2015-10-29 07:00:02 CET
2015-10-29 07:00:07 CET
REGULATED INFORMATION
YIT - Interim report (Q1 and Q3)
Interim Report January 1–September 30, 2015: Net debt continued to decrease, focus shifted towards profitability
Helsinki, Finland, 2015-10-29 07:00 CET (GLOBE NEWSWIRE) -- YIT CORPORATION
STOCK EXCHANGE RELEASE OCTOBER 29, 2015 AT 8:00 A.M.
Interim Report January 1-September 30, 2015: Net debt continued to decrease,
focus shifted towards profitability
Unless otherwise noted, the figures in brackets refer to the corresponding
period in the previous year.
July-September 2015 (Segment reporting, POC)
-- Revenue decreased by 19% to EUR 391.7 (485.7) million. At comparable
exchange rates, revenue decreased by 13%.
-- Operating profit excluding non-recurring items amounted to EUR 20.3 (33.5)
million and operating profit margin excluding non-recurring items was 5.2%
(6.9%).
-- Non-recurring items amounted to EUR -10.4 million.
-- Order backlog decreased by 10% from the end of June, amounting to EUR
2,314.6 million.
-- Operating cash flow after investments amounted to EUR 11.9 (40.7) million.
January-September 2015 (Segment reporting, POC)
-- Revenue decreased by 12% to EUR 1,182.7 (1,340.2) million. At comparable
exchange rates, revenue decreased by 6%.
-- Operating profit excluding non-recurring items amounted to EUR 59.4 (95.1)
million and operating profit margin excluding non-recurring items was 5.0%
(7.1%).
-- Non-recurring items amounted to EUR -10.4 million.
-- Operating cash flow after investments amounted to EUR 140.3 (12.0) million.
Guidance for 2015 specified (segment reporting, POC)
The Group revenue growth is estimated to be in the range of -5-0% at comparable
exchange rates.
The operating profit margin excluding non-recurring items is estimated to be in
the range of 4-5%.
Previously, YIT estimated that the Group revenue growth would be in the range
of -5 - 5% at comparable exchange rates, and the operating profit margin
excluding non-recurring items to be below the level of 2014.
Kari Kauniskangas, President and CEO:
In September, we published our updated strategic focus areas: profitability,
growth initiatives and further improving the capital efficiency. Continued
strong cash flow and reaching the targeted net debt level have allowed a
gradual shift of focus to profitability and growth. The third quarter was the
fifth consecutive quarter of positive operating cash flow after investments,
and net debt continued to decrease.
In Housing Finland and CEE, strong growth continued in the CEE countries during
the third quarter. I consider it important for the future that we were able to
start two new significant area development projects in the Czech Republic and
Slovakia. We aim to accelerate growth in the CEE countries further by
establishing a new unit in Poland and by continuing active plot acquisitions in
the area. In Finland, the big picture of the economy is largely unchanged.
Consumers are still cautious, but good activity among investors continues. In
Finland, we will increasingly seek growth in the Helsinki metropolitan area. In
addition, we will focus on the affordability of the apartments in many ways.
The high share of investor deals continues to burden the profitability of the
business segment. However, the number of completed, unsold apartments decreased
notably in Finland.
In Housing Russia, both demand and the development of prices have continued to
bring about challenges. We reorganise and adjust our operations to better match
the current situation, and with the measures announced now and in January, we
are aiming at savings of approximately EUR 10 million in fixed costs.
In Business Premises and Infrastructure, revenue and profits started to grow
again, and the strong order backlog and significant projects not yet included
in it, such as Tripla and the Tampere light rail project, provide a good
foundation for future growth. The E18 Hamina-Vaalimaa motorway project has got
off to a good start, and intensive negotiations on the Tripla project continue.
Key figures
Segment reporting, POC
EUR million 7-9/15 7-9/14 Change 1-9/15 1-9/14 Change 1-12/14
--------------------------------------------------------------------------------
Revenue 391.7 485.7 -19% 1,182.7 1,340.2 -12% 1,801.2
--------------------------------------------------------------------------------
Housing Finland and 165.8 177.4 -7% 557.0 537.2 4% 726.5
CEE
--------------------------------------------------------------------------------
Housing Russia 63.9 119.0 -46% 204.8 344.4 -41% 474.1
--------------------------------------------------------------------------------
Business Premises 161.9 188.8 -14% 421.1 456.9 -8% 599.3
and Infrastructure
--------------------------------------------------------------------------------
Other items 0.1 0.5 -0.1 1.7 1.4
--------------------------------------------------------------------------------
Operating profit 10.0 33.5 -70% 49.0 95.1 -48% 114.0
--------------------------------------------------------------------------------
Operating profit 2.6% 6.9% 4.1% 7.1% 6.3%
margin, %
--------------------------------------------------------------------------------
Operating profit 20.3 33.5 -39% 59.4 95.1 -38% 126.4
excluding
non-recurring items
--------------------------------------------------------------------------------
Housing Finland and 12.3 13.3 -8% 42.6 46.3 -8% 63.7
CEE
--------------------------------------------------------------------------------
Housing Russia 1.7 11.7 -85% 10.2 37.7 -73% 55.8
--------------------------------------------------------------------------------
Business Premises 7.5 10.3 -27% 14.5 17.3 -16% 20.4
and Infrastructure
--------------------------------------------------------------------------------
Other items -1.2 -1.8 -8.0 -6.3 -13.5
--------------------------------------------------------------------------------
Operating profit 5.2% 6.9% 5.0% 7.1% 7.0%
margin, %
excluding
non-recurring
items
--------------------------------------------------------------------------------
Housing Finland and 7.4% 7.5% 7.7% 8.6% 8.8%
CEE
--------------------------------------------------------------------------------
Housing Russia 2.7% 9.9% 5.0% 10.9% 11.8%
--------------------------------------------------------------------------------
Business Premises 4.7% 5.4% 3.5% 3.8% 3.4%
and Infrastructure
--------------------------------------------------------------------------------
Profit before taxes -0.7 22.6 20.9 66.5 -69% 75.0
--------------------------------------------------------------------------------
Profit for the -0.8 16.8 15.5 51.0 -70% 56.6
review period1
--------------------------------------------------------------------------------
Earnings per share, -0.01 0.13 0.12 0.41 -70% 0.45
EUR
--------------------------------------------------------------------------------
Operating cash flow 11.9 40.7 140.3 12.0 151.9
after investments
--------------------------------------------------------------------------------
Return on 5.1% 9.1% 5.1% 9.1% 7.7%
investment
(last 12 months), %
--------------------------------------------------------------------------------
Equity ratio at end 35.5% 35.8% 35.5% 35.8% 32.4%
of period, %
--------------------------------------------------------------------------------
Net 529.2 741.6 -29% 529.2 741.6 -29% 616.6
interest-bearing
debt
at end of period
--------------------------------------------------------------------------------
Order backlog at 2,314.6 2,736.0 -15% 2,314.6 2,736.0 -15% 2,125.9
end of period
--------------------------------------------------------------------------------
1 Attributable to equity holders of the parent company
Group reporting, IFRS
EUR million 7-9/15 7-9/14 Change 1-9/15 1-9/14 Change 1-12/14
--------------------------------------------------------------------------------
Revenue 363.8 492.4 -26% 1,220.6 1,249.3 -2% 1,778.6
--------------------------------------------------------------------------------
Operating profit 1.5 28.1 -95% 53.2 59.6 -11% 94.8
--------------------------------------------------------------------------------
Operating profit 0.4% 5.7% 4.4% 4.8% 5.3%
margin, %
--------------------------------------------------------------------------------
Operating profit 11.8 28.1 -58% 63.5 59.6 7% 107.3
excluding
non-recurring items
--------------------------------------------------------------------------------
Operating profit 3.3% 5.7% 5.2% 4.8% 6.0%
margin, %
excluding
non-recurring
items
--------------------------------------------------------------------------------
Profit before taxes -5.1 21.3 39.8 43.6 -9% 74.3
--------------------------------------------------------------------------------
Profit for the -4.0 16.3 31.2 33.5 -7% 55.9
review period1
--------------------------------------------------------------------------------
Earnings per share, -0.03 0.13 0.25 0.27 -7% 0.44
EUR
--------------------------------------------------------------------------------
Operating cash flow 11.9 40.7 140.3 12.0 151.9
after investments
--------------------------------------------------------------------------------
Order backlog at 2,649.0 3,278.5 -19% 2,649.0 3,278.5 -19% 2,507.1
end of period
--------------------------------------------------------------------------------
Invested capital at 1,204.1 1,551.6 -22% 1,204.1 1,551.6 -22% 1,431.0
end of period
--------------------------------------------------------------------------------
Return on 6.6% 6.1% 6.6% 6.1% 6.4%
investment
(last 12 months), %
--------------------------------------------------------------------------------
Effective tax rate, 20.8% 23.9% 22.1% 23.3% 24.9%
%
--------------------------------------------------------------------------------
1 Attributable to equity holders of the parent company
9/15 9/14 Change 9/15 6/15 Change 12/14
--------------------------------------------------------------------------------
Net interest-bearing 574.6 817.9 -30% 574.6 587.3 -2% 696.0
debt,
EUR million
--------------------------------------------------------------------------------
Gearing ratio, % 106.1% 127.2% 106.1% 98.7% 129.9%
--------------------------------------------------------------------------------
Equity ratio, % 33.1% 31.9% 33.1% 33.8% 29.2%
--------------------------------------------------------------------------------
Events after the review period
In October, residential sales to consumers are estimated to be over 100 units
in Finland (10/14: around 150), around 80 units in the CEE countries (10/14:
around 70) and around 200 units in Russia (10/14: around 400). In Russia, the
number of signed preliminary sales agreements in October exceeds the mentioned
number by around 100 units, but YIT has not been able to register part of the
agreements. The problems in registrations stem from tightened requirements on
insurances protecting consumers in accordance with the law 214.
Outlook for 2015
Guidance specified (segment reporting, POC)
The Group revenue growth is estimated to be in the range of -5-0% at comparable
exchange rates.
The operating profit margin excluding non-recurring items is estimated to in
the range of 4-5%.
In addition to the market outlook, the guidance is based on the following
factors: At the end of September, 48% of YIT's order backlog was sold. Projects
already sold and signed pre-agreements are estimated to contribute close to 60%
of the Q4 revenue. The rest of the revenue estimate is based on estimated new
sales during the last quarter and capital release actions.
In Russia, the tightened requirements on insurances to the law 214 that came
into effect on October 1, 2015 have temporarily stopped registrations on sales
agreements in projects that have received the building permit after January 1,
2014. The issue is expected to be solved during the remainder of the year.
In addition to the demanding market situation especially in Russia, operating
profit margin excluding non-recurring items will be burdened by the following
factors: The share of revenue coming from residential sales to investors, which
has lower margin than consumer sales, and contracting are estimated to increase
in Finland. Around EUR 230 million of the EUR 380 million capital release
program, started in autumn 2013, had been carried out in the end of September.
The execution of the program will continue actively in 2015, and the capital
release actions are estimated to have a negative effect on the operating profit
margin.
Market outlook
Finland
In Finland, the macroeconomic uncertainty is estimated to affect the
residential and business premises markets also in 2015.
Consumers are cautious, and the demand is expected to focus on small apartments
in growth centres, whereas the investor demand is expected to remain good.
Residential price development is estimated to be polarized especially between
small and large apartments. Access to mortgage financing is estimated to remain
good.
In Finland, the demand for business premises is estimated to remain modest. The
real estate investors' interest is estimated to remain on a moderate level with
focus on prime locations in the capital region. Opportunities are seen in
contracting, but there will be fewer large projects in the tendering phase
compared to the beginning of the year.
Russia
The visibility is weak in Russia and economic uncertainty is estimated to
continue to have a negative impact also on the residential market. The
construction costs are estimated to increase, while residential prices are
estimated to remain stable. The demand is estimated to focus especially on
small apartments that are either close to completion or completed.
The mortgage rates for new apartments are expected to remain stable thanks to
the government's mortgage interest rate subsidy program.
The issue related to tightened requirements on insurances that impacts the
registration of sales contracts is expected to be solved during the remainder
of the year.
The CEE countries
In the CEE countries, the residential and business premises markets are
expected to be supported by the improved economic situation. Access to mortgage
financing is estimated to remain good and residential prices to increase
moderately.
News conference for investors and media
YIT will arrange a news conference on October 29, 2015 at 10:00 a.m. Finnish
time (EET) at YIT's head office, Panuntie 11, 00620 Helsinki, Finland. The
event is in English and targeted for analysts, portfolio managers and the
media.
Webcast
The news conference and presentation by the President and CEO of YIT
Corporation Kari Kauniskangas can also be followed through a live webcast at
www.yitgroup.com/webcast. The live webcast starts at 10:00 a.m. (EET) and a
recording of the webcast will be available at approximately 12:00 noon (EET) at
the same address.
Conference call
The news conference can be participated also through a conference call.
Conference call participants arerequested to dial in at least five minutes
prior to the start of the conference, at 9:55 a.m. (EET), to number +44 20 319
405 52.
During the webcast and conference call, all questions should be presented in
English. At the end of the event, the media has the opportunity to ask
questions also in Finnish.
Schedule in different time zones
Interim Report published The investor and analyst Recorded webcast
event, conference call available
and live webcast
--------------------------------------------------------------------------------
EET (Helsinki) 08:00 10:00 12:00
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CET (Paris, 07:00 09:00 11:00
Stockholm)
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GMT (London) 06:00 08:00 10:00
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US EDT (New York) 02:00 04:00 06:00
For additional information, please contact:
Timo Lehtinen, Chief Financial Officer, YIT Corporation, tel. +358 45 670 0626,
timo.lehtinen@yit.fi
Sanna Kaje, Vice President, Investor Relations and M&A, YIT Corporation, tel.
+358 50 390 6750, sanna.kaje@yit.fi
YIT CORPORATION
Kari Kauniskangas
President and CEO
Distribution: NASDAQ OMX, principal media, www.yitgroup.com
YIT is a construction industry leader. We create better living environments in
Finland, Russia, the Baltic countries, the Czech Republic, Slovakia and Poland.
Over 100 years of experience have secured us a strong market position: we are
the largest housing developer and one of the largest business premises and
infrastructure developers in Finland, and the most significant foreign housing
and area developer in Russia. Our vision is to stay one step ahead - while
taking care of our customers, partners and personnel. We have nearly 6,000
employees in eight countries. In 2014, our revenue amounted to around EUR 1.8
billion. Our share is listed on NASDAQ OMX Helsinki. www.yitgroup.com
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