YIT'S INTERIM REPORT JANUARY 1 – SEPTEMBER 30, 2012: Residential sales remained favourable, profitability is improving in Russia
YIT CORPORATION INTERIM REPORT October 30, 2012 at 8:00 a.m.
YIT'S INTERIM REPORT JANUARY 1 – SEPTEMBER 30, 2012: Residential sales remained favourable, profitability is improving in Russia
July 1–September 30, 2012: Favourable development particularly in Russian residential construction
- The operating profit of the segments increased by 57 percent in July–September compared to the previous year, amounting to EUR 68.4 million (7–9/2011: EUR 43.6 million). The operating profit for Construction Services Finland and International Construction Services increased clearly from the previous year.
- YIT booked a provision of EUR 10 million related to the ammonia problem in residential units constructed in St. Petersburg in the third quarter of 2011. The costs of rectifying the problem are expected to be lower than estimated a year ago, and the company cancelled EUR 7.0 million of the provision in the third quarter of 2012. The cancellation of the provision improved the operating profit of International Construction Services for the third quarter.
- The revenue for the segments for the third quarter was on a par with the previous year, amounting to EUR 1,115.3 million (7–9/2011: EUR 1,096.5 million). Revenue grew in Construction Services Finland and International Construction Services. The growth in revenue was supported by the high volume of housing production, continued good residential sales and favourable development of the infrastructure business in Finland.
- The order backlog for the segments was 15 percent higher than a year earlier, increasing to EUR 4,018.6 million (9/2011: EUR 3,489.0 million). The order backlog remained at the same level for the end of June 2012.
- The Group’s profit before taxes based on segment reporting increased by 79 percent in July–September from the year before, amounting to EUR 64.0 (7-9/2011: EUR 35.8 million).
- The Group’s earnings per share based on segment reporting doubled in July–September from the year before, amounting to EUR 0.40 (7–9/2011: EUR 0.20).
1.1.–30.9.2012: Favourable development in Construction Services
- The operating profit for the segments increased by 10 percent during the review period compared to the previous year, amounting to EUR 181.2 million (1–9/2011: EUR 164.3 million). Operating profit grew in Construction Services Finland and International Construction Services.
- The revenue for the segments for January–September was on a par with the previous year, amounting to EUR 3,398.1 million (1–9/2011: EUR 3,260.3 million). Revenue grew in Construction Services Finland and International Construction Services.
- The Group’s profit before taxes based on segment reporting increased by 13 percent from the year before, amounting to EUR 165.6 (1–9/2011: EUR 147.1 million).
- The Group’s earnings per share based on segment reporting increased by 20 percent from the year before, amounting to EUR 1.01 (1–9/2011: EUR 0.84).
GUIDANCE: The Group’s revenue based on segment reporting will remain on a par with 2011 and operating profit will increase compared to 2011
YIT Corporation reiterates its estimate issued in connection with the financial statements for 2011 and according to which, in 2012, revenue will remain on the same level as in 2011 and operating profit will increase compared to 2011. The profit outlook is based on the segment-level reporting, i.e. recognition of income based on the percentage of completion.
The high uncertainty over the general macroeconomic development also has a negative effect on decision-making by YIT's customers and thereby the development and performance of YIT's business operations.
Juhani Pitkäkoski, President and CEO: Low interest rates and potential increase in capital transfer tax will support residential sales in Finland during the rest of the year
We are satisfied with the good development in Construction Services during the third quarter. Our business operations in Russia are beginning to meet the high expectations placed on them. International Construction Services was the group’s best performing segment, in terms of operating profit margin, and Construction Services Finland also had good performance across a wide front.
We responded to the continued favourable demand by starting up the construction of more than 2,000 residential units during the third quarter.
In addition to low interest rates, the possible change in capital transfer tax taking effect at the beginning of next year in Finland will support residential sales for the rest of the year.
We will continue our efforts to improve the profitability of Building Services. In addition to the efficiency improvement measures already under way, we will increasingly focus on service and maintenance operations in Building Services Northern Europe. We will improve the profitability of Building Services Central Europe through the restructuring of operations, which was already initiated during the first half of the year.
The increase in the uncertainty of the real economy after the summer and weaker confidence are reflected in our operations in the form of prolonged decision-making time by our customers and projects being postponed.
KEY FIGURES
Development of the Group based on segment reporting (percentage of completion, POC)
Revenue, EUR million | 1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | |
Building Services Northern Europe | 1,536.5 | 1,497.5 | 3% | 485.3 | 511.9 | -5% | |
Building Services Central Europe | 518.4 | 579.0 | -10% | 179.5 | 210.8 | -15% | |
Construction Services Finland | 986.4 | 891.2 | 11% | 308.9 | 269.4 | 15% | |
International Construction Services | 394.6 | 343.3 | 15% | 153.3 | 122.5 | 25% | |
Other items | -37.7 | -50.7 | -11.7 | -18.1 | |||
Group, total | 3,398.1 | 3,260.3 | 4% | 1,115.3 | 1,096.5 | 2% |
Operating profit, EUR million | 1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | |
Building Services Northern Europe | 45.6 | 55.8 | -18% | 15.6 | 19.9 | -22% | |
Building Services Central Europe | 16.6 | 24.0 | -31% | 4.8 | 7.9 | -40% | |
Construction Services Finland | 88.9 | 79.5 | 12% | 27.2 | 21.1 | 29% | |
International Construction Services | 45.2 | 19.8 | 128% | 24.0 | -0.9 | ||
Other items | -15.0 | -14.8 | -3.2 | -4.4 | |||
Group, total | 181.2 | 164.3 | 10% | 68.4 | 43.6 | 57% |
Operating profit margin, % | 1-9/12 | 1-9/11 | 7-9/12 | 7-9/11 | |||
Building Services Northern Europe | 3.0 | 3.7 | 3.2 | 3.9 | |||
Building Services Central Europe | 3.2 | 4.2 | 2.6 | 3.7 | |||
Construction Services Finland | 9.0 | 8.9 | 8.8 | 7.8 | |||
International Construction Services | 11.5 | 5.8 | 15.7 | -0.7 | |||
Group, total | 5.3 | 5.0 | 6.1 | 4.0 |
Order backlog, EUR million | 9/12 | 9/11 | Change | 9/12 | 6/12 | Change | |
Building Services Northern Europe | 904.9 | 886.1 | 2% | 904.9 | 955.1 | -5% | |
Building Services Central Europe | 435.5 | 523.9 | -17% | 435.5 | 473.4 | -8% | |
Construction Services Finland | 1,541.0 | 1,289.3 | 20% | 1,541.0 | 1,499.9 | 3% | |
International Construction Services | 1,207.4 | 850.1 | 42% | 1,207.4 | 1,186.7 | 2% | |
Other items | -70.1 | -60.3 | -70.1 | -69.7 | |||
Group, total | 4,018.6 | 3,489.0 | 15% | 4,018.6 | 4,045.4 | -1% |
Key ratios of segment reporting (percentage of completion, POC)
1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | ||
Profit before taxes, EUR million | 165.6 | 147.1 | 13% | 64.0 | 35.8 | 79% | |
Profit for the review period, EUR million 1) | 126.1 | 104.9 | 20% | 49.8 | 24.5 | 104% | |
Earnings/share, EUR | 1.01 | 0.84 | 20% | 0.40 | 0.20 | 100% | |
Operating cash flow after investments, EUR million | 3.1 | -31.4 | -30.5 | -47.3 | -35% | ||
Personnel at the end of period | 25,788 | 26,502 | -3% | 25,788 | 26,502 | -3% |
1) attributable to equity holders of the parent company
INFORMATION SESSION, WEBCAST AND CONFERENCE CALL
YIT will hold a news conference on the interim report on Tuesday, October 30, 2012, at 10:00 a.m. (Finnish Time, EEST). The news conference will be held in English. The news conference will be held at YIT's head office at Panuntie 11, 00620 Helsinki, Finland. The event is intended for analysts, portfolio managers and the media.
The news conference and the presentation, given by the company’s President and CEO, Juhani Pitkäkoski, can be viewed live on YIT’s website at www.yitgroup.com/webcast. The live webcast will start at 10:00 a.m. A recording of the webcast will be available at the same address starting at approximately 12:00 noon.
It is also possible to participate in the event through a conference call. Participants are requested to call the assigned number +44 (0) 20 7162 0077 at least five minutes before the conference call begins, at 9:55 a.m. (Finnish time, EEST) at the latest.
During the webcast and conference call, all questions should be presented in English. At the end of the event, there will also be an opportunity for the media to ask questions in Finnish.
Schedule in different time zones:
Interim Report published | The analyst, portfolio manager and media event, conference call and live webcast | Recorded webcast available | |
EEST (Helsinki) | 8:00 | 10:00 | 12:00 |
CEST (Paris, Stockholm) | 7:00 | 9:00 | 11:00 |
BST (London) | 6:00 | 8:00 | 10:00 |
US EDT (New York) | 1:00 | 3:00 | 5:00 |
Financial reports and other investor information are available at YIT's website, www.yitgroup.com/investors. The materials may be ordered via the website, by sending e-mail to InvestorRelations@yit.fi or by telephone on +358 20 433 2257.
YIT Corporation
Juhani Pitkäkoski
President and CEO
For further information, please contact:
Timo Lehtinen, Chief Financial Officer, YIT Corporation, tel. +358 45 670 0626, timo.lehtinen@yit.fi
Hanna-Maria Heikkinen, Vice President, Investor Relations, YIT Corporation, tel. +358 40 826 2172, hanna-maria.heikkinen@yit.fi
Distribution: NASDAQ OMX Helsinki, principal media, www.yitgroup.com
INTERIM REPORT JANUARY 1 – SEPTEMBER 30, 2012
CONTENTS
- Group financial development based on segment reporting
- Development by business segment
- Personnel
- Strategic objectives
- Group financial development based on Group reporting
- Resolutions passed at the Annual General Meeting
- Shares and shareholders
- Most significant short-term business risks and risk management
- Continuous improvement of occupational safety as part of corporate responsibility
- Outlook for 2012
- Tables to the Interim Report
GROUP FINANCIAL DEVELOPMENT BASED ON SEGMENT REPORTING
Accounting principles applied in the interim report
YIT Corporation’s management follows the development of the company’s business according to the percentage of completion-based reporting method for each segment. Therefore, the descriptive part of the interim report focuses on describing the company’s performance according to this reporting. YIT also reports on its operations in accordance with IFRS guidelines, where the company applies, for example, the IFRIC 15 guidelines. The effects of the differences of the recognition principles are presented in detail in the tables to the interim report.
Development of Construction Services remained favourable
Revenue, EUR million | 1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | |
Building Services Northern Europe | 1,536.5 | 1,497.5 | 3% | 485.3 | 511.9 | -5% | |
Building Services Central Europe | 518.4 | 579.0 | -10% | 179.5 | 210.8 | -15% | |
Construction Services Finland | 986.4 | 891.2 | 11% | 308.9 | 269.4 | 15% | |
International Construction Services | 394.6 | 343.3 | 15% | 153.3 | 122.5 | 25% | |
Other items | -37.7 | -50.7 | -11.7 | -18.1 | |||
Group, total | 3,398.1 | 3,260.3 | 4% | 1,115.3 | 1,096.5 | 2% |
The revenue of YIT’s segments for January–September was on a par with the previous year, amounting to EUR 3,398.1 million (1–9/2011: EUR 3,260.3 million). Revenue for the third quarter also was on a par with the previous year, amounting to EUR 1,115.3 million (7–9/2011: EUR 1,096.5 million). Revenue grew in Construction Services Finland and International Construction Services. The growth in revenue was supported by the high volume of housing production, continued good residential sales and favourable development of the infrastructure business in Finland. Changes in foreign exchange rates increased the segments' revenue for January–September by EUR 37.2 million and for the third quarter by EUR 23.3 million compared to the previous year.
In January–September, Finland accounted for 41 percent (1–9/2011: 41%) of the Group’s revenue according to the segment reporting, Sweden for 15 percent (1–9/2011: 15%), Norway for 13 percent (1–9/2011: 12%), Germany for 12 percent (1–9/2011: 14%), Russia for 9 percent (1–9/2011: 9%), Denmark for 3 percent (1–9/2011: 4%), Austria for 3 percent (1–9/2011: 2%), the Baltic countries for 3 percent (1–9/2011: 2%) and other countries for 1 percent (1–9/2011: 1%)
Profitability improved during the third quarter
Operating profit, EUR million | 1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | |
Building Services Northern Europe | 45.6 | 55.8 | -18% | 15.6 | 19.9 | -22% | |
Building Services Central Europe | 16.6 | 24.0 | -31% | 4.8 | 7.9 | -40% | |
Construction Services Finland | 88.9 | 79.5 | 12% | 27.2 | 21.1 | 29% | |
International Construction Services | 45.2 | 19.8 | 128% | 24.0 | -0.9 | ||
Other items | -15.0 | -14.8 | -3.2 | -4.4 | |||
Group, total | 181.2 | 164.3 | 10% | 68.4 | 43.6 | 57% |
Operating profit margin, % | 1-9/12 | 1-9/11 | 7-9/12 | 7-9/11 | |||
Building Services Northern Europe | 3.0 | 3.7 | 3.2 | 3.9 | |||
Building Services Central Europe | 3.2 | 4.2 | 2.6 | 3.7 | |||
Construction Services Finland | 9.0 | 8.9 | 8.8 | 7.8 | |||
International Construction Services | 11.5 | 5.8 | 15.7 | -0.7 | |||
Group, total | 5.3 | 5.0 | 6.1 | 4.0 |
YIT's operating profit based on segment reporting increased by 10 percent compared to the previous year, amounting to EUR 181.2 million in January–September (1–9/2011: EUR 164.3 million). The operating profit margin based on segment reporting was 5.3 percent (1–9/2011: 5.0%). The operating profit for the review period includes EUR -9.2 million of borrowing costs according to IAS 23 (1–9/2011: EUR -6.3 million). The IAS 23 standard defines the recording method of borrowing costs in long-term construction projects.
The operating profit for the third quarter increased by 57 percent from the previous year to EUR 68.4 million (7–9/2011: EUR 43.6 million). The operating profit margin based on segment reporting was 6.1 percent (7–9/2011: 4.0%). The operating profit for the third quarter includes EUR -3.3 million of borrowing costs according to IAS 23 (7–9/2011: EUR -1.8 million).
The third quarter operating profit for Building Services Northern Europe fell short of the previous year due to the low profitability of project operations. The operating profit for Building Services Central Europe was burdened by a decrease in the segment’s revenue due to weakening demand, especially in Germany, and the low level of activity in Central Eastern Europe. The operating profit for Construction Services Finland and International Construction Services increased clearly from the previous year.
YIT booked a provision of EUR 10 million related to the ammonia problem in residential units constructed in St. Petersburg in the third quarter of 2011. The costs of rectifying the problem are expected to be lower than estimated a year ago, and the company cancelled EUR 7 million of the provision in the third quarter of 2012. The cancellation of the provision improved the operating profit of International Construction Services for the third quarter.
Strong order backlog gives visibility
Order backlog, EUR million | 9/12 | 9/11 | Change | 9/12 | 6/12 | Change | |
Building Services Northern Europe | 904.9 | 886.1 | 2% | 904.9 | 955.1 | -5% | |
Building Services Central Europe | 435.5 | 523.9 | -17% | 435.5 | 473.4 | -8% | |
Construction Services Finland | 1,541.0 | 1,289.3 | 20% | 1,541.0 | 1,499.9 | 3% | |
International Construction Services | 1,207.4 | 850.1 | 42% | 1,207.4 | 1,186.7 | 2% | |
Other items | -70.1 | -60.3 | -70.1 | -69.7 | |||
Group, total | 4,018.6 | 3,489.0 | 15% | 4,018.6 | 4,045.4 | -1% |
The combined order backlog for YIT's segments was EUR 4,018.6 million at the end of September (9/2011: EUR 3,489.0 million) or 15 percent higher than the previous year. The order backlog remained unchanged from the end of June 2012, at which time it stood at EUR 4,045.4 million.
The order backlogs for Building Services Northern Europe and Central Europe decreased slightly from the end of June 2012. The order backlogs of the other segments remained at the level of the end of June 2012.
Capital expenditure and acquisitions
Gross capital expenditure on non-current assets included on the balance sheet totalled EUR 34.3 million in January–September (1–9/2011: EUR 43.9 million), representing 1.0 percent (1–9/2011: 1.4%) of revenue. Investments in construction equipment amounted to 11.7 million (1–9/2011: EUR 12.2 million) and investments in information technology to EUR 6.9 million (1–9/2011: EUR 9.0 million). Other investments, including acquisitions, amounted to EUR 15.7 million (1–9/2011: EUR 22.7 million).
YIT did not make any acquisitions during the third quarter. A more detailed description of acquisitions made during the review period can be found in the tables to the Interim Report.
Plot investments had an effect on cash flow
In January–September, the Group's operating cash flow after investments amounted to EUR 3.1 million (1–9/2011: EUR -31.4 million). The Group's operating cash flow after investments for the third quarter amounted to EUR -30.5 million (7–9/2011: EUR -47.3 million). In Construction Services Finland, the operating cash flow for the third quarter was positive, capital was freed up from production and tied to completed residential units and plot reserves; plot investments continued in the International Construction Services segment. The Group’s operating cash flow was burdened by increased working capital in Building Services.
At the end of September, the Group's invested capital amounted to EUR 1,948.7 million (6/2012: EUR 1,883.5 million). Of the Group's invested capital, 28 percent (6/2012: 27%), or EUR 550.7 million (6/2012: EUR 509.2 million) was invested in Russia. Exchange rate changes of the ruble increased the capital invested in Russia by EUR 16.4 million in July–September.
The amount of capital invested in Russia increased slightly compared to the end of June, taking the exchange rate change of the ruble into account. Smaller project sizes, sales of residential units at an earlier construction phase, improved terms of payment and an increased share of mortgage deals all increase capital efficiency.
The Group’s return on investment based on segment reporting amounted to 14.6 percent for the last 12 months (7/2011–6/2012: 13.7%).
Profit before taxes increased from the previous year
Profit before taxes based on segment reporting increased by 13 percent compared to the previous year, amounting to EUR 165.6 million in January–September (1–9/2011: EUR 147.1 million). The profit for the third quarter increased by 79 percent from the previous year to EUR 64.0 million (7–9/2011: EUR 35.8 million).
Earnings per share based on segment reporting increased by 20 percent from the year before in January–September, amounting to EUR 1.01 (1–9/2011: EUR 0.84). Earnings per share for the third quarter doubled from the year before, amounting to EUR 0.40 (7–9/2011: EUR 0.20).
DEVELOPMENT BY BUSINESS SEGMENT
Development by business segment is presented using figures compliant with segment reporting.
BUILDING SERVICES NORTHERN EUROPE
1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | ||
Revenue, EUR million | 1,536.5 | 1,497.5 | 3% | 485.3 | 511.9 | -5% | |
Operating profit, EUR million | 45.6 | 55.8 | -18% | 15.6 | 19.9 | -22% | |
Operating profit margin, % | 3.0 | 3.7 | 3.2 | 3.9 |
10/11-9/12 | 7/11-6/12 | |
Return on operative invested capital (last 12 months), % | 17.8 | 21.4 |
9/12 | 9/11 | Change | 9/12 | 6/12 | Change | ||
Operative invested capital, EUR million | 394.8 | 375.6 | 5% | 394.8 | 357.8 | 10% | |
Order backlog, EUR million | 904.9 | 886.1 | 2% | 904.9 | 955.1 | -5% |
Revenue, EUR million | 1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | |
Sweden | 515.8 | 492.6 | 5% | 158.5 | 167.5 | -5% | |
Finland | 449.5 | 464.1 | -3% | 148.6 | 164.8 | -10% | |
Norway | 424.8 | 377.9 | 12% | 129.6 | 122.2 | 6% | |
Denmark | 107.8 | 122.9 | -12% | 35.1 | 42.1 | -17% | |
Russia and the Baltic countries | 38.5 | 40.0 | -4% | 13.5 | 15.3 | -12% | |
Total | 1,536.5 | 1,497.5 | 3% | 485.3 | 511.9 | -5% |
The revenue for Building Services Northern Europe remained at the level of the previous year in January–September, amounting to EUR 1,536.5 million (1–9/2011: EUR 1,497.5 million). Changes in foreign exchange rates increased the revenue for the review period by EUR 32.3 million compared to the previous year. The revenue for the third quarter decreased by 5 percent from the previous year to EUR 485.3 million (7–9/2011: EUR 511.9 million). Changes in foreign exchange rates increased the revenue for the third quarter by EUR 20.2 million compared to the previous year.
The segment's operating profit for the review period decreased by 18 percent from the previous year to EUR 45.6 million (1–9/2011: EUR 55.8 million). The operating profit for the third quarter decreased by 22 percent from the previous year to EUR 15.6 million (7–9/2011: EUR 19.9 million). The segment’s profitability was burdened by the weak profitability of project operations. Business profitability was weak in Denmark during the third quarter and deteriorated in Sweden as well. The profitability of Industrial Services, on the other hand, improved during the third quarter.
The restructuring of operations proceeded in all countries where Building Services Northern Europe operates during the review period. The efficiency of the segment’s regional organisations has been enhanced during the review period, and organisation structures have been streamlined in order to improve the control and profitability of operations. In the service business, capacity planning, work preparation, material logistics, the invoicing process and efficient control of technician resources through mobile devices will be made increasingly efficient. Pilot projects to make material logistics more efficient are under way, and procurement planning has been developed.
The profitability of project operations is being improved through more selective project acquisition, increasingly systematic risk management and making procurement more efficient. YIT has increased the level of international procurement in its project business. Project business efficiency of is also being increased by establishing centres of excellence that make it possible to guarantee customers increasingly high levels of competence.
In the future, the segment’s business will be increasingly shifted towards service and maintenance operations, which are more profitable than the project business. The on-going efficiency improvement measures are estimated to result in annual savings of approximately EUR 40 million from 2013 onwards.
The share of service and maintenance operations remain at previous year’s level
Service and maintenance operations generated EUR 977.1 million (1–9/2011: EUR 922.8 million), or 64 percent (1–9/2011: 62%) of the segment's total revenue in January–September. During the third quarter, service and maintenance operations generated EUR 304.6 million (7–9/2011: EUR 312.2 million), or 63 percent (7–9/2011: 61%) of the segment's total revenue.
During the third quarter, YIT concluded several service and maintenance agreements. YIT signed a ServiFlex agreement with the municipality of Kristiansund in Norway. The agreement period is four years, and its value is approximately EUR 2.9 million. The company has also signed a ServiFlex agreement with the technology company Jakob Hatteland Group in Norway. YIT signed a four-year maintenance agreement related to camera surveillance systems with Lokaltrafik, the Greater Stockholm Public Transportation Authority.
Level of new investments was relatively low
The recovery of new investments in building systems continued slightly during the third quarter, but investments still remained at a relatively low level.
The agreements signed by YIT during the third quarter included an agreement on the delivery of electricity, plumbing, air conditioning and cooling systems to a school built in Brøttum, Norway. YIT will also provide building system services to the Smarthotel hotel in Oslo. The value of the contract is approximately EUR 2.7 million.
The number of projects associated with public-sector infrastructure construction increased during the third quarter. In Sweden, YIT will provide work related to pipeline and sprinkler systems in the largest station of the railway constructed in Stockholm (Citybana). The value of the contract is approximately EUR 3.5 million.
BUILDING SERVICES CENTRAL EUROPE
1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | ||
Revenue, EUR million | 518.4 | 579.0 | -10% | 179.5 | 210.8 | -15% | |
Operating profit, EUR million | 16.6 | 24.0 | -31% | 4.8 | 7.9 | -40% | |
Operating profit margin, % | 3.2 | 4.2 | 2.6 | 3.7 |
10/11-9/12 | 7/11-6/12 | |
Return on operative invested capital (last 12 months), % | 30.4 | 39.4 |
9/12 | 9/11 | Change | 9/12 | 6/12 | Change | ||
Operative invested capital, EUR million | 113.7 | 56.0 | 103% | 113.7 | 106.5 | 7% | |
Order backlog, EUR million | 435.5 | 523.9 | -17% | 435.5 | 473.4 | -8% |
Revenue, EUR million | 1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | |
Germany | 394.2 | 470.4 | -16% | 132.8 | 173.6 | -24% | |
Austria | 109.9 | 75.6 | 45% | 42.5 | 29.0 | 47% | |
Poland, the Czech Republic and other countries | 14.3 | 33.0 | -57% | 4.1 | 8.2 | -50% | |
Total | 518.4 | 579.0 | -10% | 179.5 | 210.8 | -15% |
The revenue for Building Services Central Europe decreased by 10 percent in January–September compared to the previous year, amounting to EUR 518.4 million (1–9/2011: EUR 579.0 million). The revenue for the third quarter decreased by 15 percent from the previous year to EUR 179.5 million (7–9/2011: EUR 210.8 million). The decrease in revenue was due to weakening demand, especially in Germany, and the low level of activity in Central Eastern Europe.
The operating profit for January–September decreased by 31 percent from the previous year to EUR 16.6 million (1–9/2011: EUR 24.0 million). The operating profit for the comparison period was improved by a sales gain of EUR 5 million from the divestment of Hungarian operations. The operating profit for the third quarter decreased by 40 percent from the previous year to EUR 4.8 million (7–9/2011: EUR 7.9 million). The decrease in revenue and the low level of activity in Central Eastern Europe burdened the segment’s profitability during the third quarter. During the second quarter of 2012, YIT initiated the restructuring of operations in Poland, aiming to decrease the share of project business and increase the share of profitable service and maintenance operations. In Germany, YIT will continue improving the efficiency of its operations and closing down low-performing units.
Demand in the Central European building systems market weakened slightly during the third quarter. The order backlog amounted to EUR 435.5 million at the end of September (9/2011: EUR 523.9 million). The order backlog at the end of September decreased by 17 percent from the previous year and by 8 percent from the end of June 2012 (6/2012: EUR 473.4 million).
Service and maintenance revenue is growing
Service and maintenance operations generated EUR 155.8 million (1–9/2011: EUR 139.5 million), or 30 percent (1–9/2011: 24%) of the segment's total revenue in January–September. The share of service and maintenance was significantly lower in Building Services Central Europe (7–9/2012: 32%) than in Building Services Northern Europe (7–9/2012: 63%), and therefore the opportunities for increasing it in Building Services Central Europe are good.
During the third quarter, YIT concluded several new service and maintenance agreements. In Germany, YIT signed agreements on the delivery of maintenance services to Kreditanstalt für Wiederaufbau and the German Aerospace Centre. Furthermore, several long-term contracts were renewed during the third quarter. In Germany, the agreement between YIT and the University of Technology, Munich, on the delivery of maintenance services was extended. The agreement on the delivery of energy efficiency services to four production plants was extended with Volkswagen.
Demand for new investments decreased in Germany
The demand for new building system investments decreased during the third quarter. In particular, the level of activity in major projects slowed down in Germany. In spite of the weaker market situation, YIT secured several significant projects during the third quarter. YIT will be responsible for the installation of building systems in the Bonneshof Center office building in Düsseldorf. In Austria, YIT will deliver building system installations to Coca-Cola’s new production and logistics centre.
CONSTRUCTION SERVICES FINLAND
1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | ||
Revenue, EUR million | 986.4 | 891.2 | 11% | 308.9 | 269.4 | 15% | |
Operating profit, EUR million | 88.9 | 79.5 | 12% | 27.2 | 21.1 | 29% | |
Operating profit excluding IAS 23 adjustment, EUR million | 93.8 | 83.5 | 12% | 28.9 | 22.0 | 31% | |
Operating profit margin, % | 9.0 | 8.9 | 8.8 | 7.8 | |||
Operating profit margin excluding IAS 23 adjustment, % | 9.5 | 9.4 | 9.4 | 8.2 |
10/11-9/12 | 7/11-6/12 | |
Return on operative invested capital (last 12 months), % | 24.3 | 25.0 |
9/12 | 9/11 | Change | 9/12 | 6/12 | Change | ||
Operative invested capital, EUR million | 546.8 | 503.0 | 9% | 546.8 | 515.3 | 6% | |
Order backlog, EUR million | 1,541.0 | 1,289.3 | 20% | 1,541.0 | 1,499.9 | 3% |
Revenue amounted to EUR 986.4 million (1–9/2011: EUR 891.2 million) in January–September and it increased by 11 percent from the previous year. The operating profit for the third quarter increased by 15 percent from the previous year to EUR 308.9 million (7–9/2011: EUR 269.4 million). The growth in revenue during the third quarter was supported by the high volume of housing production, continued good residential sales and favourable development of the infrastructure business.
The segment’s operating profit increased by 12 percent in January–September compared to the previous year, amounting to EUR 88.9 million (1–9/2011: EUR 79.5 million). The operating profit for the review period includes EUR -4.9 million of borrowing costs according to IAS 23 (1–9/2011: EUR -4.0 million). The operating profit for the third quarter increased by 29 percent from the previous year to EUR 27.2 million (7–9/2011: EUR 21.1 million). The operating profit for the third quarter includes EUR -1.7 million of borrowing costs according to IAS 23 (7–9/2011: EUR -0.9 million). The operating profit increased in infrastructure services and residential construction during the third quarter.
The order backlog at the end of September increased by 20 percent on the previous year, amounting to EUR 1,541.0 million (9/2011: EUR 1,289.3 million). The order backlog remained unchanged from the end of June 2012, at which time it stood at EUR 1,499.9 million.
The segment's capital tied into plot reserves totalled EUR 287.8 million (6/2012: EUR 279.2 million) at the end of September. The reserves included 1,824,000 m2 of residential plots (6/2012: 1,658,000) and 598,000 m2 of business premises (6/2012: 628,000).
Good residential sales to consumers continued
Residential sales continued at a good level in the third quarter. The demand focused particularly on residential units in the final stages of construction and completed residential units. Housing prices remained stable during the review period. Interest rates remained low during the third quarter, but customer’s access to financing became slightly more difficult with banks tightening their credit terms. Residential sales to consumers continued at the normal level in October.
Residential construction in Finland, number of residential units
1-9/12 | 1-9/11 | Change | 7-9/12 | 4-6/12 | Change | ||
Sold | 2,160 | 1,803 | 20% | 668 | 717 | -7% | |
- of which directly to consumers | 1,364 | 1,444 | -6% | 414 | 497 | -17% | |
Start-ups | 2,325 | 2,200 | 6% | 770 | 996 | -23% | |
- of which directly to consumers | 1,529 | 1,841 | -17% | 516 | 776 | -34% | |
Completed | 2,143 | 3,131 | -32% | 591 | 936 | -37% | |
- of which directly to consumers | 1,937 | 1,934 | 0% | 591 | 847 | -30% | |
Under construction at the end of the period | 4,288 | 3,627 | 18% | 4,288 | 4,109 | 4% | |
- of which sold at the end of the period | 2,409 | 1,743 | 38% | 2,409 | 2,293 | 5% | |
For sale at the end of the period | 2,348 | 2,121 | 11% | 2,348 | 2,245 | 5% | |
- of which completed | 469 | 237 | 98% | 469 | 429 | 9% |
Changes in the number of residential units may take place after the start of construction due to the division or combination of residences.
The focus for YIT's housing construction is on residential development projects aimed directly at consumers in accordance with market demand. During the third quarter, YIT started the construction of 516 residential units as own development projects. In addition, YIT started up the construction of approximately 250 residential units as tender-based projects.
YIT has actively replenished its plot reserves by acquiring plots and making preliminary agreements on plots in order to also ensure good opportunities for residential start-ups in the future.
Of the residential units under construction, 56 percent have been sold (9/2011: 48%), which reduces YIT's sales risk. The sales inventory is focused on medium-priced residential production: over 70 percent of the residential units for sale are priced at less than EUR 300,000.
YIT is well prepared to adjust its residential production according to the market situation. The costs of completing the current residential and business premises development projects for sale amounted to EUR 315.5 million at the end of September 2012.
Stable development in the business premises market continued
The development of the business and office premises market continued to be stable in the third quarter, and the order backlog of YIT's business and office premises operations remained at a favourable level. Competition for business premises contracts became tougher during the third quarter. The leasing of business and office premises under construction proceeded well in July–September: lease agreements were signed on approximately 9,000 m² of premises. Rents for business premises and investors’ yield requirements remained stable in the third quarter.
During the third quarter, YIT decided to start the construction of a new office and retail centre located next to the Tikkurila railway station in Vantaa. YIT will also construct a three-building residential complex and a three-storey parking building for 500 cars in the vicinity of the station. The total value of these projects is more than EUR 150 million. The centre will be realised in several phases, the first of which is due for completion in late 2014. The centre is expected to be fully complete in 2019. LEED (Leadership in Energy and Environmental Design) Gold Certification will be applied for the centre.
Development of infrastructure services remained favourable
Demand for infrastructure construction continued to be good in the third quarter, and the order backlog of infra services at the end of September 2012 was double the order backlog of the previous year after YIT had won long-term road maintenance contracts with the Finnish Transport Agency, among other contracts. The total value of the road maintenance contracts is approximately EUR 91 million. Significant on-going road projects proceeded according to plans during the third quarter.
INTERNATIONAL CONSTRUCTION SERVICES
1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | ||
Revenue, EUR million | 394.6 | 343.3 | 15% | 153.3 | 122.5 | 25% | |
Operating profit, EUR million | 45.2 | 19.8 | 128% | 24.0 | -0.9 | ||
Operating profit excluding IAS 23 adjustment, EUR million | 49.4 | 22.0 | 125% | 25.7 | 0.0 | ||
Operating profit margin, % | 11.5 | 5.8 | 15.7 | -0.7 | |||
Operating profit margin excluding IAS 23 adjustment, % | 12.5 | 6.4 | 16.7 | 0.0 |
10/11-9/12 | 7/11-6/12 | |
Return on operative invested capital (last 12 months), % | 10.5 | 6.5 |
9/12 | 9/11 | Change | 9/12 | 6/12 | Change | ||
Operative invested capital, EUR million | 703.8 | 601.5 | 17% | 703.8 | 655.7 | 7% | |
Order backlog, EUR million | 1,207.4 | 850.1 | 42% | 1,207.4 | 1,186.7 | 2% |
Revenue for January–September increased by 15 percent from the previous year and amounted to EUR 394.6 million (1–9/2011: EUR 343.3 million). The revenue for the third quarter increased by 25 percent from the previous year to EUR 153.3 million (7–9/2011: EUR 122.5 million).
The operating profit for the review period more than doubled compared to the previous year, amounting to EUR 45.2 million (1–9/2011: EUR 19.8 million). The segment’s operating profit for January–September includes EUR -4.2 million of borrowing costs according to IAS 23 (1–9/2011: EUR -2.2 million). The operating profit for the third quarter amounted to EUR 24.0 million (7–9/2011: EUR -0.9 million). The operating profit for the third quarter includes EUR -1.6 million of borrowing costs according to IAS 23 (7–9/2011: EUR -0.9 million).
Excessive levels of ammonia were found in residential units built by the company in St. Petersburg in September 2011, caused by an additive used by the concrete supplier. YIT made a provision of EUR 10.0 million during the third quarter of 2011 to cover the costs of rectifying the problem. The incurred costs by the end of September 2012 have been less than EUR 1.5 million, i.e. lower than expected. Therefore, the company cancelled EUR 7.0 million of the provision in the third quarter of 2012. The company is continuing negotiations on compensation with insurance companies and concrete suppliers. YIT has adopted increasingly strict procurement guidelines. Concrete suppliers are now required to have stricter control measures and delivery responsibilities.
Thanks to the high number of residential start-ups, the order backlog at the end of September increased by 42 percent on the previous year, amounting to EUR 1,207.4 million (9/2011: EUR 850.1 million). The order backlog remained unchanged from the end of June 2012, at which time it stood at EUR 1,186.7 million. The segment's order backlog was partially improved by the strengthening of the ruble, which had an impact of EUR 74.3 million in July–September.
The costs of completing the current residential and business premises development projects for sale amounted to EUR 482.0 million at the end of September 2012 in International Construction Services.
The segment's capital tied into plot reserves totalled EUR 406.6 million (6/2012: EUR 362.3 million) at the end of September. The reserves included 2,622,000 m2 of residential plots (6/2012: 2,566,000) and 686,000 m2 of business premises in Russia, the Baltic countries, the Czech Republic and Slovakia (6/2012: 689,000).
The segment’s return on operative invested capital for the last 12 months improved to 10.5 percent, but is still below the Group’s strategic target (20 percent). YIT aims to increase the segment’s return on invested capital primarily by increasing the volume of operations, improving profitability and increasing further capital efficiency.
Russian residential sales continued to be strong
Russia generated 76 percent (1–9 /2011: 82%) of the revenue for International Construction Services for January–September. Revenue generated in Russia increased compared with the previous year, amounting to EUR 300.4 million (1–9/2011 EUR 280.8 million).
The capital tied into plot reserves in Russia totalled EUR 323.2 million (6/2012: EUR 281.2 million) at the end of September. The reserves included 2,255,000 m2 of residential plots (6/2012: 2,211,000) and 546,000 m2 of business premises (6/2012: 546,000).
Residential construction in Russia, number of residential units
1-9/12 | 1-9/11 | Change | 7-9/12 | 4-6/12 | Change | ||
Sold | 2,921 | 2,414 | 21% | 1,032 | 934 | 10% | |
Start-ups | 3,669 | 2,905 | 26% | 1,006 | 1,123 | -10% | |
Completed 1) | 1,980 | 882 | 124% | 622 | 765 | -19% | |
Under construction at the end of the period 2) | 8,995 | 6,472 | 39% | 8,995 | 8,670 | 4% | |
- of which sold at the end of the period | 3,576 | 2,164 | 65% | 3,576 | 3,159 | 13% | |
For sale at the end of the period | 5,961 | 4,702 | 27% | 5,961 | 5,987 | 0% | |
- of which completed | 542 | 394 | 38% | 542 | 476 | 14% |
Under construction at the end of the period 2) | 9/12 | 9/11 | Change | 9/12 | 6/12 | Change | |
St. Petersburg | 2,323 | 1,988 | 17% | 2,323 | 2,290 | 1% | |
Moscow region | 4,259 | 3,141 | 36% | 4,259 | 4,016 | 6% | |
Yekaterinburg, Kazan, Don Rostov and Moscow | 2,413 | 1,343 | 80% | 2,413 | 2,364 | 2% |
1) Completion of the projects requires commissioning by the authorities.
2) At the end of September 2012, YIT had 365 residential units at Russian sites whose construction was suspended in the autumn of 2008 (9/2011: 365). These residential units are not included in the figure for residential units under construction shown in the table. Changes in the number of residential units may take place after the start of construction due to the division or combination of residences.
In Russia, the focus of operations is on residential development projects in St. Petersburg, Moscow and cities in the Moscow region, Yekaterinburg, Rostov-on-Don and Kazan. YIT actively continued plot investments in the Moscow region, Yekaterinburg, Rostov-on-Don and Kazan during the third quarter.
Residential sales have been supported by YIT's established position as a reliable construction company in Russia, YIT's diverse housing offering, YIT's own marketing and promotion measures and extensive housing loan cooperation with banks. The significance of loan financing has increased in Russia, and, in the third quarter, customers have taken out housing loans in 42 percent of YIT's residential sales. Residential sales were also supported by the limited supply of new housing, continued favourable consumer confidence and oil prices. Interest rates for mortgages increased slightly in Russia during the third quarter, but remained at a locally moderate level.
Residential sales continued at a normal level in Russia in October.
Housing prices continued to increase at a moderate rate during the third quarter in Russia, and YIT slightly increased the prices of its residential units in all of its operating cities in Russia.
Based on the favourable demand, YIT has actively started up new residential projects in Russia, and in the third quarter start-ups were made in St. Petersburg, the Moscow region, Rostov-on-Don and Yekaterinburg. During the third quarter, YIT expanded its operations to the city of Bronnitsa, located in the Moscow region.
The number of residential units for sale has been increased in a controlled manner, and the sales inventory at the end of September was geographically balanced. The number of completed but unsold residential units has remained at a relatively low level. Of the residential units under construction, 40 percent had been sold (9/2011: 33%).
After the handover of residential projects, YIT offers its customers service and maintenance. At the end of September 2012, YIT was responsible for the service and maintenance of approximately 11,500 residential units.
YIT's volume in the Russian business premises market remained low during the third quarter of the year. YIT signed a pre-agreement on the sale of a four-hectare plot to Siemens in the Gorelovo industrial park in St. Petersburg in the third quarter.
Revival of the residential market is slow in the Baltic countries and Central Eastern Europe
Estonia, Latvia, Lithuania, the Czech Republic and Slovakia accounted for 24 percent of the revenue for International Construction Services for January–September (1-9/2011: 18%). Revenue generated in these countries increased by 52 percent compared to the year before to EUR 94.2 million (1–9/2011: EUR 61.9 million). The capital tied into plot reserves in the Baltic countries, the Czech Republic and Slovakia totalled EUR 83.4 million (6/2012: EUR 81.1 million) at the end of September. The reserves included 367,000 m2 of residential plots (6/2012: 355,000) and 140,000 m2 of business premises (6/2012: 143,000).
The weaker profitability in competitive tendering compared to residential development projects and its continued high share of the revenue in the Baltic countries in particular continued to impair the segment’s profitability further during the third quarter. YIT aims to shift the focus of operations from tender-based production to own residential development projects in order to improve profitability as residential demand revives.
Residential construction in the Baltic countries and Central Eastern Europe, number of residential units
1-9/12 | 1-9/11 | Change | 7-9/12 | 4-6/12 | Change | ||
Sold | 266 | 267 | 0% | 99 | 92 | 8% | |
Start-ups | 530 | 468 | 13% | 246 | 284 | -13% | |
Completed | 314 | 141 | 123% | 35 | 47 | -26% | |
Under construction at the end of the period | 822 | 698 | 18% | 822 | 615 | 34% | |
- of which sold at the end of the period | 131 | 183 | -28% | 131 | 110 | 19% | |
For sale at the end of the period | 861 | 645 | 33% | 861 | 718 | 20% | |
- of which completed | 170 | 130 | 31% | 170 | 213 | -20% |
Residential sales were on a par with the first half of the year in the third quarter, and housing prices remained stable in the Baltic countries and Central Eastern Europe.
YIT's residential sales inventory in the Baltic countries, the Czech Republic and Slovakia is approximately 860 residential units, and YIT aims to increase the number of residential units for sale in accordance with demand. YIT made residential start-ups in Estonia, Latvia, Slovakia and the Czech Republic during the third quarter. Acquisition of new residential plots was continued during the third quarter. YIT’s relative position in the region has strengthened as a result of YIT’s stable financial position.
Construction of business premises in the Baltic countries and Central Eastern Europe
In Estonia, YIT and the real estate investment company Capital Mill OÜ signed an agreement on the engineering and construction of the Navigator retail and office centre in Tallinn. The centre will be realised using a project management model, and it is due for completion by the end of 2013. The value of the contract is EUR 9 million.
During the third quarter, YIT started up the construction of an IKEA department store in Vilnius, Lithuania. The total floor area of the department store is approximately 26,000 m², and the construction work is estimated to be complete in the summer off 2013. The value of the contract is approximately EUR 15 million.
PERSONNEL
Personnel by business segment | 9/12 | 9/11 | Change | 9/12 | 6/12 | Change | |
Building Services Northern Europe | 15,538 | 16,273 | -5% | 15,538 | 15,736 | -1% | |
Building Services Central Europe | 3,441 | 3,569 | -4% | 3,441 | 3,465 | -1% | |
Construction Services Finland | 3,635 | 3,416 | 6% | 3,635 | 3,918 | -7% | |
International Construction Services | 2,782 | 2,837 | -2% | 2,782 | 2,713 | 3% | |
Corporate Services | 392 | 407 | -4% | 392 | 423 | -7% | |
Group, total | 25,788 | 26,502 | -3% | 25,788 | 26,255 | -2% |
Personnel by country/region | 9/12 | 9/11 | Change | 9/12 | 6/12 | Change | |
Finland | 9,160 | 9,377 | -2% | 9,160 | 9,652 | -5% | |
Sweden | 4,542 | 4,790 | -5% | 4,542 | 4,629 | -2% | |
Norway | 3,708 | 3,623 | 2% | 3,708 | 3,617 | 3% | |
Germany | 2,502 | 2,677 | -7% | 2,502 | 2,530 | -1% | |
Russia | 2,647 | 2,516 | 5% | 2,647 | 2,596 | 2% | |
Denmark | 1,158 | 1,370 | -15% | 1,158 | 1,160 | 0% | |
Baltic countries | 972 | 1,092 | -11% | 972 | 963 | 1% | |
Other countries (Central Europe excluding Germany) | 1,099 | 1,057 | 4% | 1,099 | 1,108 | -1% | |
Group, total | 25,788 | 26,502 | -3% | 25,788 | 26,255 | -2% |
In January–September 2012, the Group employed 25,946 people on average (1–9/2011: 26,229). At the end of September, the Group employed 25,788 people (9/2011: 26,502).
YIT hired almost 1,000 summer employees in its Finnish operations for the summer 2012. The summer employees worked in a variety of production-related and administrative tasks at YIT in construction, building services, industrial and corporate services functions.
The cost effect of YIT’s share-based incentive scheme was about EUR 3.6 million in January–September (1–9/2011: EUR 3.1 million).
STRATEGIC TARGETS
YIT Corporation's Board of Directors confirmed the Group's strategy for 2013–2014 on September 20, 2012. The key strategic objective is increasingly focused, balanced and profitable growth. It was decided to keep the Group’s strategic long-term targets unchanged: average annual revenue growth of more than 10 percent, return on investment of 20 percent, operating cash flow after investments sufficient for dividend payout and reduction of debt, equity ratio of 35 percent and dividend payout of 40–60 percent of net profit for the period. The target levels are based on figures reported by the company on the basis of the percentage of completion in accordance with the current emphasis. When determining the target levels, the assumption was made that economic growth in YIT’s market areas will continue.
In terms of business operations, the focus areas of YIT’s growth continue to be building systems service and maintenance operations and residential construction. Growth is being sought organically and through acquisitions. Particular focus areas for growth include residential construction in Russia and building services in Germany.
To support its strategic goals, YIT has launched three development programmes, which focus on energy-efficient solutions, best quality living experience and efficient building services. Building Services Northern Europe will focus on improving profitability and strengthening cash flow. In addition to increasing the share of service and maintenance business, Building Services Central Europe will seek to strengthen its position during the strategy period, particularly in large Design & Build projects. In residential construction, YIT is investing in innovative solutions and strengthening its front-runner status. In Construction Services Finland, YIT is responding to customer demand by particularly increasing the production of moderately priced housing during the strategy period. The focus of operation in all construction business areas is on increasing the share of own development production.
YIT aims to grow its operations in building system services in the German-speaking region further. In International Construction Services, the company is focusing on expanding in Russia.
YIT published a stock exchange release on the confirmation of the strategy on September 21, 2012, and materials for the Capital Market Day focusing on the strategic focus areas on September 25, 2012.
GROUP FINANCIAL DEVELOPMENT BASED ON GROUP REPORTING (IFRS)
1-9/12 | 1-9/11 | Change | 7-9/12 | 7-9/11 | Change | ||
Revenue, EUR million | 3,421.0 | 3,191.8 | 7% | 1,103.6 | 1,084.9 | 2% | |
Operating profit, EUR million | 186.4 | 142.5 | 31% | 63.6 | 35.4 | 80% | |
Operating profit margin, % | 5.5 | 4.5 | 5.8 | 3.3 | |||
Profit before taxes, EUR million | 170.8 | 125.3 | 36% | 59.2 | 27.6 | 115% | |
Profit for the review period, EUR million 1) | 130.1 | 90.0 | 45% | 46.3 | 18.9 | 149% | |
Earnings/share, EUR | 1.03 | 0.72 | 43% | 0.37 | 0.15 | 147% | |
Operating cash flow after investments, EUR million | 3.1 | -31.4 | -30.5 | -47.3 | -35% |
1) attributable to equity holders of the parent company
9/12 | 9/11 | Change | 9/12 | 6/12 | Change | ||
Order backlog, EUR million | 4,462.0 | 3,738.3 | 19% | 4,462.0 | 4,409.3 | 1% | |
Return on investment (last 12 months) % | 13.7 | 15.6 | 13.7 | 12.5 | |||
Equity ratio, % | 31.6 | 29.2 | 31.6 | 30.0 | |||
Gearing ratio, % | 83.7 | 86.8 | 83.7 | 86.7 |
Revenue based on Group reporting increased by 7 percent compared to the previous year, amounting to EUR 3,421.0 million in January–September (1–9/2011: EUR 3,191.8 million). The revenue for the third quarter remained on a par with the previous year, amounting to EUR 1,103.6 million (7–9/2011 EUR 1,084.9 million). In Group-level reporting, own residential development projects are only recognised as income upon project delivery. The completion schedules for own development projects affect the Group's revenue recognition, and therefore Group-level figures may fluctuate greatly between different quarters. The number of residential units completed during the third quarter was lower than the previous year. The number of residential units completed in Russia was clearly higher than the year before, while in Finland, the Baltic countries and Central Eastern Europe the number of residential units completed was clearly lower than the year before.
Following the IFRIC 15 adjustment, the Group's operating profit for January–September increased by 31 percent compared to the previous year, amounting to EUR 186.4 million (1–9/2011: EUR 142.5 million). Following the IFRIC 15 adjustment, the Group's operating profit margin for January–September was 5.5 percent (1–9/2011: 4.5%). The operating profit for the third quarter increased by 80 percent from the previous year to EUR 63.6 million (7–9/2011: EUR 35.4 million). The operating profit margin for the third quarter was 5.8 percent (7–9/2011: 3.3%).
Profit before taxes based on Group reporting increased by 36 percent compared to the previous year, amounting to EUR 170.8 million in January–September (1–9/2011: EUR 125.3 million). Profit before taxes for the third quarter more than doubled to EUR 59.2 million (7–9/2011: EUR 27.6 million).
Earnings per share based on Group reporting increased by 43 percent from the year before in January–September, amounting to EUR 1.03 (1–9/2011: EUR 0.72). Earnings per share for the third quarter more than doubled to EUR 0.37 (7–9/2011: EUR 0.15).
The order backlog based on Group reporting amounted to EUR 4,462.0 million at the end of September (9/2011: EUR 3,738.3 million).
Return on investment amounted to 13.7 percent for the last 12 months (7/2011–6/2012: 12.5%). Invested capital is calculated by deducting non-interest bearing liabilities from the balance sheet total. The balance sheet total at the end of September was EUR 3,722.3 million (6/2012: EUR 3,646.9 million).
The equity ratio increased slightly compared to the end of June 2012, amounting to 31.6 percent (6/2012: 30.0%).
Diverse capital structure and good liquidity position
YIT’s financing consists of diverse sources of financing and its liquidity position remained good at the end of September 2012. Cash and cash equivalents amounted to EUR 150.0 million (6/2012: EUR 169.5 million) at the end of September. In addition, committed credit and overdraft facilities amounting to a total of EUR 359.0 million were undrawn. YIT has a total of EUR 280 million in committed credit facilities, of which EUR 30 million falls due in December 2014 and EUR 250 million in December 2015. These committed credit facilities do not include an obligation to maintain financial key ratios, i.e. covenants.
The gearing ratio decreased compared with the end of June 2012, amounting to 83.7 percent at the end of September (6/2012: 86.7%). Net interest-bearing debt increased slightly and amounted to EUR 827.3 million at the end of September (6/2012: EUR 803.1 million).
Net financial expenses decreased in January–September compared to the previous year and amounted to EUR 15.7 million (1–9/2011: EUR 17.2 million), or 0.5 percent (1–9/2011: 0.5%) of the Group's revenue. The net financial expenses include EUR 12.6 million of capitalisations of interest expenses in compliance with IAS 23 (1–9/2011: EUR 9.2 million). The exchange rate differences included in the net financial expenses, totalling EUR -4.5 million (1–9/2011: EUR -2.1 million), were comprised almost entirely of costs of hedging debt investments in Russia.
Net financial expenses decreased in the third quarter compared to the previous year and amounted to EUR 4.4 million (7–9/2011: EUR 7.8 million), or 0.4 percent (7–9/2011: 0.7%) of the Group's revenue. The net financial expenses include EUR 4.7 million of capitalisations of interest expenses in compliance with IAS 23 (7–9/2011: EUR 2.9 million). The exchange rate differences included in the net financial expenses totalled EUR -1.8 million (7–9/2011: EUR 0.0 million).
The hedged ruble exposure increased from the end of June 2012. At the end of September 2012, EUR 118.2 million of the capital invested in Russia was comprised of debt investments (6/2012: EUR 103.1 million) and EUR 432.5 million was equity investments or similar fixed net investments (6/2012: EUR 406.1 million). In accordance with YIT's hedging policy, the debt investments are hedged against exchange rate risk, while equity investments are not hedged due to their permanent nature.
Borrowings amounted to EUR 977.3 million at the end of September (6/2012: EUR 972.6 million), and the average interest rate was 3.0 percent (6/2012: 3.1%). Fixed-interest loans accounted for approximately 64 percent of the Group’s borrowings (6/2012: 58%). Of the loans, approximately 50 percent had been raised directly from the capital and money markets (6/2012: 47%), approximately 39 percent from banks and other financial institutions (6/2012: 41%) and approximately 11 percent from insurance companies (6/2012: 11%). The maturity distribution of long-term loans is balanced. A total of EUR 14.3 million of long-term loans will mature during the last quarter of 2012. The average interest rate of YIT’s loans decreased slightly as a result of a decrease in market rates, and fixed-interest loans accounted for an increasing share of the loan portfolio as a result of new interest rate hedges concluded by the company.
The total amount of construction-stage contract receivables sold to financial institutions decreased from the end of June 2012, amounting to EUR 269.5 million at the end of September (6/2012: EUR 274.3 million). Of this amount, EUR 152.9 million is included in borrowings on the balance sheet (6/2012: EUR 182.0 million) and the remainder comprises off-balance sheet items in accordance with IAS 39. Interest expenses on receivables sold to financing companies amounted to EUR 3.5 million during the review period (1–9/2011: EUR 3.8 million), of which EUR 0.9 million in the third quarter (7–9/2011: EUR 1.3 million) and these are fully included in the financial expenses.
Participations in the housing corporation loans for unsold completed residential units amounted to EUR 75.1 million at the end of September (6/2012: EUR 62.9 million), and they are included in borrowings. The interest on the participations is included in housing corporation charges and is thus booked in project expenses. Interest on the participations amounted to EUR 1.6 million in the review period (1–9/2011: EUR 1.0 million) and EUR 0.6 million during the third quarter (7–9/2011: EUR 0.4 million).
During the second quarter, YIT Corporation paid out dividends of EUR 87.7 million for 2011 in compliance with the resolution of the Annual General Meeting.
The Group's balanced business structure and solid financial position enable the implementation of YIT's growth strategy and the acquisitions and plot investments required by it. On the other hand, the Group has also prepared for macroeconomic uncertainty by diversifying the sources of financing and maintaining a strong liquidity position.
RESOLUTIONS PASSED AT THE ANNUAL GENERAL MEETING
YIT Corporation’s Annual General Meeting was held on March 13, 2012. The Annual General Meeting adopted the 2011 financial statements, discharged the members of the Board of Directors and the President and CEO from liability, confirmed the dividend as proposed by the Board of Directors, decided on the Board of Directors' fees and elected the auditor. The Annual General Meeting confirmed the composition of the Board of Directors: Henrik Ehrnrooth (Chairman), Reino Hanhinen (Vice Chairman), Kim Gran, Antti Herlin, Satu Huber and Michael Rosenlew were re-elected as Board members.
At its organisational meeting on March 13, 2012, the Board elected the chairmen and members of the Audit Committee, Personnel Committee as well as the Working Committee from among its number.
YIT Corporation published stock exchange releases on the resolutions passed at the Annual General Meeting and the organisation of the Board of Directors on March 13, 2012. The stock exchange releases and a presentation of the members of the Board of Directors are available at YIT's website: www.yitgroup.com.
SHARES AND SHAREHOLDERS
The company has one series of shares. Each share carries one vote and confers an equal right to a dividend.
Share capital and number of shares
YIT Corporation's share capital and the number of shares outstanding did not change during the review period. YIT Corporation’s share capital was EUR 149,216,748.22 at the beginning of 2012 (2011: EUR 149,216,748.22), and the number of shares outstanding was 127,223,422 (2011: 127,223,422).
Treasury shares and authorisations of the Board of Directors
In accordance with the Limited Liability Companies Act, the General Meeting decides on the buyback and conveyance of shares, as well as any decisions leading to changes in the share capital. The Annual General Meeting of YIT Corporation resolved on March 13, 2012, to authorise the Board of Directors to purchase the company's shares as proposed by the Board of Directors. In addition to this, the Board of Directors has a valid share issue authorisation issued by YIT’s Annual General Meeting on March 10, 2010. The share issue authorisation also includes an authorisation to decide on the conveyance of treasury shares.
YIT Corporation held 1,952,414 treasury shares at the beginning of the review period purchased on the basis of the authorisation given by the General Meeting of October 6, 2008.
YIT Corporation's Board of Directors confirmed the rewards for the 2011 earning period under the share-based incentive scheme for YIT's management on April 26, 2012, which were conveyed as a directed share issue without consideration. In the share issue, 130,976 YIT Corporation shares were issued and conveyed without consideration to the key persons participating in the Share Ownership Plan according to the terms and conditions of the plan.
During the review period, 15,876 shares were returned to the company in accordance with the terms and conditions of the share-based incentive scheme, after which the company held 1,837,314 treasury shares at the end of September 2012.
Trading in shares
The price of YIT's share was EUR 12.38 at the beginning of the year (January 1, 2011: EUR 18.65). The closing rate of the share on the last trading day of the review period was EUR 14.93 (September 30, 2011: EUR 11.33). The share price has increased by approximately 21 percent during January–September. The highest price of the share during the review period was EUR 17.25 (1–9/2011: EUR 21.92), the lowest was EUR 11.87 (1–9/2011: EUR 10.10) and the average price was EUR 14.90 (1–9/2011: EUR 17.54). Share turnover on Nasdaq OMX in January–September amounted to 81,078 thousand shares (1–9/2011: 105,662 thousand). The value of turnover was EUR 1,208.7 million (1–9:2011: EUR 1,778.2 million), source: Nasdaq OMX.
In addition to the Helsinki Stock Exchange, YIT shares are also traded on other market places, such as Chi-X, BATS and Turquoise. The share of trade volume on alternative market places decreased slightly compared to the previous year during the review period. During January–September, 46,832 thousand YIT Corporation shares changed hands on alternative market places (1–9/2011: 65,018 thousand), corresponding to approximately 37 percent of the total share trade (1–9/ 2011: 38%). Of the alternative market places, YIT shares changed hands particularly in Chi-X, source: Nasdaq OMX and Fidessa Fragmentation Index.
YIT Corporation’s market capitalisation at the end of the review period was EUR 1,872.0 million (9/2011: EUR 1,419.3 million). The market capitalisation has been calculated excluding the shares held by the company.
Number of shareholders and flagging notifications
At the end of September 2012, the number of registered shareholders was 35,258 (9/2011: 33,763). At the end of September, a total of 32.9 percent of the shares were owned by nominee-registered and non-Finnish investors (9/2011: 35.0%).
During the review period, the company received no "flagging notifications" of change in ownership in YIT Corporation in accordance with Chapter 2, section 9 of the Securities Market Act.
MAJOR SHORT-TERM BUSINESS RISKS AND RISK MANAGEMENT
YIT has specified the major risk factors and their management from the point of view of the Group as a whole, taking the special characteristics of YIT’s business operations and environment into consideration. Risks are divided into strategic, operational, financial and event risks.
YIT has developed the Group's business structure to be balanced and more tolerant of economic fluctuations. The share of steadily developing service and maintenance operations has been increased. Cash flow-generating (building system and industrial services, contracting) and capital-intensive business operations (residential and commercial development production) balance the risks related to business operations and the use of capital and enable better risk management at the Group level.
Operations have been expanded geographically so that economic fluctuations impact operations at different times in different markets. Continuous monitoring and analysis as well as alternative scenarios and action plans based on them make it possible to react quickly to changes in the operating environment and also to utilise the business opportunities provided by the changes.
The Group's aim is to grow profitably, both organically and through acquisitions. Risks associated with acquisitions are managed by selecting projects according to strict criteria and effective integration processes that familiarise new employees with YIT's values, operating methods and strategy.
YIT's typical operational risks include risks related to plot investments, sales risk of residential and commercial development projects and risks related to contract tenders, service agreements, project management and personnel. YIT manages sales risk by matching the number of housing start-ups with the estimated residential demand and the number of unsold residential units (the figures for residential production are presented under Development by business segment) and by normally securing key tenants and/or the investor prior to starting a business premises project. A strong increase in interest rates and changes in the availability of housing loans and real estate financing are key risks related to the demand for residential units.
YIT tests the value of its plots as required by IFRS accounting principles. Plot reserves are measured at acquisition cost and the plot value is impaired when it is estimated that the building being constructed on the plot will be sold at a price lower than the sum of the price of the plot and the construction costs. No write-offs were made to plots in the review period.
Financing and financial risks include liquidity, credit and counterparty, interest rate and currency risks and risks related to the reporting process. Financing and financial risks are managed through accounting and financing policies, internal control as well as internal and external audit.
YIT's most significant currency risk is related to investments denominated in rubles. Capital invested in Russia totalled EUR 550.7 million at the end of the period (6/2012: EUR 509.2 million). The amount of equity or equivalent net investments at the end of the period was EUR 432.5 million (6/2012: EUR 406.1 million). The equity investments in the Russian subsidiaries are unhedged in accordance with the treasury policy, and a potential devaluation of the ruble would have an equal negative impact on the Group's shareholders' equity. Debt investments amounted to EUR 118.2 million at the end of the period (6/2012: EUR 103.1 million), and this exposure was hedged in full. The differences in the interest rates between the euro and ruble have an effect on hedging costs and therefore net financial expenses.
Possible event risks include accidents related to personal or information security and sudden and unforeseen material damage to premises, project sites and other property resulting, for example, from fire, collapse or theft. YIT complies with a group-wide security policy covering the different areas of security.
A more detailed account of YIT's risk management policy and the most significant risks was published in the Annual Report 2011. Financing risks were described in more detail in the notes to the Financial Statements for 2011.
CONTINUOUS IMPROVEMENT OF OCCUPATIONAL SAFETY AS PART OF CORPORATE RESPONSIBILITY
Occupational safety is considered very important at YIT. The level of occupational safety is regularly monitored in every segment, and various measures are continuously made in order to decrease the number of accidents. Strong commitment to ensuring a safe working environment has yielded results, and accident frequency figures have improved. The personnel survey also showed that changes have taken place in the attitudes of personnel, and occupational safety is deemed increasingly important. This attitude change is very important in improving occupational safety.
Concrete measures to increase safety mean prediction of risks, emphasising the importance of work planning, early intervention, continuous training, appropriate use of equipment and tools and internal audits. YIT addresses shortcomings in occupational safety without delay. The company’s management performs regular site visits to promote occupational safety. YIT has performed well in several occupational safety competitions, e.g. in Finland and Russia. YIT’s accident frequency has decreased during the review period. During January–September there were 11 work accidents per million working hours, whereas in 1-12/2011, corresponding accident frequency was 14.
OUTLOOK FOR 2012
YIT Corporation reiterates its estimate issued in connection with the financial statements for 2011 and according to which, in 2012, revenue will remain at the level of 2011 and operating profit will increase compared to 2011. The profit outlook is based on segment-level reporting, i.e. recognition of income based on the percentage of completion.
The high uncertainty over the general macroeconomic development also has a negative effect on decision-making by YIT's customers and thereby the development and performance of YIT's business operations.
Building Services Northern Europe
The market situation in building services varies by country in the Nordic countries. According to an estimate by the construction industry’s Euroconstruct expert network, the service and maintenance market is estimated to grow slightly in all Nordic countries during 2012 (June 2012 report). The increase in technology in buildings increases the need for new services. The demand for energy efficiency services is expected to remain stable. Outsourcing of real estate services is estimated to increase.
According to the Euroconstruct forecast, the building system project market in Finland is expected to remain soft in 2012. New investments have not increased much due to the continued low level of construction of business premises and offices. In Denmark, the construction of business premises and renovations are estimated to begin to increase slightly during 2012–2013. According to an estimate by Prognoscentret, the project market in Sweden and Norway will increase at a reasonable rate in 2012. The construction of business premises is estimated to increase both in Sweden and Norway, which will open up new opportunities for YIT. The building system market is, however, post-cyclic by nature. The public sector invests less in new buildings than the year before, with governments aiming to balance their budgets.
In the Baltic countries and Russia, both the project and service market is estimated to remain at low level.
According to an investment survey by the Confederation of Finnish Industries EK, manufacturing industry and energy sector investments in Finland will increase slightly in 2012. The investments are mainly made to replace capacity, and the amount of expansion investments is estimated to remain low. The industrial maintenance market is estimated to remain stable.
Building Services Central Europe
In Building Services Central Europe, the service and maintenance market is expected to grow at a moderate rate. The opportunities for growth in service and maintenance are favourable, particularly in Germany and Austria. The building system services market in Central Eastern Europe (Poland, the Czech Republic and Romania) is developing slowly.
Uncertainty in the project market has increased in the Central European countries in which YIT operates. Decision-making on new investments has been slowed down and the start-ups of certain projects have been postponed. New building system investments are estimated to remain at the current level in Germany and Austria, whereas in Central Eastern Europe they are estimated to decrease slightly.
Growth in the demand for energy-efficient services is possible over the next few years with high energy prices and tightening environmental legislation, particularly in Germany and Austria.
Construction Services Finland
With regard to Construction Services Finland, housing demand is expected to continue to be good. Residential demand continues to be supported by continued low interest rates, the relatively stable employment rates and migration to growth centres. Furthermore, the population and the number of household-dwelling units will increase with continued migration and the increasing number of one-person households. Residential sales during the fourth quarter may also be partly supported by the government’s proposal of a tax amendment to take force at the turn of the year, increasing the capital transfer tax from the current 1.6% level to 2.0%. According to the government bill, the tax would be calculated from the debt-free price in the future.
According to the Confederation of Finnish Construction Industries estimate published in October 2012, the construction of 27,000 residential units will start in Finland during 2012 (2011: 32,200). According to a report published by VTT in January, the annual need for the production of new residential units amounts to 24,000–29,000 residential units over the long term. YIT's goal is to strengthen its position as the leading housing developer in Finland.
YIT estimates that housing prices will remain stable in 2012. Construction costs are estimated to increase, mainly due to new energy regulations, but the increase is expected to be moderate in 2012.
According to VTT’s estimate, the volume of office construction will decrease by approximately 8–9 percent during 2012. Vacancy rates for offices continue to be rather high after the last recession, with the vacant building stock also including relatively old office premises. YIT estimates that the demand will focus on modern and energy-efficient offices.
According to the VTT estimate, the volume of business premises construction will begin to decrease. The shift of the retail trade towards larger and larger business properties and the expansion of foreign retail chains in Finland will maintain the volume of construction. Vacancy rates for business premises are rather low. The decrease in the willingness to take risks due to the European credit crunch may be reflected in the level of new investments in the business premises market in 2012.
According to the VTT forecast published in June 2012, infrastructure construction will remain stable in 2012. Rail and metro construction is expected to continue to increase, at least during 2012–2013. The market situation of rock construction is expected to remain favourable due to mine investments and underground rock excavation projects, at least until 2014. The road maintenance market is expected to remain stable, and new tenders will create opportunities for YIT to increase its market share.
International Construction Services
The volume of residential construction is estimated to increase in Russia in 2012: according to an estimate by the Russian government, residential construction in Russia will amount to approximately 67 million m2, showing an increase of approximately 5 percent on the previous year.
Moscow, the Moscow region and St. Petersburg make up the largest residential markets in Russia: these areas account for approximately one-fifth of all residential construction. Even though the volume of residential construction has been increasing over the past few years, there is still a need for new residential units in all areas. Residential demand has also remained favourable due to strong economic development in Russia, good consumer confidence and favourable development in the housing loan market. However, housing loan interest rates began to increase at the end of 2011. The increase in interest rates has continued during 2012.
The future outlook for Russian residential construction is good. Living space per person is still clearly lower than in Western Europe and housing is in poor condition, which creates the need for new, high-quality housing. Furthermore, the number of household-dwelling units is expected to increase, and the middle class is growing in proportion to the population. The development of the housing loan market in Russia has also contributed to the expansion of the potential buyer base. YIT has promoted the availability of loans to consumers through extensive cooperation with banks. YIT expects housing prices to increase in Russia in 2012 at a rate slightly higher than local inflation. Construction costs are estimated to increase hand in hand with housing prices.
The volume of business premises construction is expected to grow at a moderate rate in 2012. YIT’s largest individual market is St. Petersburg, where YIT will continue the marketing and sales of the Gorelovo industrial park.
In the Baltic countries, residential demand has been increasing as the result of improved consumer confidence and the employment situation. VTT estimates that the number of residential units completed in 2012 will increase to 11,200 or by approximately 9 percent from the previous year.
According to VTT's estimate, residential start-ups in 2012 are estimated to be at last year’s level in the Czech Republic. Interest and unemployment rates are increasing, which typically decreases the demand for residential units. Residential prices have remained stable in Slovakia. VTT estimates that residential start-ups in Slovakia will remain at the previous year’s level. On the other hand, the residential market is supported by the favourable economic growth in Slovakia and interest rates remaining low.
INTERIM REPORT JAN 1 – SEP 30, 2012: TABLES
The information presented in the Interim Report has not been audited
1. SEGMENT REPORTING
1.1 Segment reporting accounting principles
1.2 Key figures, segment reporting
1.3 Revenue, segment reporting
1.4 Operating profit and profit for the review period, segment reporting
1.5 Order backlog, segment reporting
1.6 YIT Group figures by quarter, segment reporting
1.7 Segment information by quarter, segment reporting
1.8 Reconciliation of the segment reporting and the group reporting
2. GROUP REPORTING, IFRS
2.1 Key figures, IFRS
2.2 YIT Group figures by quarter, IFRS
2.3 Consolidated income statement Jan 1 – Sep 30, 2012, IFRS
2.4 Statement of comprehensive income Jan 1 – Sep 30, 2012, IFRS
2.5 Consolidated income statement Jul 1 – Sep 30, 2012, IFRS
2.6 Consolidated balance sheet, IFRS
2.7 Consolidated statement of changes in equity
2.8 Consolidated cash flow statement
2.9 Accounting principles of the interim report
2.10 Definitions of key financial figures
2.11 Financial risk management
2.12 Unusual items affecting operating profit
2.13 Business combinations and disposals
2.14 Changes in property, plant and equipment
2.15 Inventories
2.16 Notes on equity
2.17 Borrowings
2.18 Change in contingent liabilities and assets and commitments
2.19 Transactions with associated companies
1. SEGMENT REPORTING
1.1 Segment reporting accounting principles
Building Services Northern Europe and Building Services Central Europe segments’ reporting to YIT Group’s management board is based on YIT Group’s IFRS accounting principles. In the reporting of Construction Services Finland segment and International Construction Services segment, the revenue from own residential and commercial development projects is recognised on the basis of the percentage of degree of completion and the degree of sale, using the percentage of completion method, which does not fully comply with Group’s IFRS accounting principles. According to the Group’s IFRS accounting principles revenue from own residential and commercial development projects is recognised on completion. In the case of YIT’s commercial real estate development projects, the recognition practice will be evaluated on a case-by-case basis and in accordance with the terms and conditions of each contract. Sold projects are recognised either when the construction work has started or when the project is complete. The share of income and expenses to be recognised is calculated by multiplying the percentage of completion by the percentage of sale multiplied by the occupancy rate. YIT usually sells own real estate development projects to investors either prior to construction or during an early phase. The impact on revenue and operating profit of the two revenue recognition principles is shown in the line IFRIC 15 adjustment. As a result of the accounting policy, Group figures can fluctuate greatly between quarters. The chief operating decision-maker is the YIT Group’s Management Board, which reviews the Group’s internal reporting in order to assess performance and allocate resources to the segments.
1.2 Key figures, segment reporting
1-9/12 | 1-9/11 | Change | 1-12/11 | |
Revenue, EUR million | 3,398.1 | 3,260.3 | 4% | 4,524.7 |
Operating profit, EUR million | 181.2 | 164.3 | 10% | 240.5 |
% of revenue | 5.3 | 5.0 | 5.3 | |
Profit before taxes, EUR million | 165.6 | 147.1 | 13% | 215.8 |
Profit for the review period, EUR million 1) | 126.1 | 104.9 | 20% | 156.7 |
Earnings/share, EUR | 1.01 | 0.84 | 20% | 1.25 |
Diluted earnings per share, EUR | 1.01 | 0.84 | 20% | 1.25 |
Equity per share, EUR | 8.44 | 7.38 | 14% | 7.93 |
Return on investment, last 12 months, % | 14.6 | 14.4 | 1% | 14.8 |
Equity ratio, % | 33.8 | 31.4 | 8% | 32.9 |
Order backlog at the end of period, EUR million | 4,018.6 | 3,489.0 | 15% | 3,752.7 |
Average number of personnel | 25,946 | 26,229 | -1% | 26,254 |
1) attributable to equity holders of the parent company
1.3 Revenue, segment reporting
EUR million | 1-9/12 | 1-9/11 | Change | 1-12/11 |
Building Services Northern Europe | 1,536.5 | 1,497.5 | 3% | 2,097.6 |
– Group internal | -37.4 | -46.3 | -63.2 | |
– external | 1,499.3 | 1,451.2 | 3% | 2,034.4 |
Building Services Central Europe | 518.4 | 579.0 | -10% | 779.3 |
– Group internal | -0.4 | -0.2 | -0.3 | |
– external | 518.0 | 578.8 | -11% | 779.0 |
Construction Services Finland | 986.4 | 891.2 | 11% | 1,226.9 |
– Group internal | -1.2 | -1.1 | -1.9 | |
– external | 985.1 | 890.1 | 11% | 1,225.0 |
International Construction Services | 394.6 | 343.3 | 15% | 489.2 |
– Group internal | -0.1 | -4.3 | -4.2 | |
– external | 394.5 | 339.0 | 16% | 485.0 |
Other items | 1.2 | 1.1 | 1.5 | |
Revenue in total, segment reporting | 3,398.1 | 3,260.3 | 4% | 4,524.7 |
IFRIC 15 adjustment | 22.8 | -68.5 | -142.6 | |
Revenue in total, IFRS | 3,421.0 | 3,191.8 | 7% | 4,382.1 |
1.4 Operating profit and profit for the review period, segment reporting
EUR million | 1-9/12 | 1-9/11 | Change | 1-12/11 |
Building Services Northern Europe | 45.6 | 55.8 | -18% | 78.8 |
Building Services Central Europe | 16.6 | 24.0 | -31% | 33.3 |
Construction Services Finland | 88.9 | 79.5 | 12% | 111.6 |
International Construction Services | 45.2 | 19.8 | 128% | 37.2 |
Other items | -15.0 | -14.8 | 1% | -20.4 |
Operating profit total, segment reporting | 181.2 | 164.3 | 10% | 240.5 |
Financial income and expenses | -15.7 | -17.2 | -9% | -24.8 |
Profit before taxes, segment reporting | 165.6 | 147.1 | 13% | 215.8 |
Taxes | -38.9 | -41.5 | -6% | -58.0 |
Attributable to non-controlling interests | -0.6 | -0.7 | -19% | -1.0 |
Profit for the review period, segment reporting | 126.1 | 104.9 | 20% | 156.7 |
IFRIC 15 adjustment | 3.6 | -15.3 | -32.3 | |
Profit for the review period, IFRS | 129.7 | 89.6 | 45% | 124.4 |
Operating profit margin, segment reporting
% | 1-9/12 | 1-9/11 | 1-12/11 |
Building Services Northern Europe | 3.0 | 3.7 | 3.8 |
Building Services Central Europe | 3.2 | 4.2 | 4.3 |
Construction Services Finland | 9.0 | 8.9 | 9.1 |
International Construction Services | 11.5 | 5.8 | 7.6 |
Operating profit margin, segment reporting | 5.3 | 5.0 | 5.3 |
1.5 Order backlog, segment reporting
EUR million | 9/12 | 9/11 | Change | 12/11 |
Building Services Northern Europe | 904.9 | 886.1 | 2% | 913.1 |
Building Services Central Europe | 435.5 | 523,9 | -17% | 449.5 |
Construction Services Finland | 1,541.0 | 1,289.3 | 20% | 1,493.6 |
International Construction Services | 1,207.4 | 850.1 | 42% | 962.5 |
Other items | -70.1 | -60.3 | -66.0 | |
Order backlog total, segment reporting | 4,018.6 | 3,489.0 | 15% | 3,752.7 |
IFRIC 15 adjustment | 443.4 | 249.3 | 78% | 395.9 |
Order backlog, IFRS | 4,462.0 | 3,738.3 | 19% | 4,148.6 |
1.6 YIT Group figures by quarter, segment reporting
7-9/12 | 4-6/12 | 1-3/12 | 10-12/11 | 7-9/11 | 4-6/11 | 1-3/11 | |
Revenue, EUR million | 1,115.3 | 1,184.5 | 1,098.3 | 1,264.5 | 1,096.5 | 1,136.9 | 1,026.9 |
Operating profit, EUR million | 68.4 | 60.5 | 52.3 | 76.2 | 43.6 | 70.3 | 50.4 |
% of revenue | 6.1 | 5.1 | 4.8 | 6.0 | 4.0 | 6.2 | 4.9 |
Profit before taxes, EUR million | 64.0 | 54.5 | 47.1 | 68.6 | 35.8 | 65.5 | 45.9 |
Profit for the review period, EUR million 1) | 49.8 | 41.7 | 34.6 | 51.8 | 24.5 | 47.6 | 32.7 |
Earnings/share, EUR | 0.40 | 0.33 | 0.28 | 0.41 | 0.20 | 0.38 | 0.26 |
Diluted earnings per share, EUR | 0.40 | 0.33 | 0.28 | 0.41 | 0.20 | 0.38 | 0.26 |
Equity/share, EUR | 8.44 | 7.91 | 7.74 | 7.93 | 7.38 | 7.42 | 7.05 |
Return on investment, last 12 months, % | 14.6 | 13.7 | 14.8 | 14.8 | 14.4 | 15.4 | 15.1 |
Equity ratio, % | 33.8 | 32.2 | 31.5 | 32.9 | 31.4 | 31.8 | 31.0 |
Order backlog at the end of period, EUR million | 4,018.6 | 4,045.4 | 3,965.5 | 3,752.7 | 3,489.0 | 3,509.4 | 3,355.6 |
Average number of personnel | 26,002 | 25,998 | 25,821 | 26,254 | 26,229 | 26,021 | 25,754 |
Personnel at the end of period | 25,788 | 26,255 | 25,703 | 25,996 | 26,502 | 26,807 | 25,748 |
1) attributable to equity holders of the parent company
1.7. Segment information by quarter, segment reporting
Revenue by business segment
EUR million | 7-9/12 | 4-6/12 | 1-3/12 | 10-12/11 | 7-9/11 | 4-6/11 | 1-3/11 |
Building Services Northern Europe | 485.3 | 538.1 | 513.1 | 600.1 | 511.9 | 509.4 | 476.2 |
Building Services Central Europe | 179.5 | 179.5 | 159.4 | 200.3 | 210.8 | 191.1 | 177.1 |
Construction Services Finland | 308.9 | 347.9 | 329.5 | 335.7 | 269.4 | 332.3 | 289.5 |
International Construction Services | 153.3 | 133.4 | 107.9 | 145.9 | 122.5 | 120.5 | 100.3 |
Other items | -11.7 | -14.4 | -11.6 | -17.5 | -18.1 | -16.4 | -16.2 |
Revenue in total, segment reporting | 1,115.3 | 1,184.5 | 1,098.3 | 1,264.5 | 1,096.5 | 1,136.9 | 1,026.9 |
Operating profit by business segment
EUR million | 7-9/12 | 4-6/12 | 1-3/12 | 10-12/11 | 7-9/11 | 4-6/11 | 1-3/11 |
Building Services Northern Europe | 15.6 | 15.3 | 14.6 | 23.0 | 19.9 | 18.8 | 17.1 |
Building Services Central Europe | 4.8 | 6.6 | 5.2 | 9.3 | 7.9 | 12.1 | 4.0 |
Construction Services Finland | 27.2 | 32.0 | 29.7 | 32.1 | 21.1 | 32.8 | 25.6 |
International Construction Services | 24.0 | 12.7 | 8.5 | 17.4 | -0.9 | 12.3 | 8.4 |
Other items | -3.2 | -6.1 | -5.7 | -5.6 | -4.4 | -5.7 | -4.7 |
Operating profit total, segment reporting | 68.4 | 60.5 | 52.3 | 76.2 | 43.6 | 70.3 | 50.4 |
Operating profit margin by business segment
% | 7-9/12 | 4-6/12 | 1-3/12 | 10-12/11 | 7-9/11 | 4-6/11 | 1-3/11 |
Building Services Northern Europe | 3.2 | 2.8 | 2.9 | 3.8 | 3.9 | 3.7 | 3.6 |
Building Services Central Europe | 2.6 | 3.7 | 3.3 | 4.6 | 3.7 | 6.3 | 2.3 |
Construction Services Finland | 8.8 | 9.2 | 9.0 | 9.6 | 7.8 | 9.9 | 8.8 |
International Construction Services | 15.7 | 9.5 | 7.9 | 11.9 | -0.7 | 10.2 | 8.4 |
Order backlog by business segment
EUR million | 9/12 | 6/12 | 3/12 | 12/11 | 9/11 | 6/11 | 3/11 |
Building Services Northern Europe | 904.9 | 955.1 | 969.4 | 913.1 | 886.1 | 879.5 | 804.9 |
Building Services Central Europe | 435.5 | 473.4 | 500.5 | 449.5 | 523.9 | 554.1 | 573.2 |
Construction Services Finland | 1,541.0 | 1,499.9 | 1,428.0 | 1,493.6 | 1,289.3 | 1,239.5 | 1,176.0 |
International Construction Services | 1,207.4 | 1,186.7 | 1,142.9 | 962.5 | 850.1 | 896.4 | 862.7 |
Other items | -70.1 | -69.7 | -75.3 | -66.0 | -60.3 | -60.2 | -61.2 |
Order backlog total, segment reporting | 4,018.6 | 4,045.4 | 3,965.5 | 3,752.7 | 3,489.0 | 3,509.4 | 3,355.6 |
Operative invested capital
EUR million | 9/12 | 6/12 | 3/12 | 12/11 | 9/11 | 6/11 | 3/11 |
Building Services Northern Europe | 394.8 | 357.8 | 339.4 | 372.9 | 375.6 | 323.5 | 282.8 |
Building Services Central Europe | 113.7 | 106.5 | 96.5 | 72.0 | 56.0 | 40.8 | 18.9 |
Construction Services Finland | 546.8 | 515.3 | 552.1 | 558.4 | 503.0 | 451.7 | 436.1 |
International Construction Services | 703.8 | 655.7 | 651.8 | 602.2 | 601.5 | 668.3 | 720.0 |
Return on operative invested capital
last 12 months, % | 9/12 | 6/12 | 3/12 | 12/11 | 9/11 | 6/11 | 3/11 |
Building Services Northern Europe | 17.8 | 21.4 | 24.5 | 23.8 | 23.5 | 28.6 | 34.8 |
Building Services Central Europe | 30.4 | 39.4 | 59.7 | 53.8 | 58.5 | 91.7 | 83.1 |
Construction Services Finland | 24.3 | 25.0 | 24.6 | 24.0 | 26.3 | 30.9 | 28.3 |
International Construction Services | 10.5 | 6.5 | 6.1 | 6.5 | 5.8 | 6.7 | 5.8 |
1.8 Reconciliation of the segment reporting and the group reporting
Review period | 1-9/12 | 1-9/11 | 1-12/11 | ||||||
Income statement, EUR million | Segment reporting | IFRIC 15 adjustments | IFRS | Segment reporting | IFRIC 15 adjustments | IFRS | Segment reporting | IFRIC 15 adjustments | IFRS |
Revenue | 3,398.1 | 22.8 | 3,421.0 | 3,260.3 | -68.5 | 3,191.8 | 4,524.7 | -142.6 | 4,382.1 |
Other operating income and expenses | -3,182.7 | -17.6 | -3,200.3 | -3,066.5 | 46.7 | -3,019.8 | -4,244.6 | 102.1 | -4,142.5 |
Depreciation and value adjustments | -34.2 | -34.2 | -29.5 | -29.5 | -39.6 | -39.6 | |||
Operating profit | 181.2 | 5.2 | 186.4 | 164.3 | -21.8 | 142.5 | 240.5 | -40.5 | 200.0 |
Financial income and expenses | -15.7 | -15.7 | -17.2 | -17.2 | -24.8 | -24.8 | |||
Profit before taxes | 165.6 | 5.2 | 170.8 | 147.1 | -21.8 | 125.3 | 215.7 | -40.5 | 175.3 |
Income taxes | -38.9 | -1.7 | -40.6 | -41.5 | 6.2 | -35.3 | -58.0 | -7.8 | -50.2 |
Profit for the review period | 126.7 | 3.5 | 130.1 | 105.6 | -15.6 | 90.0 | 157.7 | 125.1 | |
Attributable to | |||||||||
Equity holders of the parent company | 126.1 | 3.6 | 129.7 | 104.9 | -15.3 | 89.6 | 156.7 | -32.2 | 124.5 |
Non-controlling interests | 0.6 | -0.1 | 0.4 | 0.7 | -0.3 | 0.4 | 1.0 | -0.4 | 0.6 |
Earnings/share, EUR | 1.01 | 1.03 | 0.84 | 0.72 | 1.25 | 0.99 | |||
Diluted earnings per share, EUR | 1.01 | 1.03 | 0.84 | 0.72 | 1.25 | 0.99 |
Quarter | 7-9/12 | 7-9/11 | ||||
Income statement, EUR million | Segment reporting | IFRIC 15 adjustments | IFRS | Segment reporting | IFRIC 15 adjustments | IFRS |
Revenue | 1,115.3 | -11.7 | 1,103.6 | 1,096.5 | -11.7 | 1,084.8 |
Other operating income and expenses | -1,034.2 | 6.9 | -1,027.3 | -1,042.8 | 3.5 | -1,039.3 |
Depreciation and value adjustments | -12.7 | -12.7 | -10.1 | -10.1 | ||
Operating profit | 68.4 | -4.8 | 63.6 | 43.6 | -8.2 | 35.4 |
Financial income and expenses | -4.4 | -4.4 | -7.8 | -7.8 | ||
Profit before taxes | 64.0 | -4.8 | 59.2 | 35.8 | -8.2 | 27.6 |
Income taxes | -13.9 | 1.2 | -12.8 | -11.1 | 2.4 | -8.7 |
Profit for the review period | 50.1 | -3.6 | 46.5 | 24.7 | -5.8 | 18.9 |
Attributable to | ||||||
Equity holders of the parent company | 49.8 | -3.5 | 46.3 | 24.5 | -5.9 | 18.6 |
Non-controlling interests | 0.3 | -0.1 | 0.2 | 0.2 | 0.1 | 0.3 |
Earnings/share, EUR | 0.40 | 0.37 | 0.20 | 0.15 | ||
Diluted earnings per share, EUR | 0.40 | 0.37 | 0.20 | 0.15 |
9/12 | 9/11 | 12/11 | |||||||
Balance sheet, EUR million | Segment reporting | IFRIC 15 adjustments | IFRS | Segment reporting | IFRIC 15 adjustment | IFRS | Segment reporting | IFRIC 15 adjustment | IFRS |
Non-current assets | |||||||||
Other non-current assets | 539.7 | 539.7 | 532.5 | 532.5 | 538.1 | 538,1 | |||
Deferred tax assets | 48.8 | 7.1 | 55.9 | 45.0 | 10.8 | 55.8 | 47.2 | 13.1 | 60,3 |
Current assets | |||||||||
Inventories | 1,543.0 | 315.5 | 1,858.5 | 1,306.0 | 265.6 | 1,571.6 | 1,348.2 | 324.4 | 1,672,6 |
Trade and other receivables | 1,173.8 | -55.7 | 1,118.2 | 1,099.9 | -65.2 | 1,034.7 | 1,122.0 | -94.7 | 1,027,3 |
Cash and cash equivalents | 150.0 | 150.0 | 224.1 | 224.1 | 206.1 | 206,1 | |||
Total assets | 3,455.4 | 266.9 | 3,722.3 | 3,207.5 | 211.1 | 3,418.6 | 3,261.6 | 242.9 | 3,504,5 |
Shareholders' equity | 1,061.6 | -73.6 | 987.9 | 927.7 | -57.4 | 870.3 | 996.7 | -75.6 | 921,1 |
Non-current liabilities | |||||||||
Financial liabilities | 541.7 | 541.7 | 536.4 | 536.4 | 522.9 | 522,9 | |||
Other non-current liabilities | 121.1 | 121.1 | 102.7 | 102.7 | 128.5 | 128,5 | |||
Deferred tax liabilities | 105.8 | -12.3 | 93.5 | 94.8 | -6.5 | 88.3 | 96.6 | -8.3 | 88,3 |
Current liabilities | |||||||||
Financial liabilities | 367.0 | 68.7 | 435.6 | 349.3 | 93.4 | 442.7 | 325.2 | 98.4 | 423,6 |
Advances received | 307.8 | 285.7 | 593.6 | 250.0 | 184.3 | 434.3 | 231.3 | 227.0 | 458,3 |
Other current liabilities | 950.4 | -1.5 | 948.9 | 946.5 | -2.6 | 943.9 | 960.4 | 1.2 | 961,6 |
Total equity and liabilities | 3,455.4 | 266.9 | 3,722.3 | 3,207.5 | 211.1 | 3,418.6 | 3,261.6 | 242.9 | 3,504,5 |
2. GROUP REPORTING, IFRS
2.1 Key figures, IFRS
9/12 | 9/11 | Change | 12/11 | |
Earnings/share, EUR | 1.03 | 0.72 | 43% | 0.99 |
Diluted earnings per share, EUR | 1.03 | 0.72 | 43% | 0.99 |
Equity/share, EUR | 7.86 | 6.93 | 13% | 7.33 |
Average share price during the period, EUR | 14.90 | 17.54 | -15% | 15.28 |
Share price at end of period, EUR | 14.93 | 11.33 | 32% | 12.38 |
Market capitalisation at end of period, MEUR | 1,872.0 | 1,419.3 | 32% | 1,550.9 |
Weighted average share-issue adjusted number of shares outstanding, thousands | 125,341 | 125,160 | 0% | 125,210 |
Diluted weighted average share-issue adjusted number of shares outstanding, thousands | 125,341 | 125,160 | 0% | 125,210 |
Share-issue adjusted number of shares outstanding at end of period, thousands | 125,386 | 125,272 | 0% | 125,271 |
Net interest-bearing debt at end of period, EUR million | 827.3 | 755.0 | 10% | 740.4 |
Return on investment, last 12 months, % | 13.7 | 15.6 | 12.0 | |
Equity ratio, % | 31.6 | 29.2 | 30.2 | |
Gearing ratio, % | 83.7 | 86.8 | 80.4 | |
Gross capital expenditures, MEUR | 34.3 | 43.9 | -22% | 48.7 |
% of revenue | 1.0 | 1.4 | 1.1 | |
Unrecognised order backlog at the end of the period, MEUR | 4,462.0 | 3,738.3 | 19% | 4,148.6 |
of which order backlog outside Finland | 2,439.0 | 1,969.6 | 24% | 2,066.9 |
Average number of personnel | 25,946 | 26,229 | -1% | 26,254 |
2.2 YIT Group figures by quarter, IFRS
7-9/12 | 4-6/12 | 1-3/12 | 10-12/11 | 7-9/11 | 4-6/11 | 1-3/11 | |
Revenue, EUR million | 1,103.6 | 1,218.9 | 1,098.4 | 1,190.4 | 1,084.8 | 1,137.2 | 969.7 |
Operating profit, EUR million | 63.6 | 67.7 | 55.2 | 57.5 | 35.4 | 67.9 | 39.2 |
% of revenue | 5.8 | 5.6 | 5.0 | 4.8 | 3.3 | 6.0 | 4.0 |
Financial income, MEUR | 0.1 | 2.8 | 1.4 | 1.4 | 0.0 | 0.3 | 2.4 |
Exchange rate differences, MEUR | -1.8 | -1.6 | -1.0 | -2.1 | 0.0 | -0.8 | -1.3 |
Financial expenses, MEUR | -2.6 | -7.3 | -5.7 | -6.9 | -7.8 | -4.4 | -5.6 |
Profit before taxes, MEUR | 59.2 | 61.6 | 49.9 | 49.9 | 27.6 | 63.0 | 34.7 |
% of revenue | 5.4 | 5.1 | 4.5 | 4.2 | 2.5 | 5.5 | 3.6 |
Balance sheet total, MEUR | 3,722.3 | 3,646.9 | 3,631.9 | 3,504.5 | 3,418.6 | 3,387.4 | 3,274.8 |
Earnings/share, EUR | 0.37 | 0.37 | 0.29 | 0.27 | 0.15 | 0.37 | 0.20 |
Equity/share, EUR | 7.86 | 7.37 | 7.14 | 7.33 | 6.93 | 7.00 | 6.64 |
Share price at end of period, EUR | 14.93 | 13.38 | 16.12 | 12.38 | 11.33 | 17.24 | 20.92 |
Market capitalisation at end of period, MEUR | 1,872.0 | 1,677.7 | 2,019.3 | 1,550.9 | 1,419.3 | 2,159.7 | 2,616.6 |
Return on investment, last 12 months, % | 13.7 | 12.5 | 12.8 | 12.0 | 15.6 | 15.7 | 14.0 |
Equity ratio, % | 31.6 | 30.0 | 28.8 | 30.2 | 29.2 | 29.7 | 28.5 |
Net interest-bearing debt at end of period, EUR million | 827.3 | 803.1 | 755.9 | 740.4 | 755.0 | 702.7 | 626.1 |
Gearing ratio, % | 83.7 | 86.7 | 84.2 | 80.4 | 86.8 | 79.9 | 75.2 |
Gross capital expenditures, MEUR | 10.1 | 10.5 | 13.6 | 7.1 | 20.6 | 14.6 | 8.7 |
% of revenue | 0.9 | 0.9 | 1.2 | 0.6 | 1.7 | 1.3 | 0.9 |
Order backlog at end of period, MEUR | 4,462.0 | 4,409.3 | 4,385.3 | 4,148.6 | 3,738.3 | 3,796.9 | 3,699.0 |
Personnel at the end of period | 25,788 | 26,255 | 25,703 | 25,996 | 26,502 | 26,807 | 25,748 |
2.3 Consolidated income statement Jan 1 – Sep 30, 2012, IFRS
EUR million | 1-9/12 | 1-9/11 | Change | 1-12/11 |
Revenue | 3,421.0 | 3,191.8 | 7% | 4,382.1 |
of which activities outside Finland | 1,949.3 | 1,873.3 | 4% | 2,607.7 |
Other operating income and expenses | -3,200.4 | -3,019.7 | 6% | -4,142.9 |
Share of results of associated companies | 0.1 | -0.1 | 0.4 | |
Depreciation and impairments | -34.2 | -29.5 | 16% | -39.6 |
Operating profit | 186.4 | 142.5 | 31% | 200.0 |
% of revenue | 5.5 | 4.5 | 4.6 | |
Financial income | 4.3 | 2.7 | 60% | 4.3 |
Exchange rate differences | -4.5 | -2.1 | 115% | -4.1 |
Financial expenses | -15.5 | -17.8 | -13% | -24.9 |
Profit before taxes | 170.8 | 125.3 | 36% | 175.3 |
% of revenue | 5.0 | 3.9 | 4.0 | |
Income taxes 1) | -40.6 | -35.3 | 15% | -50.2 |
Profit for the review period | 130.1 | 90.0 | 45% | 125.1 |
% of revenue | 3.8 | 2.8 | 2.9 | |
Attributable to | ||||
Equity holders of the parent company | 129.7 | 89.6 | 45% | 124.5 |
Non-controlling interests | 0.4 | 0.4 | 12% | 0.6 |
Earnings per share attributable to the equity holders of the parent company | ||||
Earnings/share, EUR | 1.03 | 0.72 | 43% | 0.99 |
Diluted earnings per share, EUR | 1.03 | 0.72 | 43% | 0.99 |
1) Taxes for the review period are based on the taxes for the whole financial year.
2.4 Statement of comprehensive income Jan 1 – Sep 30, 2012, IFRS
EUR million | 1-9/12 | 1-9/11 | Change | 1-12/11 |
Profit for the review period | 130.1 | 90.0 | 45% | 125.0 |
Other comprehensive income | ||||
- Cash flow hedges | -0.5 | -1.2 | -58% | -2.0 |
– Deferred taxes | 0.1 | 0.3 | -67% | 0.4 |
Change in fair value for available for sale investments | -0.7 | 0.0 | 0.5 | |
– Deferred taxes | 0.2 | 0.0 | -0.1 | |
– Change in translation differences | 21.3 | -25.3 | -8.5 | |
– Other change | -0.2 | 0.1 | ||
Other comprehensive income, total | 20.4 | -26.4 | -9.7 | |
Total comprehensive income | 150.6 | 63.6 | 137% | 115.3 |
Attributable to | ||||
Equity holders of the parent company | 150.1 | 62.9 | 139% | 114.5 |
Non-controlling interests | 0.4 | 0.7 | -43% | 0.8 |
2.5 Consolidated income statement Jul 1 – Sep 30, 2012, IFRS
EUR million | 7-9/12 | 7-9/11 | Change |
Revenue | 1,103.6 | 1,084.8 | 2% |
of which activities outside Finland | 641.9 | 653.6 | -2% |
Other operating income and expenses | -1,027.1 | -1,039.3 | -1% |
Share of results of associated companies | -0.2 | 0.0 | |
Depreciation and value adjustments | -12.7 | -10.1 | 26% |
Operating profit | 63.6 | 35.4 | 80% |
% of revenue | 5.8 | 3.3 | |
Financial income | 0.1 | 0.0 | |
Exchange rate differences | -1.8 | 0.0 | |
Financial expenses | -2.6 | -7.8 | -67% |
Profit before taxes | 59.2 | 27.6 | 115% |
% of revenue | 5.4 | 2.5 | |
Income taxes 1) | -12.8 | -8.7 | 47% |
Profit for the review period | 46.5 | 18.9 | 146% |
% of revenue | 4.2 | 1.7 | |
Attributable to | |||
Equity holders of the parent company | 46.3 | 18.6 | 149% |
Non-controlling interests | 0.4 | 0.3 | 49% |
Earnings per share attributable to the equity holders of the parent company | |||
Earnings/share, EUR | 0.37 | 0.15 | 147% |
Diluted earnings per share, EUR | 0.37 | 0.15 | 147% |
1) Taxes for the review period are based on the taxes for the whole financial year.
2.6 Consolidated balance sheet, IFRS
EUR million | 9/12 | 9/11 | Change | 12/11 |
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 109.7 | 109.7 | 0% | 110.8 |
Goodwill | 346.6 | 347.5 | 0% | 347.5 |
Other intangible assets | 62.7 | 53.8 | 16% | 54.1 |
Shares in associated companies | 0.4 | 2.6 | -84% | 3.1 |
Other investments | 3.1 | 3.4 | -10% | 3.8 |
Other receivables | 17.3 | 15.4 | 13% | 18.8 |
Deferred tax assets | 55.9 | 55.8 | 0% | 60.3 |
Current assets | ||||
Inventories | 1,858.5 | 1,571.6 | 18% | 1,672.6 |
Trade and other receivables | 1,118.2 | 1,034.7 | 8% | 1,027.3 |
Cash and cash equivalents | 150.0 | 224.1 | -33% | 206.1 |
Total assets | 3,722.3 | 3,418.6 | 9% | 3,504.5 |
Equity and liabilities | ||||
Equity attributable to equity holders of the parent company | ||||
Share capital | 149.2 | 149.2 | 149.2 | |
Other equity | 836.2 | 718.9 | 16% | 769.5 |
Non-controlling interests | 2.5 | 2.2 | 13% | 2.5 |
Total equity | 987.9 | 870.3 | 14% | 921.1 |
Non-current liabilities | ||||
Deferred tax liabilities | 93.5 | 88.3 | 6% | 88.3 |
Pension liabilities | 28.2 | 26.6 | 6% | 26.5 |
Provisions | 52.9 | 53.9 | -2% | 54.1 |
Borrowings | 541.7 | 536.4 | 1% | 522.9 |
Other liabilities | 40.0 | 22.2 | 80% | 47.9 |
Current liabilities | ||||
Advances received | 593.6 | 434.3 | 37% | 458.3 |
Trade and other payables | 892.9 | 895.2 | 0% | 909.3 |
Provisions | 56.1 | 48.7 | 15% | 52.3 |
Current borrowings | 435.6 | 442.7 | -2% | 423.6 |
Total equity and liabilities | 3,722.3 | 3,418.6 | 9% | 3,504.5 |
2.7 Consolidated statement of changes in equity, IFRS
Equity attributable to equity holders of the parent company | ||||||||||
EUR million | Share capital | Legal reserve | Other reserve | Cumulative translation difference | Fair value reserve | Treasury shares | Retained earnings | Total | Non-controlling interest | Total equity |
Equity on January 1, 2012 | 149.2 | 1.9 | 2.8 | -23.4 | -3.6 | -9.7 | 801.5 | 918.7 | 2.5 | 921.1 |
Comprehensive income | ||||||||||
Profit for the period | 129.7 | 129.7 | 0.4 | 130.1 | ||||||
Other comprehensive income: | ||||||||||
Cash flow hedges | -0.5 | -0.5 | -0.5 | |||||||
- Deferred tax | 0.1 | 0.1 | 0.1 | |||||||
Change in fair value of available for sale investments | -0.7 | -0.7 | -0.7 | |||||||
- Deferred tax | 0.2 | 0.2 | 0.2 | |||||||
Change in translation differences | 21.3 | 21.3 | 21.3 | |||||||
Comprehensive income, total | 21.3 | -0.9 | 129.7 | 150.1 | 0.4 | 150.6 | ||||
Transactions with owners | ||||||||||
Dividend paid | -87.7 | -87.7 | -0.4 | -88.1 | ||||||
Share-based incentives | 1.1 | 0.6 | 2.6 | 4.3 | 4.3 | |||||
Transactions with owners, total | 1.1 | 0.6 | -85.1 | -83.4 | -0.4 | -83.8 | ||||
Equity on September 30, 2012 | 149.2 | 1.9 | 3.9 | -2.1 | -4.5 | -9.2 | 846.1 | 985.5 | 2.5 | 987.9 |
Equity attributable to equity holders of the parent company | ||||||||||
EUR million | Share capital | Legal reserve | Other reserve | Cumulative translation differences | Fair value reserve | Treasury shares | Retained earnings | Total | Non-controlling interest | Total equity |
Equity on January 1, 2011 | 149.2 | 2.0 | 0.0 | -14.2 | -2.4 | -10.6 | 756.1 | 880.1 | 2.8 | 882.9 |
Comprehensive income | ||||||||||
Profit for the period | 89.6 | 89.6 | 0.4 | 90.0 | ||||||
Other comprehensive income: | ||||||||||
Cash flow hedges | -1.2 | -1.2 | -1.2 | |||||||
- Deferred tax | 0.3 | 0.3 | 0.3 | |||||||
Change in translation differences | -24.8 | -0.8 | -25.6 | 0.3 | -25.3 | |||||
Other change | -0.2 | 0.0 | -0.2 | 0.0 | -0.2 | |||||
Comprehensive income, total | -0.2 | -24.8 | -0.9 | 88.8 | 62.9 | 0.7 | 63.6 | |||
Transactions with owners | ||||||||||
Dividend paid | -81.3 | -81.3 | -0.2 | -81.5 | ||||||
Transfer from retained earnings | 0.2 | 0.0 | 0.0 | 0.2 | 0.2 | |||||
Share-based incentives | 2.9 | 0.9 | 1.3 | 5.1 | 5.1 | |||||
Transactions with owners, total | 0.2 | 0.9 | -80.0 | -76.0 | -0.2 | -76.2 | ||||
Changes in ownership shares in subsidiaries | ||||||||||
Changes in group ownership shares in subsidiaries - no loss of control | 1.1 | 1.1 | -1.1 | 0.0 | ||||||
Changes in ownership shares in subsidiaries | 1.1 | 1.1 | -1.1 | 0.0 | ||||||
Equity on September 30, 2011 | 149.2 | 2.0 | 2.9 | -39.0 | -3.3 | -9.7 | 766.0 | 868.1 | 2.2 | 870.3 |
2.8 Consolidated cash flow statement
EUR million | 7-9/12 | 7-9/11 | Change | 1-9/12 | 1-9/11 | Change | 1-12/11 |
Cash flows from operating activities | |||||||
Net profit for the period | 46.5 | 19.0 | 145% | 130.1 | 90.0 | 45% | 125.1 |
Reversal of accrual-based items | 31.0 | 38.5 | -19% | 97.9 | 91.6 | 7% | 143.5 |
Change in working capital | |||||||
Change in trade and other receivables | 1.8 | 206.3 | -99% | -29.3 | 130.1 | -159.2 | |
Change in inventories | -62.8 | -19.3 | 226% | -151.0 | -117.3 | 29% | -196.3 |
Change in current liabilities | -25.5 | -1.3 | more than a thousand | 59.1 | 133.8 | -56% | 189.4 |
Change in working capital, total | -86.5 | -74.5 | 16% | -121.2 | -113.6 | 7% | -166.1 |
Interest paid | -5.3 | -8.5 | -37% | -27.4 | -26.7 | 3% | -34.3 |
Other financial items, net | -4.4 | 4.7 | -10.3 | 0.4 | -5.3 | ||
Interest received | 1.0 | 1.2 | -16% | 2.8 | 2.8 | 0% | 4.1 |
Taxes paid | -7.7 | -13.2 | -42% | -44.1 | -49.7 | -11% | -49.6 |
Net cash generated from operating activities | -25.6 | -32.6 | -22% | 27.8 | -5.0 | 17.4 | |
Cash flows from investing activities | |||||||
Acquisition of subsidiaries, net of cash | -0.2 | -3.9 | -95% | -7.3 | -8.9 | -18% | -8.8 |
Purchase of property, plant and equipment | -8.6 | -11.9 | -28% | -19.1 | -25.3 | -24% | -30.0 |
Purchase of intangible assets | -1.3 | -1.9 | -33% | -6.2 | -6.0 | 3% | -8.9 |
Increases in other investments | -0.1 | ||||||
Disposal of subsidiaries, net of cash | 0.0 | 5.9 | 5.9 | ||||
Proceeds from sale of shares in associated companies | 2.9 | 2.9 | |||||
Sales of tangible and intangible assets | 1.8 | 3.3 | -46% | 4.3 | 5.5 | -22% | 4.5 |
Sale of investments | 0.6 | -0.1 | 0.7 | 2.6 | -73% | 2.7 | |
Net cash used in investing activities | -4.9 | -14.5 | -66% | -24.7 | -26.2 | -6% | -34.7 |
Operating cash flow after investments | -30.5 | -47.3 | -35% | 3.1 | -31.4 | -17.3 | |
Cash flow from financing activities | |||||||
Change in loan receivables | 5.5 | 0.0 | -6.3 | ||||
Change in current liabilities | 14.3 | 112.2 | -87% | 64.8 | 159.0 | -59% | 139.4 |
Proceeds from borrowings | 0.0 | 0.0 | 100.0 | 175.0 | -43% | 175.0 | |
Repayments of borrowings | -9.1 | -70.7 | -87% | -132.2 | -141.9 | -7% | -157.4 |
Payments of financial leasing debts | -0.3 | 0.2 | -0.5 | -1.4 | -64% | -0.9 | |
Dividends paid | 0.0 | 0.0 | -88.1 | -81.5 | 8% | -81.5 | |
Net cash used in financing activities | 10.3 | 41.7 | -75% | -62.3 | 109.2 | 74.6 | |
Net change in cash and cash equivalents | -20.2 | -5.6 | 261% | -59.2 | 77.8 | 57.3 | |
Cash and cash equivalents at beginning of period | 167.6 | 231.3 | -28% | 204.7 | 147.6 | 39% | 147.6 |
Change in the fair value of cash equivalents | 1.9 | -1.6 | 3.9 | -1.3 | -0.2 | ||
Cash and cash equivalents at end of period | 149.3 | 224.1 | -33% | 149.3 | 224.1 | -33% | 204.7 |
2.9 Accounting principles of the interim report
YIT Corporation’s Interim Report for January 1 – September 30, 2012, has been drawn up in line with IAS 34: Interim Financial Reporting. The information presented in the Interim Report has not been audited. YIT has applied the same accounting policy and IFRS standards and interpretations in the drafting of the Interim Report as in its annual financial statements for 2011. The new standards, interpretations and amendments on current standards that have been approved by the EU and have been applied as of January 1, 2012 have no effect on group reporting.
In the Interim report the figures are presented in million euros performing the roundings on each line, which may cause some rounding inaccuracies in column and total sums.
Exchange rates used in the preparation of the interim report
Average rate 1-9/12 | Average rate 1-9/11 | Balance sheet rate 9/12 | Balance sheet rate 9/11 | |||
EUR 1= | CZK | 25.1380 | 24.3610 | 25.1410 | 24.7540 | |
DKK | 7.4386 | 7.4543 | 7.4555 | 7.4417 | ||
HUF | 291.3100 | 271.2800 | 284.8900 | 292.5500 | ||
MYR | 3.9697 | 4.2591 | 3.9596 | 4.3112 | ||
NOK | 7.5121 | 7.8041 | 7.3695 | 7.8880 | ||
PLN | 4.2088 | 4.0183 | 4.1038 | 4.4050 | ||
RUB | 39.7955 | 40.4800 | 40.1400 | 43.3500 | ||
SEK | 8.7334 | 9.0084 | 8.4498 | 9.2580 | ||
SGD | 1.6125 | 1.7539 | 1.5848 | 1.7589 | ||
USD | 1.2813 | 1.4066 | 1.2930 | 1.3503 | ||
LVL | 0.6976 | 0.7028 | 0.6962 | 0.7028 | ||
LTL | 3.4528 | 3.4528 | 3.4528 | 3.4528 |
2.10 Definitions of key financial figures
Return on investment (ROI, %) = | Profit before taxes + interest expenses + other financial expenses + / - exchange rate differences x 100 Balance sheet total - capitalised interest - non-interest bearing liabilities (average) |
Segment’s operative invested capital = | Tangible and intangible assets + goodwill + shares in associated companies + investments + inventories + trade receivables + other non-interest bearing operational receivables *) - provisions - trade payables - advances received - non-interest bearing liabilities *) *) excl. items associated with taxes, distribution of profit and financial items |
Return on operative invested capital (%) = | Segment’s operating profit + interest included in operating profit Segment’s operative invested capital (average) |
Equity ratio (%) ) | Equity + non-controlling interest x 100 Balance sheet total - advances received |
Gearing ratio (%) = | Interest-bearing liabilities – cash and cash equivalents x 100 Shareholder’s equity + non-controlling interest |
Segment reporting, earnings / share (EUR) = | Net profit for the financial year (attributable to equity holders), segment reporting Share issue-adjusted average number of outstanding shares during the period |
Group IFRS reporting, earnings / share (EUR) = | Net profit for the period (attributable to equity holders), group reporting Share issue-adjusted average number of outstanding shares during the period |
Equity/share (EUR) = | Shareholders' equity Share issue-adjusted number of outstanding shares at the end of the period |
Market capitalisation = | (Number of shares - treasury shares) x share price on the closing date by share series |
2.11 Financial risk management
Financial risks include liquidity, interest rate, currency and credit risk, and their management is a part of the Group's financing policy. The Board of Directors has approved the Corporate Finance Policy. The Group’s Finance Department is responsible for the practical implementation of the policy in association with the business segments and units.
The Group's strategic financial targets guide the use and management of the Group's capital. Achieving the strategic targets is supported by maintaining an optimum Group capital structure. Capital structure is mainly influenced by controlling investments and the amount of working capital tied to business operations.
A more detailed account of the financial risks has been published in the notes to the financial statements for 2011.
2.12 Unusual items affecting operating profit
EUR million | 1-9/12 | 1-9/11 | Change | 1-12/11 |
Building Services Northern Europe | -2.8 | -3.0 | -3.0 | |
Building Services Central Europe | -0.9 | 5.0 | 5.0 | |
International Construction Services | 7.0 | -10.0 | -10.0 | |
Total | 3.3 | -8.0 | -8.0 |
The operating profit for International Construction Services for the third quarter of 2012 was improved by the cancellation of a EUR 7.0 million cost provision due to the ammonia issue in St. Petersburg. YIT made a provision of EUR 10.0 during the third quarter of 2011 to cover the costs of rectifying the problem.
YIT started the restructuring of operations in Poland during the second quarter of 2012 and made a write-down of EUR 0.9 million in goodwill in the third quarter of 2012 as the result.
During the second quarter of 2012, the operating profit for Building Services Northern Europe was burdened by a non-recurring expense of EUR 2.8 million associated with the final financial report of a customer project completed in 2011. Building Services Northern Europe booked a provision of EUR 3.0 million associated with the same project in the second quarter of 2011.
The operating profit for Building Services Central Europe for the second quarter of 2011 was improved by a sales gain of EUR 5.0 million from the divestment of Hungarian operations.
2.13 Business combinations and disposals
In January 2012, Building Services Central Europe acquired a cooling solutions and services provider, P&P Kälteanlagenbau GmbH and HVAC solution provider, WM Haustechnik GmbH. The Building Services Northern Europe segment also acquired in January 2012 the share capitals of Elektriska Installationer i Finspång AB and Kraftmontage i Finspång AB and in April 2012 the share capitals of companies specialised in electrical installations, Dala Elmontage Lidkvist & Bodin AB in Sweden and Madla Elektro AS in Norway. The total acquisition price amounted to EUR 9.0 million. The acquisition is not expected to result in goodwill.
Composition of acquired net assets and goodwill
EUR million | 9/12 |
Consideration | |
Cash | 8.5 |
Contingent consideration | 0.5 |
Total consideration | 9.0 |
Acquisition-related costs (recognised as other operating expenses) | 0.2 |
Recognised amounts of identifiable assets acquired and liabilities assumed | |
Cash and cash equivalents | 1.1 |
Property, plant and equipment | 0.5 |
Intangible rights: | |
Customer base | 1.5 |
Order backlog | 4.0 |
Other intangible rights | 11.6 |
Inventories | 0.9 |
Trade and other receivables | 6.6 |
Deferred tax liabilities, net | 0.8 |
Trade and other payables | 16.6 |
Total identifiable net assets | 9.0 |
Non-controlling interest | |
Goodwill | 0.0 |
Total value | 9.0 |
There were no disposals during the review period.
2.14 Changes in property, plant and equipment
EUR million | 1-9/12 | 1-9/11 | Change | 1-12/11 |
Carrying value at the beginning of the period | 110.8 | 106.7 | 4% | 106.7 |
Increase | 20.0 | 25.6 | -22% | 30.4 |
Increase through acquisitions | 0.5 | 0.8 | -37% | 0.9 |
Decrease | -3.5 | -4.9 | -28% | -3.7 |
Decrease through disposals | 0.0 | -0.1 | -0.1 | |
Depreciation and value adjustments | -17.9 | -17.9 | 0% | -23.9 |
Reclassifications | -1.5 | -0.5 | 196% | 0.6 |
Carrying value at the end of the period | 109.7 | 109.7 | 0% | 110.8 |
2.15 Inventories
EUR million | 9/12 | 9/11 | Change | 12/11 |
Raw materials and consumables | 34.5 | 27.5 | 26% | 27.6 |
Work in progress | 814.2 | 725.6 | 12% | 792.8 |
Land areas and plot owning companies | 701.9 | 634.6 | 11% | 643.8 |
Shares in completed housing and real estate companies | 245.1 | 142.6 | 72% | 158.2 |
Advance payments | 59.3 | 40.5 | 46% | 49.5 |
Other inventories | 3.4 | 0.8 | 324% | 0.7 |
Total inventories | 1,858.5 | 1,571.6 | 18% | 1,672.6 |
2.16 Notes on equity
Share capital and share premium account | Number of outstanding shares | Share capital (EUR million) | Treasury shares (EUR million) |
Outstanding shares January 1, 2012 | 125,271,008 | 149.2 | -9.7 |
Return of treasury shares, Jan 1 – Mar 31, 2012 | -4,131 | ||
Return of treasury shares, Apr 1 – Jun 30, 2012 | -8,541 | ||
Return of treasury shares, Jul 1 – Sep 30, 2012 | -3,204 | ||
Transfer of treasury shares under the share incentive scheme | 130,976 | 0.6 | |
Outstanding shares Sep 30, 2012 | 125,386,108 | 149.2 | -9.2 |
2.17 Borrowings
EUR million | Fair value | Carrying value | Nominal value |
Bonds in financial statements December 31, 2011 | 330.8 | 335.1 | 335.7 |
Valuation of the above bonds on September 30, 2012 | 285.5 | 278.1 | 278.6 |
Bonds raised during the review period: | |||
Floating-rate bonds | |||
1/2012 -2014, Euribor 3 month +1.75% 1) | 49.9 | 49.9 | 50.0 |
Total bonds on September 30, 2012 | 335.4 | 328.0 | 328.6 |
Terms of the bonds raised during the review period in brief:
1) Loan period February 17, 2012 – August 18, 2014, interest payments annually February 17, May 17, August 17 and November 17 in arrears.
The bond is unsecured. ISIN code FI4000037874.
2.18 Change in contingent liabilities and assets and commitments
EUR million | 9/12 | 9/11 | Change | 12/11 |
Collateral given for own commitments | ||||
– Corporate mortgages | 30.1 | 29.3 | 3% | 31.2 |
– Other pledged assets | 0.9 | |||
Other commitments to associated companies | 7.0 | 7.0 | 7.0 | |
Other commitments | ||||
– Repurchase commitments | 334.2 | 232.9 | 43% | 293.1 |
– Operating leases | 315.7 | 314.6 | 0% | 330.7 |
– Rental guarantees for clients | 2.4 | 3.3 | -28% | 4.1 |
– Other contingent liabilities | 1.3 | 3.2 | -58% | 1.5 |
– Guarantees given | 0.0 | |||
Liability under derivative contracts | ||||
– Value of underlying instruments | ||||
– Interest rate derivatives | 467.0 | 332.2 | 41% | 329.4 |
– Foreign exchange derivatives | 190.7 | 205.6 | -7% | 194.1 |
--Commodity derivatives | 2.5 | 0.0 | ||
– Market values | ||||
– Interest rate derivatives | -14.1 | -10.6 | 33% | -11.9 |
– Foreign exchange derivatives | -0.8 | 6.8 | 1.1 | |
--Commodity derivatives | -1.1 | 0.0 | ||
Parent company’s guarantees on behalf of subsidiaries | 1,518.6 | 1,270.4 | 20% | 1,515.4 |
2.19 Transactions with associated companies
EUR million | 1-9/12 | 1-9/11 | Change | 1-12/11 |
Sales to associated companies | 1.2 | 1.1 | 7% | 1.5 |
Purchases from associated companies | 0.1 | 0.1 | -6% | 0.1 |
Trade and other receivables | 0.1 | 0.0 | 0.0 | |
Trade and other payables | 0.0 | 0.0 | 0.0 |