YIT’s Half-Year Report January 1 – June 30, 2018

YIT Corporation Stock Exchange Release July 26, 2018 at 8:00 A.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 half-year report for January–June 2018, comparison figures are pro forma figures. To illustrate the impacts of the merger on the result of YIT’s operations and its financial position and to improve the comparability of the combined company’s financial information, YIT has prepared unaudited pro forma financial disclosures. These unaudited pro forma financial disclosures reflect the new segment reporting structure and reporting practices adopted by YIT on the date of completing the merger. The unaudited pro forma financial disclosures are based on YIT’s and Lemminkäinen’s IFRS-compliant historical financial data, adjusted for the effects of the merger. YIT’s actual results may deviate materially from the assumptions used in preparing these audited pro forma disclosures.

Additional information about the historical financial figures of YIT or Lemminkäinen are available in YIT’s and Lemminkäinen’s audited consolidated financial statements and unaudited interim reports, available on YIT’s website at www.yitgroup.com.

In this half-year report, the figures for the second quarter and for the first six months of 2018, the comparison figures and the figures for year 2017 are presented as pro forma figures. The pro forma balance sheet is presented as if the merger had occurred on December 31, 2017 and as if YIT as the accounting acquirer had consolidated the acquisition balance sheet of Lemminkäinen in its group financial accounts at said time. The pro forma income statements for the accounting period ending December 31, 2017 are presented as if the merger had occurred on January 1, 2017. Pro forma adjustments that do not have a continuing impact on YIT’s result are presented in the income statement for the accounting period that ended December 31, 2017. Additional information is available in the stock exchange release published on April 4, 2018 and its appendices.

Due to the merger, YIT’s financial information is also reported in the explanatory statement of the half-year report so that the financial statements of merged Lemminkäinen for the financial period January 1‒January 31, 2018 are included in the pro forma figures for 2018, and the figures are presented in the tables in the column “Pro forma 1‒6/18”. Figures including Lemminkäinen’s financial statements for the financial period January 1–January 31, 2018 are used in the discussion in the explanatory statement and compared to the pro forma figures January 1–December 31, 2017. In the half-year report tables, the column ”Reported 1‒6/18” does not include Lemminkäinen’s figures for the financial period January 1–January 31, 2018. 

Group reporting, IFRS 
The result improved in the second quarter but remained unsatisfactory. Cash flow and order backlog strengthened.


  •  Operating cash flow after investments amounted to EUR +129.9 million.
  •  Order backlog grew by 9% from the level of end of March and was EUR 5,068.4 million (3/2018: 4,640.8). 
  •  Revenue decreased by 8% to EUR 908.8 million (983.4).
  •  Adjusted operating profit1 amounted to EUR 24.4 million (39.5) and adjusted operating profit margin was 2.7% (4.0). Adjusting items of EUR 13.2 million during the reporting period (6.9) are mainly related to merger related fair value cost effects, integration costs, reorganisation of paving operations in Scandinavia and a loss related to the capital release action in Russia.
  •  Operating profit amounted to EUR 11.3 million (32.6) and operating profit margin was 1.2% (3.3).
  •  Earnings per share were EUR -0.02 (0.09).


  •  The merger of YIT Corporation and Lemminkäinen Corporation was completed on February 1, 2018.
  •  Revenue decreased by 10% to EUR 1,511.1 million (1,679.4).
  •  Adjusted operating profit1 amounted to EUR -18.9 million (12.4) and adjusted operating profit margin was -1.2% (0.7). Adjusting items of EUR 21.1 million during the reporting period (32.2) are mainly related to merger related fair value cost effects, integration costs, reorganisation of paving operations in Scandinavia and a loss related to the capital release action in Russia.
  •  Operating profit amounted to EUR -39.9 million (-19.8) and operating profit margin was -2.6% (-1.2).
  •  Earnings per share were EUR -0.27 (-0.14).
  •  Operating cash flow after investments amounted to EUR -22.8 million.
  •  Order backlog grew by 9% from the level of end of March and was EUR 5,068.4 million (3/2018: 4,640.8).
  •  The company estimates the total annual synergies related to the merger to have an impact of EUR 40-50 million by the end of 2020. Of this, EUR 40 million will be achieved already starting from the first quarter 2020.

Kari Kauniskangas, President and CEO:

In the second quarter, cash flow and order backlog developed strongly. The Group’s result improved clearly from the first months of the year, but it is not satisfactory as the segments perform unevenly. The strong development of the Housing Finland and CEE segment continued. In April–June, the segment’s adjusted operating profit margin was nearly 10%. The Group result decreased from last year due to the Infrastructure projects segment’s weak result. As anticipated, no projects were completed in Russia, which is reflected in the low net sales and operating loss. We expect the remainder of the year to be strong, driven by the active paving season, the sales of business premises projects and the increasing completion of residential projects. The positive development is further supported by the measures to complete the integration as well as achieving the synergy benefits.

The order backlog of the Business premises segment grew significantly. New orders in the order backlog include, for instance, the Tripla office buildings as well as life-cycle and turnkey projects won in competitive tendering. In business premises projects, renting has proceeded well and, as stated in our guidance, we expect to sell some business premises, under construction and with full or nearly full occupancy, in the Helsinki region in the fourth quarter. During the quarter, the Keilaniemenranta area development project took giant leaps forward as the city launched further zoning in the area and the renovation of the old high-rise building began.

During the quarter, the consumer housing demand in the Housing Finland and CEE segment remained good in Finland and excellent in the CEE countries. The segment’s performance was good in general and particularly strong in the CEE countries. In Russia, the housing demand has as such remained steadily at a rather good level. The price level is still low but stable. Good results have been achieved in releasing capital in Russia but the measures taken burden the operating profit.

Infrastructure projects’ revenue was low particularly in Finland, and the result was weak due to low revenue and the low margin level of order backlog recognised as revenue. However, positive developments include, for instance, successes in competitive tendering in Scandinavia and the Baltic countries, as well as in the competitive tendering for the West Metro extension, with the Soukka station recorded in the order backlog during the review period. The paving season has got off to a good start and the result, excluding restructuring costs, was rather satisfactory. The order backlog of the Paving segment at the end of June improved year-on-year.

Integration to merge YIT’s and Lemminkäinen’s operations has been proceeding well and will continue in the near future. I thank the personnel for the good commitment and effort in the beginning of the year. Supported by the implementation of best practices cash flow improved significantly, and the gearing ratio decreased. As part of financing rearrangements, the company issued two notes, amounting to EUR 250 million, that extend the maturity of the debt portfolio. At the same time, the company repaid earlier notes totalling EUR 150 million. We will present the company’s new strategy at the Capital Markets Day that will be organised in Helsinki in September.

Key figures

Group reporting, IFRS

EUR million  Reported 46/18  Pro forma 46/18  Pro forma 46/17  Change  Reported 16/18  Pro forma 16/18  Pro forma 16/17  Change1  Pro forma1–12/17 
Revenue  908.8  908.8  983.4  -8%  1,441.1  1,511.1  1,679.4  -10%  3,862.5 
Housing   Finland and CEE  316.7  316.7  298.2  6%  545.2  559.6  556.5  1%  1,156.2 
Housing   Russia  53.2  53.2  107.1  -50%  87.7  91.5  175.6  -48%  421.0 
Business   premises  212.2  212.2  220.1  -4%  374.7  395.2  419.0  -6%  902.2 
Infrastructure   projects  153.8  153.8  175.2  -12%  225.7  247.5  297.1  -17%  686.0 
Paving  183.4  183.4  202.3  -9%  225.8  236.1  265.0  -11%  768.9 
Partnership properties    
Other items  -10.5  -10.5  -19.5  46%  -17.9  -18.8  -33.8  44%  -71.8 
Operating   profit  6.6  11.3  32.6  -65%  -28.0  -39.9  -19.8  -102%  77.4 
Operating   profit margin, %  0.7%  1.2%  3.3%  -1.9%  -2.6 %  -1.2%  2.0% 
Adjusted   operating profit  24.4  24.4  39.5  -38%  -0.9  -18.9  12.4  138.9 
Housing   Finland and CEE  30.4  30.4  25.9  17%  51.7  50.9  34.4  48%  83.0 
Housing   Russia  -7.3  -7.3  -1.5  -386%  -20.2  -21.1  -6.7  -215%  4.9 
Business   premises  5.5  5.3  6.8  -22%  3.3  3.0  8.6  -65%  51.5 
Infrastructure   projects  -1.4  -1.5  5.2  -7.3  -10.2  3.9  17.4 
Paving  4.8  4.8  9.1  -47%  -14.1  -26.0  -15.9  -63%  4.7 
Partnership   properties  -0.6  -0.6  -0.3  -100%  -0.8  -0.8  -0.3  -168%  -0.5  
Other items  -6.8  -6.7  -6.0  -12%  -13.6  -14.8  -11.6  -27%  -22.0 
Adjusted   operating profit margin, %  2.7%  2.7 %  4.0 %  -0.1%  -1.2 %  0.7%  3.6% 
Housing   Finland and CEE  9.6%  9.6 %  8.7 %  9.5%  9.1 %  6.2%  7.2% 
Housing   Russia  -13.7%  -13.7 %  -1.4 %  -23.1%  -23.1 %  -3.8%  1.2% 
Business   premises  2.5%  2.5 %  3.1 %  0.9%  0.8 %  2.1%  5.7% 
Infrastructure   projects  -1.0%  -1.0 %  3.0 %  -3.2%  -4.1 %  1.3%  2.5% 
Paving  2.6%  2.6 %  4.5 %  -6.2%  -11.0 %  -6.0%  0.6% 
Partnership   properties 
Adjusting   items  17.8  13.2  6.9  91%  27.1  21.1  32.2  34%  61.5 
Profit before   taxes  -5.8  -1.3  23.3  -48.6  -59.1  -34.8  -70%  50.7 
Profit for   the review period2  -7.9  -4.3  18.3  -43.6  -56.5  -29.0  -95%  26.3 
Earnings per   share, EUR  -0.04  -0.02  0.09  -0.22  -0.27   -0.14  -93%  0.13 
Operating cash flow after investments   129.9  n/a  n/a  -22.8  n/a  n/a  n/a 
Net interest-bearing debt at end of period  734.0  734.0  n/a  734.0  734.0  n/a  668.5 
Gearing ratio at end of period, %  73.4%  n/a  n/a  73.4%  n/a  n/a  59.9% 
Equity ratio at end of
period, % 
33.9%  n/a  n/a  33.9%  n/a  n/a  40.2% 
Pro forma return on capital employed (ROCE, rolling   12m), %  n/a  n/a  n/a  n/a  n/a  n/a 
Order backlog, end of   period  5,068.4  5,068.4  4,617.1  10%  5,068.4  5,068.4  4,617.1  10%  4,218.3 

1 Comparisons include pro forma figures with Lemminkäinen’s financial statements for the accounting period of January 1‒January 31, 2018.
2 Attributable to the equity holders of the parent company.

Guidance for 2018 (IFRS)

On June 27, 2018, YIT’s Board of Directors decided to give numerical guidance for year 2018 concerning the development of both the Group pro forma revenue and adjusted pro forma operating profit. The guidance is unchanged.

The Group pro forma revenue 2018 is estimated to decrease by -2% – -6% from pro forma revenue 2017 (pro forma 2017: EUR 3,862.5 million).

In 2018, the adjusted pro forma operating profit1 is estimated to be in the range of EUR 130–160 million (pro forma 2017: EUR 138.9 million).

Guidance rationale

The guidance for 2018 is based on, among others, the estimated timing of completions of residential projects under construction and the company’s solid order backlog. At the end of June, 53% of the order backlog was sold. YIT estimates that in 2018, approximately 5,300–5,700 apartments in Finland and CEE, and approximately 2,400–3,300 apartments in Russia will be completed, most of them during the last quarter of 2018.

In the third quarter, the adjusted pro forma operating profit1 is expected to be on the good level of last year, driven especially by the paving season.

During the first months of the year, YIT has signed several significant, long-term lease agreements and the estimate regarding the adjusted operating profit1 includes the divestment of some of the business premises in the Helsinki metropolitan area during the fourth quarter. In the fourth quarter, the adjusted pro forma operating profit1 is expected to be clearly better than last year.

Estimated completions of residential projects under construction 

units  H1/2018,actual  Q3/2018,
Finland   1,888 1,519 1,106 315 1,486 2,016
CEE  661 0–200 200–400 0–200 800–1,100 1,173
Russia  233 500–800 1,700–2,100 600–900 400–600 2,073
Total   2,782 2,019–2,519 3,006–3,606 915–1,415 2,686–3,186 5,262
Housing stock under construction, June 30,   2018: 14,938 

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.

Events after the review period

In July, residential sales to consumers are estimated to be around 160 units in Finland (7/17: around 210), around 80 units in the CEE countries (7/17: around 80) and approximately 250 units in Russia (7/17: below 200). Additionally, of projects previously sold to the YCE Housing I fund , the fund is estimated to sell further to consumers approximately 26 apartments (7/17: 18).

News conference for investors and media

YIT will arrange a news conference on Thursday, July 26, 2018 at 10:00 A.M. Finnish time (EEST, at 8:00 A.M. BST) 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 10:00 A.M. (EEST) and a recording of the webcast will be available at approximately 12:00 noon (EEST) at the same address.

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 9:55 A.M. (EEST). 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: 7890831.

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, business premises and entire areas. We are also specialised in demanding infrastructure construction and paving. Together with our customers our 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 2017 was over EUR 3.8 billion. YIT Corporation's share is listed on Nasdaq Helsinki Oy. www.yitgroup.com