SRV announces its revised strategy and updated long-term financial objectives for 2024-2027: Towards sustainable profitability

SRV GROUP PLC     STOCK EXCHANGE RELEASE     21 NOVEMBER 2023     9:00 EET

SRV announces its revised strategy and updated long-term financial objectives for 2024-2027: Towards sustainable profitability

SRV Group Plc has released its revised strategy and updated long-term financial objectives for 2024–2027 today. The strategy responds to the ongoing trends in the company’s business environment, such as accelerating climate change, urban growth and high-density development, and faster digitalisation.

“We seek to build a lifecycle-wise environment by listening to our customers and other stakeholders,” says Saku Sipola, President & CEO of SRV. “Our approach is encapsulated in our customer promise: ‘By listening, we build wisely.’”

The company’s strategic objectives are to increase shareholder value, provide an excellent customer experience, be a desired employer and mitigate climate change. To ensure the achievement of these objectives, we will focus on five strategic priorities:

• A portfolio that is optimised for market conditions and risk management
• Lifecycle-wise construction
• Customer work that produces value
• Efficiency and digitalisation
• Corporate culture, people and expertise

The long-term financial objectives will be achieved through the continuous optimisation of business operations 

SRV aims to continuously optimise its portfolio for market conditions and risk management in order to reach its long-term financial objectives. At the end of 2023, the company’s project portfolio is strongly focused on cooperative business premises contracts. Going forward, the company intends to pursue profitable growth by increasing the share accounted for by housing construction and especially by housing and business premises construction based on in-house project development in a controlled manner, as follows:

• SRV will bolster its leading position in cooperative project management contracting and alliance projects
• The share of revenue accounted for by housing construction will be increased to 30-40%
• The relative share of the portfolio accounted for by business premises based on in-house project development, residential development projects and residential developer contracting projects will be raised to 30-40% of revenue.

“Our aim is to build SRV into a sustainably profitable company. We will steer our profitability by tapping into market opportunities and engaging in prudent risk management. The key factor in risk management is the careful selection of projects. We also proactively manage our risks by diversifying our portfolio geographically, by intended use and contract type, and by limiting the amount of capital tied up in projects,” says Sipola.

Geographically, the company will continue to focus particularly on growing urban areas in Finland. In cooperative contracting, SRV seeks to be the leading company nationwide. In renovation, the company is pursuing growth through cooperative implementation models, particularly in association with key customers.

Lifecycle-wise construction remains at the core of the strategy

“We took great strides forward in lifecycle wisdom during the previous strategy period – the outcome was an improvement in the profitability of development projects. We have focused on development and developer contracting projects, with a particular emphasis on the reduction of emissions, that is, climate change mitigation and adaptation. All our construction sites have been net-zero emission sites since the beginning of 2022, and we have reduced our emissions by 75%. Furthermore, we have built our first net-zero emission-free building,” says Sipola. “We see lifecycle-wise construction as a big competitive advantage. For example, according to reports by JLL and CBRE the occupancy rate of lifecycle-wise properties is around 8% higher and their green premium at the time of sale is approximately 8-12%. In addition, energy consumption during the use of a lifecycle-wise building is about 20-30% lower."

In the focus of value-generating customer work, SRV emphasises, among other things, growth in customer-oriented and lifecycle-wise project development projects, business processes in accordance with its customer promise, and strengthening the culture of cooperation. With respect to efficiency and digitalisation, the company will continue to develop its procurement and industrial construction, and utilise the latest technologies in information modelling as well as production and design control. In terms of corporate culture, people and expertise, the company is focusing particularly on competitiveness with the help of experts and corporate culture, in management and professional development, and in the promotion of community spirit and diversity.

Long-term financial objectives

The company’s operations are guided by the following long-term financial objectives that it aims to achieve
by the end of 2027:

• Operative operating profit of at least EUR 50 million (earlier 6%)
• Revenue > EUR 900 million (earlier EUR 900 million) ​

Taking into account that SRV aims to pay dividends of 30-50% of its annual result, in line with its dividend policy, the company’s outlook and capital needs remain unchanged.

Capital Markets Day

SRV will present its revised strategy and updated long-term financial objectives at the Capital Markets Day, which will be held on 21 November 2023, starting at noon. The Capital Markets Day can be followed live as a webcast or viewed as a recording after the event at https://srv.videosync.fi/paaomamarkkinapaiva-2023/register. The presentation materials will be available on SRV’s site after the event at: https://www.srv.fi/en/srv-as-a-company/investor/cmd/. The Capital Markets Day will be held in Finnish.

For further information, please contact:
Saku Sipola, President & CEO, tel. +358 (0)40 551 5953, saku.sipola@srv.fi  

Distribution:
Nasdaq Helsinki
Main media
www.srv.fi

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SRV in brief

SRV is a Finnish developer and innovator in the construction industry. We are building a more sustainable and responsible urban environment that fosters economic value and takes the wellbeing of both the environment and people into consideration. We call this approach lifecycle wisdom. Our genuine engagement and enthusiasm for our work comes across in every encounter – and listening is one of our most important ways of working. We believe that the only way to change the world is through discussion.

Our company, established in 1987, is listed on the Helsinki Stock Exchange. We operate in growth centres in Finland. In 2022, our revenue totalled EUR 770.1 million. In addition to approximately 1,000 in-house staff, we have a network of around 3,800 partners.

SRV – Building for life