YIT’s Financial Statements Bulletin 2022
Adjusted operating profit margin improved from 3.2% to 4.6% in 2022
- Adjusted operating profit increased to EUR 110 million (85)1.
- Adjusted operating profit margin improved to 4.6% (3.2). Higher profitability reflects stabilising underlying performance in Business Premises and Infrastructure, and productivity gains from existing operating model and enhanced project management.
- Result for the period was EUR -375 million (4), impacted by the result of EUR -438 million from the discontinued operations following the sale of YIT’s businesses in Russia. The result for the period for continuing operations was EUR 63 million (6).
- Operating cash flow after investments amounted to EUR -281 million (288), burdened by increased capital employed as a result of lower sales in Housing.
- The number of unsold completed apartments increased to 794 (321),
- Net interest-bearing debt was at EUR 569 million (303) and gearing at 64% (30).
- Order book decreased to EUR 3,702 million (3,847). The order book decreased in Infrastructure and remained stable in other segments. At the end of the period, 72% of the order book was sold (83%).
- YIT's land bank in Housing amounted to 2,201,000 sqm (2,363,000), which enables the construction of 34,000 new homes.
- YIT's wind power development portfolio consisted of approx. 2,900 MW of project opportunities in the preliminary study phase (30 Sep 2022: 3,000). In addition, YIT had approx. 550 MW of projects in the permitting phase (30 Sep 2022: 550).
- In 2022, YIT's combined lost time injury frequency weakened to 13.3 (11.0), and there were two fatal accidents at YIT's construction sites. Strong improvement actions have been implemented to reverse the trend. The number of safety observations, which YIT uses as a proactive key performance indicator in safety management, improved by over 100% compared to 2021.
- YIT updated its climate targets and created a carbon roadmap to reduce emissions. In its own operations (scope 1 and 2), YIT’s goal is to be carbon neutral by 2030. YIT is committed to cutting value chain emissions (scope 3) by at least 30% by 2030, compared to reference year 2019.
- Heikki Vuorenmaa started as President and CEO of YIT Corporation on 28 November 2022.
- Adjusted operating profit increased to EUR 42 million (35).
- Adjusted operating profit margin improved to 5.4% (4.0).
- Result for the period was EUR 28 million (-8).
- Operating cash flow after investments amounted to EUR 40 million (133).
- Order book decreased to EUR 3,702 million (30 Sep 2022: 4,089). The decrease was driven by the lower order book in Housing, mainly attributable to the lower number of consumer apartment start-ups.
|Operating profit, %
|Adjusted operating profit
|Adjusted operating profit margin, %
|Result before taxes
|Result for the period, continuing operations
|Result for the period, including discontinued operations
|Earnings per share, continuing operations, EUR
|Operating cash flow after investments
|Net interest-bearing debt
|Gearing ratio, %
|Equity ratio, %
|Return on capital employed, % (ROCE, rolling 12 months)
|Combined lost time injury frequency (cLTIF, rolling 12 months)
|Customer satisfaction rate (NPS)
1 On 25 April 2022, YIT restated financial information for comparative periods reflecting an operating model change, where certain operations and functions were transferred between reportable segments, and the reporting of the sold Russian businesses as discontinued operations. Unless otherwise noted, all figures in this report concern continuing operations, and the figures in brackets refer to the restated figures of the corresponding period in the previous year. Balance sheet and cash flow statement for comparative periods were not restated.
From the first quarter of 2022 onwards, YIT has four reportable segments: Housing, Business Premises, Infrastructure and Property Development.
Sold Russian businesses are reported as discontinued operations.
Heikki Vuorenmaa, President and CEO
“During the year 2022, we made progress in multiple areas. With the efforts of the entire YIT team, we focused on strategy execution, improved our productivity, and advanced towards our sustainability ambitions.
In 2022, our Group adjusted operating profit increased to EUR 110 million compared to EUR 85 million in 2021. Furthermore, our adjusted operating profit margin improved to 4.6% compared to 3.2% in 2021. We increased our operational efficiency and achieved productivity gains from our existing operating model and enhanced project management. In Housing, our performance was impacted by the weakening market. In Business Premises and Infrastructure, we progressed in improving our profitability. In Property Development, we continued to strengthen our portfolio in wind power and renewable energy.
One of the key events of the year was the sale of YIT's businesses in Russia. The strategic review of the Russian businesses was originally initiated in November 2021, and then accelerated after Russia's invasion of Ukraine in early 2022. The sale was finalised in challenging conditions, which led to a weaker financial outcome than originally anticipated. After the sale, we were able to fully focus on our strategy and core businesses.
At the end of 2022, we set an ambitious goal at carbon-neutral construction by updating our climate targets and creating a carbon roadmap to reduce emissions. We aim to be carbon neutral in our own operations by 2030, and we commit to cutting at least 30% of our value chain emissions by 2030. I am pleased with our progress, as we have already reduced the emissions from our own operations by over 55% compared to the reference year 2019. We have also taken an important step in reducing our value chain emissions, by starting to use low-carbon hollow-core slabs in housing production in our major markets in Finland. We are decisive in our sustainability actions, with a focus on measures that we estimate will have the biggest impact on the entire industry.
The market environment in 2022 was challenging. Construction material cost inflation was at a high level at the start of the year, and then accelerated even further following the geopolitical turmoil. In the second half of the year, the market environment abruptly weakened as high overall inflation, rapid interest rate hikes, and the energy crisis led to increased cautiousness among households and investors.
The strong headwinds from the market are expected to persist into 2023. Here at YIT, we continue our decisive actions in project management, procurement, and tendering to mitigate the impacts. Additionally, we have already tightened our focus on cash generation and taken a more prudent approach to new housing start-ups. Going forward, we will accelerate the implementation of our strategy to improve our performance and competitiveness, both in the short and long term.
I am confident in YIT’s potential. We have a strong brand and unique capabilities that enable us to fulfil our customers’ needs. In the long-term, we see growing demand for sustainable and energy-efficient living and working environments in our key markets. Green transition is also creating new growth opportunities for us. We enter the challenging market in 2023 with a solid action plan, as we move towards the next phase of our strategy implementation.”
YIT’s order book decreased to EUR 3,702 million during the fourth quarter (30 Sep 2022: 4,089). The decrease was driven by the lower order book in Housing, mainly attributable to the lower number of consumer apartment start-ups. At the end of the quarter, 72% of the order book was sold (30 Sep 2022: 74%).
YIT’s revenue decreased by 10% to EUR 779 million (870). Revenue increased in Infrastructure, but decreased in other segments. In Housing, revenue was impacted by lower sales, while in Business Premises and Property Development the comparative period was supported by self-developed projects.
YIT´s adjusted operating profit increased to EUR 42 million (35), and the adjusted operating profit margin improved to 5.4% (4.0). Higher profitability reflects improved performance in Infrastructure, and productivity gains from existing operating model and enhanced project management. Profitability was negatively impacted by an impairment in Property Development related to a development project. Adjusted operating profit in Other Items segment was positively impacted by a reversal of internal margins. The comparative period was negatively impacted by write-downs and margin reductions of EUR 66 million in certain legacy and non-strategic projects, partly offset by a positive impact of EUR 48 million from the sale of Lestijärvi wind farm.
YIT’s operating profit was EUR 42 million (25). Adjusting items were EUR 1 million in the fourth quarter (10). The result for the period was EUR 28 million (-8).
YIT´s revenue decreased to EUR 2,403 million (2,652). The decrease is mainly related to the lower number of apartment completions and lower sales in Housing. Revenue remained stable in Business Premises and Infrastructure, but decreased in Property Development where the comparative period was supported by the Lestijärvi wind farm sale.
YIT´s adjusted operating profit increased to EUR 110 million (85), and the adjusted operating profit margin improved to 4.6% (3.2). Higher profitability reflects stabilising underlying performance in Business Premises and Infrastructure, and productivity gains from existing operating model and enhanced project management. Increased construction material costs had a negative impact on margins. In Housing, profitability was also negatively impacted by the lower number of apartment completions and lower sales, while an impairment related to a development project burdened profitability in Property Development.
YIT’s operating profit was EUR 102 million (56). The adjusting items amounted to EUR 8 million (29). Adjusting items were mainly related to merger-related fair value allocations. The result for the period amounted to EUR -375 million (4) and the earnings per share amounted to EUR -1.82 (0.00). The result was impacted by the impairment booked in the first quarter following the held for sale classification of the Russian operations and the booking of the accumulated RUB/EUR translation difference in the second quarter. The result for the period for continuing operations amounted to EUR 63 million (6) and the earnings per share for continuing operations amounted to EUR 0.28 (0.01).
Outlook and guidance for 2023
YIT expects its Group adjusted operating profit for continuing operations to be lower than in 2022 (2022: EUR 110 million).
In Housing, the demand outlook remains muted in the short term. In Business Premises and Infrastructure, the underlying operational performance is expected to improve, but certain legacy low-margin projects will still affect Infrastructure’s performance.
YIT’s performance will be supported by the increased efficiencies from the transformation program launched on 10 February 2023.
Developments in housing markets may have an impact on the outlook. Rising interest rates may have a negative impact on the fair value of investments.
Board of Directors’ proposal for profit distribution
The distributable funds of YIT Corporation on 31 December 2022 amounted to EUR 795 million, of which the profit for the period 2022 amounted to EUR 20 million.
The Board of Directors proposes that a dividend of EUR 0.18 per share be paid based on the balance sheet to be adopted for the year 2022 and that the dividend shall be paid in two equal instalments.
The first instalment of the dividend shall be paid to the shareholders who are registered in the shareholders’ register maintained by Euroclear Finland Oy on the dividend record date of 21 March 2023. The Board of Directors proposes that the dividend for this instalment be paid on 5 April 2023.
The second instalment of the dividend shall be paid in October 2023. The second instalment of the dividend shall be paid to shareholders who are registered in the shareholders’ register maintained by Euroclear Finland Oy on the dividend record date, which, together with the payment date, shall be decided by the Board of Directors in its meeting to be scheduled for September 2023. The dividend record date for the second instalment as per the current rules of the Finnish book-entry system would be 3 October 2023 at the earliest and the dividend payment date 11 October 2023.
On 31 December 2022, the number of outstanding shares of the company amounted to 209,511,146, of which the corresponding dividend based on Board of Directors proposal amounts to approximately EUR 38 million.
Events after the reporting period
On 10 February 2023, YIT published a stock exchange release related to the launch of 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.
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.
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.
News conference for investors and media
YIT will arrange a news conference on Friday, 10 February 2023 at 10:00 a.m. Finnish time (EET, at 8:00 a.m. GMT). The results will be presented by Heikki Vuorenmaa, President and CEO of YIT Corporation, and CFO Tuomas Mäkipeska. The news conference will be held as a live webcast that can be followed on the company’s web site www.yitgroup.com/webcast. A recording of the webcast will be available at the same address later that day.
The news conference can be participated also through a conference call. Questions can be asked via the conference call and should be asked in English. You can access the teleconference by registering on the link: http://palvelu.flik.fi/teleconference/?id=10010331. After the registration you will be provided phone numbers and a conference ID to access the conference call. To ask a question, please press *5 on your telephone keypad to enter the queue.
The event is targeted for analysts, portfolio managers and the media. Welcome!
For further information:
Samu Heikkilä, Investor Relations Manager, YIT Corporation, tel. +358 44 581 7979, 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. We develop and build sustainable living environments: functional homes, future-proof public and commercial buildings, infrastructure for smooth mobility, and renewable energy solutions to benefit the climate. We employ around 5,000 professionals in nine countries: Finland, Sweden, Norway, Estonia, Latvia, Lithuania, the Czech Republic, Slovakia and Poland. Our revenue in 2022 was EUR 2.4 billion. YIT Corporation's share is listed on Nasdaq Helsinki. Read more: www.yitgroup.com