YIT’s Interim Report January 1–September 30, 2018

YIT Corporation Stock Exchange Release October 25, 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 interim report for January–September 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.

Operational performance as expected, operating profit declined from the previous year. The strong order backlog gives a good outlook for the current and the next year. The guidance for the full year remains unchanged.

Group reporting, IFRS


  •  Order backlog grew by 14% year-on-year (9/2017: 4,378.9).
  •  Revenue decreased by 8 % and was EUR 979.2 million (1,059.5).
  •  Adjusted operating profit1 amounted to EUR 53.8 million (66.1) and adjusted operating profit margin was 5.5 % (6.2). During the reporting period, EUR 5.2 million (6.0) of adjusing items were recorded, that consist mainly of the merger related fair value cost effects and integration costs.
  •  Operating profit amounted to EUR 48.6 million (60.1) and operating profit margin was 5.0% (5.7).
  •  Earnings per share were EUR 0.17 (0.21).
  •  Reported operating cash flow after investments amounted to -33.0 EUR million.

January– September 

  •  The merger of YIT Corporation and Lemminkäinen Corporation was completed on February 1, 2018.
  •  Revenue decreased by 9% to EUR 2,490.3 million (2,738.9).
  •  Adjusted operating profit1 amounted to EUR 34.9 million (78.5) and adjusted operating profit margin was 1.4% (2.9). During the reporting period, EUR 26.2 million (38.2) of adjusing items were recorded, that consist mainly of the 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 8.7 million (40.3) and operating profit margin was 0.3% (1.5).
  •  Earnings per share were EUR -0.10 (0.07).
  •  Reported operating cash flow after investments amounted to EUR -55.8 million.
  •  Order backlog grew by 14% year-on-year (9/2017: 4,378.9).
  •  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. 

1The 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 operational performance of the segments was as we expected. Approximately EUR 6.5 million of operating profit shifted to the fourth quarter due to the postponements of handovers. The profitability of the Paving as well as Housing Finland and CEE segments was almost 10 per cent. The company’s order backlog is very strong, which gives a good outlook for the rest of the year as well as the whole next year. We reiterate the whole year guidance given in June.

We signed several significant lease agreements during the period. The most important of these was the agreement signed with Telia Finland, which was YIT’s all time largest. The successes achieved in leasing support our ongoing efforts related to property sales. Based on the offers we have received and the ongoing negotiations, we estimate that the sale of several significant business premises projects will be completed as planned.

The adjusted operating profit of the Housing Russia segment was poor due to the postponement of handovers, given discounts and weakened project margins in contracting. In line with its strategy, YIT has continued to have a strong focus on housing sales to release capital employed in Russia, partly at the expense of profitability. Obtaining the commissioning permit for a project in St. Petersburg, which has a significant impact on the segment’s profit, was postponed to the fourth quarter. The revenue and adjusted operating profit of the Housing Finland and CEE segment declined year-on-year in spite of a higher number of completed apartments. This is due to a low number of completions in the Helsinki metropolitan area as well as the substantially smaller average size of the completed apartments. Consumer demand remains at a good level in Finland, but the residential demand of private investors has started to decline during the year. In the CEE countries, the demand for apartments has remained strong in all countries. The postponements of project handovers both in Russia and in Finland have shifted the recognition of the operating profit by approximately EUR 6.5 million to the fourth quarter.

The Paving segment performed well in the third quarter and improved its result year-on-year. However, the operating profit of the Infrastructure projects segment declined year-on-year. The segment’s operating profit was burdened by additional costs related to the Court of Appeal’s decision in a dispute related to the construction of the Niittykumpu metro tunnels. We have begun implementing an action plan to improve the Infrastructure projects segment’s sales mix and competitiveness. We will also allocate resources to areas with good demand.

In September, we announced our new strategy for 2019–2021. The target of YIT’s strategy is to improve profitability and to strengthen financial stability. The company’s strategic priorities, sources of growth and structural profitability, include urban development and non-cyclical businesses. The Board of Directors confirmed a 12% or higher return on capital employed (ROCE) and a gearing ratio of 30–50% as the long-term financial targets of the company. In addition, the company’s target is to increase its dividend annually.

Key figures

Group reporting, IFRS

EUR million  Reported
Pro forma
Pro forma
Change  Reported
Pro forma
Pro forma
Change1  Pro forma  
Revenue  979,2  979.2  1,059.5  -8%  2,420.4  2,490.3  2,738.9  -9%  3,862.5 
Housing Finland and CEE  244.2  244.2  329.1  -26%  789.5  803.9  885.5  -9%  1,156.2 
Housing Russia  55.8  55.8  45.1  24%  143.5  147.4  220.6  -33%  421.0 
Business premises  211.4  211.4  203.5  4%  586.0  606.5  622.4  -3%  902.2 
Infrastructure projects  188.5  188.5  186.2  1%  414.2  436.0  483.3  -10%  686.0 
Paving  297.5  297.5  312.7  -5%  523.3  533.6  577.7  -8%  768.9 
Partnership properties  0.0  0.0  0.0  0.0    
Other items  -18.2  -18.2  -17.0  -7%  -36.1  -37.1  -50.7  27%  -71.8 
Operating profit  44.1  48.6  60.1  -19%  16.1  8.7  40.3  -78%  77.4 
Operating profit margin, %  4.5%  5.0%  5.7 %  0.7 %  0.3%  1.5 %  2.0% 
Adjusted operating profit  53.8  53.8  66.1  -19%  52.9  34.9  78.5  -56%  138.9 
Housing Finland and CEE  23.9  23.9  33.2  -28%  75.6  74.8  67.7  11%  83.0 
Housing Russia  -7.8  -7.8  -6.9  -14%  -28.0  -28.9  -13.6  -113%  4.9 
Business premises  8.7  8.7  8.0  8%  12.0  11.7  16.7  -30%  51.5 
Infrastructure projects  3.9  3.9  7.6  -48%  -3.3  -6.2  11.5  -154%  17.4 
Paving  29.3  29.3  27.4  7%  15.2  3.3  11.5  -71%  4.7 
Partnership properties  -0.2  -0.2  -0.3  -173%  -1.0  -1.0  -0.7  -47%  -0.5  
Other items  -4.0  -4.0  -3.3  -20%  -17.6  -18.8  -15.4  -22%  -22.0 
Adjusted operating profit margin, %  5.5%  5.5%  6.2%  2.2%  1.4%  2.9%  3.6% 
Housing Finland and CEE  9.8%  9.8%  10.1%  9.6%  9.3%  7.6%  7.2% 
Housing Russia  -14.0%  -14.0%  -15.2%  -19.5%  -19.6%  -6.2%  1.2% 
Business premises  4.1%  4.1%  4.0%  2.1%  1.9%  2.7%  5.7% 
Infrastructure projects  2.1%  2.1%  4.1%  -0.8%  -1.4%  2.4%  2.5% 
Paving  9.8%  9.8%  8.8%  2.9%  0.6%  2.0%  0.6% 
Partnership properties 
Adjusting items  9.7  5.2  6.0  -14%  36.8  26.2  38.2  -31%  61.5 
Profit before taxes  37.1  41.6  54.7  -24%  -11.5  -17.5  19.8  50.7 
Profit for the review period2  32.4  36.0  44.5  -19%  -11.2  -20.4  15.5  26.3 
Earnings per share, EUR  0.16  0.17  0.21  -18%  -0.06  -0.10  0.07  0.13 
Operating cash flow after investments   -33.0  n/a  n/a  -55.8  n/a  n/a  n/a 
Net interest-bearing debt at end of period  767.8  767.8  n/a  767.8  767.8  n/a  668.5 
Gearing ratio at end of period, %  75.5%  n/a  n/a  75.5%  n/a  n/a  59.9% 
Equity ratio at end of period, %  34.8%  n/a  n/a  34.8%  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  4,990.8  4,990.8  4,378.9  14%  4,990.8  4,990.8  4,378.9  14%  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 September, 62% of the order backlog was sold. YIT estimates that in 2018, approximately 5,100 apartments in Finland and CEE1, and approximately 3,000 apartments in Russia will be completed for consumers. 

During the year, YIT has signed several significant, long-term lease agreements and the estimate regarding the adjusted operating profit1 includes the divestment of several 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.

 The figure for CEE includes projects sold to YCE housing fund I. 

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 October, residential sales to consumers are estimated to be around 140 units in Finland (10/17: around 260), around 120 units in the CEE countries (10/17: around 100) and approximately 350 units in Russia (10/17: 250). Additionally, of projects previously sold to the YCE Housing I fund, the fund is estimated to sell further to consumers approximately 28 apartments (10/17: 28). 

After the review period on October 4, YIT’s Trigoni proposal was nominated as a winner of the Helsinki High-rise Design-Build Competition, covering the development of the new high-rise district and the realisation of the first construction phase (start-up area) in Pasila in Helsinki, Finland. The realisation of the start-up area includes the construction of two tower buildings and a podium structure. The winner and the implementation contract for the start-up phase will be officially decided upon by the Helsinki City Council and the Parliament. The construction of the start-up area could commence approximately 2020–2021 after the city plan has been confirmed, and its value is approximately EUR 500 million.

After the review period, YIT’s project Tripla, in Central Pasila, won the Construction Site of the Year 2018 competition at the beginning of October.

News conference for investors and media

YIT will arrange a news conference on Thursday, October 25, 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 0360
Participants from UK and outside of Nordic countries +44 (0)330 336 9104
Participants from Sweden +46 (0)8 5033 6573
Participants from Norway +47 2100 2613

The participants will be asked to provide the following confirmation code: 448867.

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