

The Group revenue 2019 is estimated to be in the range of +5% – -5% compared to revenue 2018 (pro forma 2018: EUR 3,759.3 million).

In 2019, the adjusted operating profit* is estimated to be EUR 170–230 million (pro forma 2018: EUR 134.5 million).

Guidance rationale

The guidance for 2019 is based on, among others, the completion of Mall of Tripla in the last quarter, the estimated timing of completion of the residential projects under construction and the company’s solid order backlog. At the end of December, 63% of the order backlog was sold.

Significant fluctuation is expected between the quarters due to normal seasonal variation, sales of business premises projects and the timing of completions of residential projects as well as Mall of Tripla. As in 2018, the last quarter of the year is expected to be clearly the strongest. The company estimates that the adjusted operating profit for first quarter of 2019 will be on par with the comparison period (pro forma).

* The adjusted operating profit reflects the result of ordinary course of business and does not include material reorganisation costs, impairment charges or other items affecting comparability. Adjusted operating profit is disclosed to improve comparability between reporting periods. Adjusting items are defined more precisely in note 4.4 in the tables section.

Factors affecting the guidance

The most significant factors with which YIT can answer the market demand are sales and pricing, project and project risk management, product development and the product offering, measures to reduce production costs, cost management and measures affecting the capital efficiency.

Factors outside of YIT’s sphere of influence are mainly related to global economic development, the functionality of financing markets and the interest rate,

the political environment, economic development in areas of operation, changes in demand for apartments and business premises, the availability of resources such as key persons, the functionality of the labour markets, changes in public and private sector investments and changes in legislation, permit and authorisation processes and the duration thereof, as well as the development of foreign exchange rates.

Due to the long-term nature of construction and urban development projects, the changes in demand may be quicker than the company's ability to adapt its offering.

Short-term outlook by region


Consumer and institutional investor demand for apartments is expected to remain stable, at the autumn 2018 level, which is also supported by continuously stable mortgage demand. Activity among private residential investors is expected to be lower than in the previous years, even weak. Location and the price level will continue to play a key role.

The divergent development of apartment prices and demand between growth centres and the rest of Finland is expected to continue. The availability of mortgages and housing company loans has become weaker during the year. The increased supply of apartments is anticipated to prevent the rise of housing prices.

The rental demand for business premises is expected to remain on a good level in growth centres. Activity among property investors is expected to remain at a good level, particularly for centrally located projects in the Helsinki metropolitan area and in major growth centres. The contracting market is expected to remain active, but contract sizes are expected to decrease on average.

Renovation is expected to grow moderately due to increasing urbanisation and aging of building stock.

High construction activity has led to increased competition for skilled professionals and the situation is expected to continue. Construction costs are estimated to increase slightly. Construction volume is expected to remain at a good level.

The increased regulation and higher capital requirements imposed on financial institutions affect construction and property development.

Infrastructure construction market is expected to decline in from the year 2018 levels. The state's investments in basic road maintenance are expected to keep demand relatively stable for paving in 2019. The government is cutting down the allowances for infrastructure projects for the coming years, which weakens the outlook for paving and infrastructure projects. Demand for infra projects is maintained by complex infrastructure projects in urban growth centres as well as transport projects and industrial investments.


In Russia, the geopolitical tension impacts the general market situation. The demand for apartments is expected to remain at the same level as seen on average in 2018. Residential demand is anticipated to improve slowly and price levels are expected to remain low.

Changes in regulation concerning the housing market are expected to lead to increased volatility in supply and sales practices in the beginning of the year. Regulatory changes might cause delay in banks’ project financing abilities and cause uncertainty and turbulence in the market. Demand is expected to focus primarily on affordable apartments. Inflation in construction costs is expected to remain moderate.

Construction and repair projects on major roads are expected to maintain demand for paving.

The Baltic countries and CEE countries

Residential demand is expected to remain at a good level. Residential prices are estimated to increase further. The prices of plots have increased and competition for plots is expected to remain intense. The availability of financing and low interest rates are expected to continue to support residential demand. The shortage of resources is expected to continue to increase inflation in construction costs and to limit volume growth. The contracting market for business premises is expected to remain at the current level or decrease slightly in the Baltic countries.

In the Baltic countries, the volume of infrastructure construction is expected to continue to grow due to the states’ investments in improving urban and transport infrastructure.


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 2019. Large-scale road and railway projects are ongoing or planned in Sweden and Norway, which will increase demand for infrastructure projects and paving. In addition, especially Norway is investing in the development and renewal of energy production.

In Denmark, demand for paving declined in 2018 as public investments in road infrastructure were decreased, and it is estimated to continue on stable level. 

Events after the review period

YIT and Stockholm Vatten AB signed an agreement on new infrastructure work in Henriksdal wastewater treatment plant in Stockholm, Sweden. The work will begin in February 2019 and it will be completed in December 2023. The value of the contract is approximately EUR 60 million. The project will be booked in the order backlog of the first quarter in 2019.

News conference for investors and media

YIT will arrange a news conference on Friday, February 1, 2019 at 2:00 p.m. Finnish time (EET, at 12:00 noon GMT) at YIT's head office, Panuntie 11, 00620 Helsinki, Finland. The event is in English and targeted for analysts, portfolio managers and the media. Welcome!


The news conference and presentation by the President and CEO of YIT Corporation Kari Kauniskangas can also be followed through a live webcast at www.yitgroup.com/webcast. The live webcast starts at 2:00 p.m. (EET) and a recording of the webcast will be available at the same address later that day.

Conference call

The news conference can be participated also through a conference call. Conference call participants are requested to dial in at least five minutes prior to the start of the conference, at 1:55 p.m. (EET). Conference call numbers are:

Participants from Finland +358 (0)9 7479 0361

Participants from UK and outside of Nordic countries +44 (0)330 336 9105

Participants from Sweden +46 (0)8 5033 6574

Participants from Norway +47 2100 2610

The participants will be asked to provide the following confirmation code: 4693468.

During the webcast and conference call, all questions should be presented in English. At the end of the event, the media has the opportunity to ask questions also in Finnish.

For further information, please contact:

Hanna Jaakkola, Vice President, Investor Relations, YIT Corporation, tel. +358 40 5666 070, hanna.jaakkola@yit.fi

Ilkka Salonen, Chief Financial Officer, YIT Corporation, tel. +358 45 359 4434, ilkka.salonen@yit.fi


Hanna Jaakkola

Vice President, Investor Relations

Distribution: Nasdaq Helsinki, major media, www.yitgroup.com 

YIT is the largest Finnish and significant North European construction company. We develop and build apartments and living services, business premises and entire areas. We are also specialised in demanding infrastructure construction and paving. Together with our customers, our nearly 10,000 professionals are creating more functional, more attractive and more sustainable cities and environments. We work in 11 countries: Finland, Russia, Scandinavia, the Baltic States, the Czech Republic, Slovakia and Poland. The new YIT was born when over 100-year-old YIT Corporation and Lemminkäinen Corporation merged on February 1, 2018. Our pro forma revenue for 2018 was approximately EUR 3.8 billion. YIT Corporation's share is listed on Nasdaq Helsinki Oy. www.yitgroup.com