Interim Report January 1 – March 31, 2015: Balance sheet strengthened, successes in big projects
INTERIM REPORT APRIL 28, 2015 AT 8:00 A.M.
Interim Report January 1 – March 31, 2015: Balance sheet strengthened, successes in big projects
Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year.
January-March 2015 (Segment reporting, POC)
- Revenue decreased by 7% to EUR 374.9 (403.1) million. At comparable exchange rates, revenue increased by 1%.
- Operating profit amounted to EUR 20.5 (26.9) million and operating profit margin was 5.5% (6.7%).
- Operating cash flow after investments amounted to EUR 15.1 (-12.3) million.
- Order backlog increased by 2% from the end of December, amounting to EUR 2,169.8 million.
Guidance for 2015 unchanged (segment reporting, POC)
The Group revenue growth is estimated to be in the range of -5 – 5% at comparable exchange rates.
The operating profit margin excluding non-recurring items is estimated to be below the level of 2014.
Kari Kauniskangas, President and CEO:
In 2015, we have continued our efforts to improve capital efficiency and to maintain a strong cash flow. At the same time, we have built our future by actively advancing our promising projects, such as the Tripla-project in Pasila, and by investing in new plots for example in Prague in the Czech Republic. With respect to the first quarter of the year, I am also particularly pleased that we managed to maintain the downward trend in our net debt, and our financial standing improved.
As expected, the business environment in our main markets, Finland and Russia, has continued to be demanding, but the first quarter nevertheless included many successes. A consortium formed by YIT and Meridiam was selected as the preferred bidder for the E18 motorway between Hamina and Vaalimaa, and we also won several business premises contracts in Finland and the CEE countries. Activity has also been good in investor sales in both business premises and housing. Alltogether, during the last quarter of 2014 and the first quarter of 2015 we have secured projects worth over EUR 500 million, which will strengthen our order backlog in the coming quarters.
In housing, our business developed particularly well in the CEE countries, where both the unit sales and revenue grew strongly, and profitability improved substantially from the comparison period.
In Russia, YIT’s reputation as a reliable operator bore fruit, and housing sales continued at a reasonable level considering the circumstances. We kept residential start-ups at a lower level than in the comparison period; three new projects were started to maintain the operating volume.
I am also very pleased to note that, despite the challenges in our operating environment, our recent personnel survey indicates that the commitment of our personnel and the quality of leadership within the company have improved broadly.
Key figures
Segment reporting, POC
| EUR million | 1–3/15 | 1–3/14 | Change | 1–12/14 |
| Revenue | 374.9 | 403.1 | -7% | 1,801.2 |
| Housing Finland and CEE | 183.6 | 172.9 | 6% | 726.5 |
| Housing Russia | 71.3 | 108.5 | -34% | 474.1 |
| Business Premises and Infrastructure | 120.1 | 121.1 | -1% | 599.3 |
| Other items | -0.1 | 0.6 | 1.4 | |
| Operating profit | 20.5 | 26.9 | -24% | 114.0 |
| Operating profit margin, % | 5.5% | 6.7% | 6.3% | |
| Operating profit excluding non-recurring items | 20.5 | 26.9 | -24% | 126.4 |
| Housing Finland and CEE | 14.2 | 16.8 | -15% | 63.7 |
| Housing Russia | 6.2 | 12.2 | -49% | 55.8 |
| Business Premises and Infrastructure | 3.1 | 0.2 | over thousand % | 20.4 |
| Other items | -3.0 | -2.3 | -13.5 | |
| Operating profit margin, % excluding non-recurring items | 5.5% | 6.7% | 7.0% | |
| Housing Finland and CEE | 7.7% | 9.7% | 8.8% | |
| Housing Russia | 8.7% | 11.2% | 11.8% | |
| Business Premises and Infrastructure | 2.6% | 0.2% | 3.4% | |
| Profit before taxes | 10.3 | 18.2 | -43% | 75.0 |
| Profit for the review period1 | 7.8 | 14.3 | -45% | 56.6 |
| Earnings per share, EUR | 0.06 | 0.11 | -45% | 0.45 |
| Operating cash flow after investments | 15.1 | -12.3 | 151.9 | |
| Return on investment (last 12 months), % | 7.5% | 10.2% | 7.7% | |
| Equity ratio at end of period, % | 35.2% | 35.0% | 32.4% | |
| Net interest-bearing debt at end of period | 600.7 | 766.6 | -22% | 616.6 |
| Order backlog at end of period | 2,169.8 | 2,696.7 | -20% | 2,125.9 |
1 Attributable to equity holders of the parent company
Group reporting, IFRS
| EUR million | 1–3/15 | 1–3/14 | Change | 1–12/14 |
| Revenue | 394.0 | 403.2 | -2% | 1,778.6 |
| Operating profit | 27.1 | 23.2 | 17% | 94.8 |
| Operating profit margin, % | 6.9% | 5.8% | 5.3% | |
| Operating profit excluding non-recurring items | 27.1 | 23.2 | 17% | 107.3 |
| Operating profit margin, % excluding non-recurring items | 6.9% | 5.8% | 6.0% | |
| Profit before taxes | 22.4 | 18.8 | 19% | 74.3 |
| Profit for the review period1 | 17.5 | 14.6 | 20% | 55.9 |
| Earnings per share, EUR | 0.14 | 0.12 | 17% | 0.44 |
| Operating cash flow after investments | 15.1 | -12.3 | 151.9 | |
| Order backlog at end of period | 2,550.1 | 3,146.4 | -19% | 2,507.1 |
| Invested capital at end of period | 1,374.3 | 1,555.8 | -12% | 1,431.0 |
| Return on investment (last 12 months), % | 6.8% | 7.0% | 6.4% | |
| Effective tax rate, % | 22.1% | 22.4% | 24.9% |
1 Attributable to equity holders of the parent company
| 3/15 | 3/14 | Change | 12/14 | |
| Net interest-bearing debt, EUR million | 678.0 | 840.3 | -19% | 696.0 |
| Gearing ratio, % | 117.3% | 132.1% | 129.9% | |
| Equity ratio, % | 32.1% | 31.6% | 29.2% |
Events after the review period
In April, residential sales to consumers are estimated to be around 140 units in Finland, around 70 units in the CEE countries and around 250 units in Russia.
Outlook for 2015
Guidance (segment reporting, POC)
The Group revenue growth is estimated to be in the range of -5 – 5% at comparable exchange rates.
The operating profit margin excluding non-recurring items is estimated to be below the level of 2014.
In addition to the market outlook, the guidance is based on the following factors: At the end of March, 43% of YIT’s order backlog was sold, in addition to which the company had signed a significant number of pre-agreements. Projects already sold and signed pre-agreements are estimated to contribute approximately 40% of the Q2-Q4/15 revenue. The rest of the revenue estimate is based on estimated new sales during the remainder of the year and capital release actions.
Operating profit margin excluding non-recurring items will be burdened by the following factors, in addition to the demanding market situation: The share of Housing Russia segment of the Group revenue is estimated to decrease due to the weakening of the ruble and the decline in the production volume, which will impact the operating profit margin negatively. In addition, the share of revenue coming from residential sales to investors, which has lower margin than consumer sales, and contracting is estimated to increase in Finland. Approximately half of the over EUR 380 million capital release program, started in autumn 2013, was carried out by the end of March. The execution of the program will be continued actively in 2015, and the capital release actions are estimated to have a negative effect on the operating profit margin.
Market outlook
Finland
In Finland, the macroeconomic uncertainty is estimated to affect the residential and business premises markets also in 2015.
Consumers are cautious, and the demand is expected to focus on small apartments in growth centres, whereas the investor demand is expected to remain good. Residential price development is estimated to be polarized especially between small and large apartments. Access to mortgage financing is estimated to remain good.
In Finland, the demand for business premises is estimated to remain modest. The real estate investors’ interest is estimated to pick up with focus on prime locations in the capital region. Opportunities are seen in contracting.
Russia
The visibility is weak in Russia and economic uncertainty is estimated to have a negative impact also on the residential market. Consumers’ purchasing power is estimated to weaken, and the construction costs to increase. Residential price development involves uncertainties. The demand is estimated to focus especially on small apartments that are either close to completion or completed.
The mortgage rates are expected to remain stable thanks to the government’s mortgage subsidy program.
The CEE countries
In the CEE countries the residential and business premises markets are expected to be supported by the improved economic situation. Access to mortgage financing is estimated to remain good and residential prices to increase moderately.
News conference for investors and media
YIT will arrange a news conference on April 28, 2015 at 10:00 a.m. Finnish time (EEST) at YIT's head office, Panuntie 11, 00620 Helsinki, Finland. The event is in English and targeted for analysts, portfolio managers and the media.
Webcast
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 arerequested to dial in at least five minutes prior to the start of the conference, at 9:55 a.m. (EEST), to number +44 20 319 40552.
During the webcast and conference call, all questions should be presented in English. At the end of the event the media has the possibility to ask questions also in Finnish.
Schedule in different time zones
| Interim Report published | The investor and analyst event, conference call and live webcast | Recorded webcast available | ||
| EEST (Helsinki) | 08:00 | 10:00 | 12:00 | |
| CEST (Paris, Stockholm) | 07:00 | 09:00 | 11:00 | |
| BST (London) | 06:00 | 08:00 | 10:00 | |
| US EDT (New York) | 01:00 | 03:00 | 05:00 | |
For additional information, please contact:
Timo Lehtinen, Chief Financial Officer, YIT Corporation, tel. +358 45 670 0626, timo.lehtinen@yit.fi
Sanna Kaje, Vice President, Investor Relations, YIT Corporation, tel. +358 50 390 6750, sanna.kaje@yit.fi
YIT CORPORATION
Kari Kauniskangas
President and CEO
Distribution: NASDAQ OMX, principal media, www.yitgroup.com
YIT is a construction industry leader. We create better living environments in Finland, Russia, the Baltic countries, the Czech Republic and Slovakia. Over 100 years of experience have secured us a strong market position: we are the largest housing developer and one of the largest business premises and infrastructure developers in Finland, and the most significant foreign housing and area developer in Russia. Our vision is to stay one step ahead – while taking care of our customers, partners and personnel. We have nearly 6,000 employees in seven countries. In 2014, our revenue amounted to around EUR 1.8 billion. Our share is listed on NASDAQ OMX Helsinki. www.yitgroup.com