Interim Report January 1 – March 31, 2016: Positive development in Finland and CEE, Q1 results burdened by Russia

YIT CORPORATION Stock Exchange Release April 28, 2016 at 8:00 a.m.

Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year.

Due to the new guidelines from the European Securities and Market Authority concerning alternative performance measures, the performance measure “operating profit excluding non-recurring items” is replaced with “adjusted operating profit”. The content of adjustments equals items previously disclosed as nonrecurring items and consist of material reorganization costs and impairment. Adjusted operating profit is disclosed to improve comparability between reporting periods.

January-March 2016 (Segment reporting, POC)

  • Revenue decreased by 3% to EUR 362.4 (374.9) million. At comparable exchange rates, revenue decreased by 1%.
  • Operating profit amounted to EUR 12.1 (20.5) million and operating profit margin was 3.3% (5.5%).
  • Order backlog increased by 3% from the end of December, amounting to EUR 2,246.8 million.
  • Operating cash flow after investments amounted to EUR -25.0 (15.1) million.

Kari Kauniskangas, President and CEO:

In January-March, the results were modest as we expected, but the quarter also saw a lot of positive development.

In the Business Premises and Infrastructure segment, the increase in the order backlog achieved last year started to bear fruit. The segment’s revenue grew by 22%, and the operating profit margin improved by 1.5 percentage points year-on-year. The Tripla project’s investor negotiations, renting and construction proceeded, and over EUR 500 million is expected to be added to the order backlog from the project during the second quarter of 2016.

The outlook for the Housing Finland and CEE segment is also positive. The residential demand has stayed on a good level in the CEE countries, but now we have also seen the first signs of a pick-up in consumer demand in Finland. We started clearly more new consumer projects than in the comparison period in Finland, and the good demand for the new projects was promising. We increased start-ups also in the CEE countries, and took a significant step in Poland by acquiring our first plot in Warsaw. Our aim is to start the construction and the sales of the first residential project in Poland already during the second quarter of the year.

In the Housing Russia segment, we succeeded well in sales, but operating result turned negative due to lower revenue and changes in the pricing of certain projects. We still target to have positive operating profit for the full year, and to decrease our operative invested capital in Russia.

Our cash flow in the first quarter was negative for the first time after six positive quarters. Plot investments were high during the review period, and the Tripla project’s groundworks burdened our balance sheet. However, our goal is to close the investor deal regarding the Tripla project’s mall and parking facility already during the second quarter, after which the project will tie YIT’s capital only for the minority ownership’s part. Our efforts to improve capital efficiency will continue in all of our business segments.

Key figures

Segment reporting, POC

EUR million 1–3/16 1–3/15 Change 1–12/15
Revenue 362.4 374.9 -3% 1,651.2
Housing Finland and CEE 166.0 183.6 -10% 777.8
Housing Russia 49.1 71.3 -31% 266.4
Business Premises and Infrastructure 149.4 122.0 22% 615.6
Other items -2.1 -2.0 -8.6
Operating profit 12.1 20.5 -41% 65.7
Operating profit margin, % 3.3% 5.5%
Adjusted operating profit 12.1 20.5 -41% 76.0
Housing Finland and CEE 12.9 14.2 -9% 56.0
Housing Russia -3.1 6.2 10.9
Business Premises and Infrastructure 6.0 3.1 96% 22.7
Other items -3.7 -3.0 -13.5
Adjusted operating profit margin, % 3.3% 5.5% 4.6%
Housing Finland and CEE 7.7% 7.7% 7.2%
Housing Russia -6.3% 8.7% 4.1%
Business Premises and Infrastructure 4.0% 2.5% 3.7%
Profit before taxes -0.8 10.3 27.0
Profit for the review period 1) -0.6 7.8 20.0
Earnings per share, EUR -0.00 0.06 0.16
Operating cash flow after investments -25.0 15.1 183.7
Return on investment (last 12 months), % 4.7% 7.5%
Equity ratio at end of period, % 34.1% 35.2%
Net interest-bearing debt at end of period 481.3 600.7 -20% 460.8
Order backlog at end of period 2,246.8 2,169.8 4% 2,172.9

1) Attributable to equity holders of the parent company

Group reporting, IFRS

EUR million 1–3/16 1–3/15 Change 1–12/15
Revenue 337.6 394.0 -14% 1,732.2
Operating profit 6.7 27.1 -75% 81.6
Operating profit margin, % 2.0% 6.9% 4.7%
Adjusted operating profit 6.7 27.1 -75% 91.9
Adjusted operating profit margin, % 2.0% 6.9% 5.3%
Profit before taxes -1.2 22.4 61.3
Profit for the review period 1) -0.9 17.5 47.2
Earnings per share, EUR -0.01 0.14 0.38
Operating cash flow after investments -25.0 15.1 183.7
Order backlog at end of period 2,575.2 2,550.1 1% 2,467.3
Invested capital at end of period 1,187.6 1,374.3 -14% 1,174.3
Return on investment (last 12 months), % 4.9% 6.8% 6.4%
Effective tax rate, % 18.4% 22.1% 22.9%

1) Attributable to equity holders of the parent company

3/16 3/15 Change 3/16 12/15 Change
Net interest-bearing debt, EUR million 554.5 678.0 -18% 554.5 529.0 5%
Gearing ratio, % 108.6% 117.3% 108.6% 101.1%
Equity ratio, % 31.5% 32.1% 31.5% 32.9%

Events after the review period

In April, residential sales for consumer are estimated to be around 130 units (4/15: around 140) in Finland, around 80 units (4/15: around 70) in the CEE countries and over 250 units (4/15: around 250) in Russia.

Outlook for 2016

Guidance unchanged (segment reporting, POC)

The Group revenue growth is estimated to be in the range of 0–10% at comparable exchange rates.

The adjusted operating profit* is estimated to grow from the level of 2015 (2015: EUR 76.0 million).

* The adjusted operating profit does not include material reorganisation costs or impairment.

In addition to the market outlook, the 2016 guidance is based on the following factors: At the end of March, 48% of YIT’s order backlog was sold. Projects already sold and signed pre-agreements are estimated to contribute over half of Q2-Q4/2016 revenue, assuming that large projects such as Tripla progress as planned. The rest of the revenue estimate is based on estimated new sales during 2016 and capital release actions.

In Business Premises and Infrastructure, the growing volume and the improved margin content of the order backlog are estimated to support the segment’s adjusted operating profit. The demanding market situation in Russia is expected to keep the profitability of Housing Russia on a low level. Similarly to the year 2015, the investor projects’ share of revenue is estimated to remain high in Housing Finland and CEE, which will impact the segment’s adjusted operating profit margin negatively. The execution of the capital release program started in autumn 2013 will continue actively in 2016, and the capital release actions are expected to have a negative effect on the adjusted operating profit margin.

Market outlook


In Finland, the macroeconomic uncertainty is estimated to affect the residential and business premises markets also in 2016.

Consumer demand is estimated to pick up slightly and the demand to focus especially on small, affordable apartments in growth centres. The investor activity is estimated remain on a good level but even more focus will be paid on the location. Residential price polarization is estimated to continue especially between growth centres and the rest of Finland. Access to mortgage financing is estimated to remain good.

In Finland, the tenants’ demand for business premises is estimated to remain modest. The real estate investors’ activity is expected to remain on a good level with focus on prime locations in the capital region. Business premises contracting is estimated to remain active. Political support for new infrastructure projects is estimated to revitalise the infrastructure market.


The visibility is weak in Russia and economic uncertainty is estimated to continue to have a negative impact also on the residential market. The construction cost inflation is expected to moderate. The nominal residential prices are estimated to remain stable. Demand is estimated to focus especially on small apartments.

The CEE countries

In the CEE countries, the demand in the residential and business premises markets is expected to be supported by the improved economic situation. Residential prices are estimated to increase in the Czech Republic, Slovakia and Lithuania, and to remain stable in Poland, Estonia and Latvia. The construction costs are estimated to increase slightly.

Access to mortgage financing is expected to remain good and interest rates to remain on a low level.

News conference for investors and media

YIT will arrange a news conference on April 28, 2016 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.


The news conference and presentation by the President and CEO of YIT Corporation Kari Kauniskangas can also be followed through a live webcast at 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), to number +44 20 319 40 552.

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
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,
Sanna Kaje, Vice President, Investor Relations and M&A, YIT Corporation, tel. +358 50 390 6750,


Kari Kauniskangas
President and CEO

Distribution: NASDAQ Helsinki, major media,

YIT creates sustainable cities and better living environment by developing and constructing housing, business premises, infrastructure and entire areas. We focus on providing a first-class customer experience, high quality and continuous development of our diverse expertise. Our operating area covers Finland, Russia, the Baltic countries, the Czech Republic, Slovakia and Poland. In 2015, our revenue amounted to nearly EUR 1.7 billion, and we employ about 5,300 employees. Our share is listed on Nasdaq Helsinki.