Lemminkäinen - Company Announcement

Lemminkäinen reviews its strategy for 2014-2016 and changes its reporting structure

LEMMINKÄINEN CORPORATION    STOCK EXCHANGE RELEASE   30 JULY 2014 AT 08:01 A.M

LEMMINKÄINEN REVIEWS ITS STRATEGY FOR 2014-2016 AND CHANGES ITS REPORTING
STRUCTURE 

Lemminkäinen has reviewed its strategy and sharpens its strategic focus after
the divestment of technical building services. To enable future profitable
growth, the company will in the short term concentrate on improving its
competitiveness, profitability and financial strength. 

In the long term, the company seeks profitable growth by leveraging its strong
market position in the infrastructure construction in Northern Europe. The
company estimates that the outlook for infrastructure construction is good
especially in Norway and Sweden. In building construction in Finland and
Russia, where the market outlook continues to be uncertain, Lemminkäinen is
focusing its operations on profitable customer segments and areas. 

Short-term priorities: Strengthen the balance sheet and improve efficiency

Lemminkäinen is committed to strengthen its balance sheet by EUR 100 million.
The company plans to continue divesting some of its operations and assets which
are not directly linked to the above mentioned strategy. In addition, it is
also planning an equity issue in autumn 2014. A project to release working
capital is ongoing. Lemminkäinen will also renew its capital allocation
principles and process and actively seek alternative financing models to
construction projects. 

Following the Deliver 2014 efficiency improvement programme, Lemminkäinen will
start a new business excellence programme focusing initially on improved
tendering process, project management, resource planning as well as rightsizing
its machinery fleet. To enable efficient implementation of the business
excellene initiatives, Lemminkäinen is in the process of reviewing its
management model and streamlining its business segment organisation structures. 

Long-term priorities: Profitable growth in infrastructure construction in
Northern Europe and more focused building construction in Finland and Russia 

Lemminkäinen aims to grow into one of the leading providers of demanding
infrastructure solutions for both the public sector and selected industries in
Northern Europe. In paving, where Lemminkäinen already has a leading position,
the Company will continue measures to improve its competitiveness through
enhanced operational and capital efficiency. The profitable growth in
infrastructure projects will be based on Lemminkäinen's technical know-how and
versatile competences. 

In building construction, Lemminkäinen will focus on the growing metropolitan
areas of Helsinki and St Petersburg, competing with attractive sites and high
technical quality. In both countries, the company continues to decrease the
share of competitive contract-based construction. Due to the economic and
political instability, Lemminkäinen does not expect that its net sales in
Russia increase significantly in the next few years. 

Financial targets

Lemminkäinen's long-term financial targets are:

  -- Return on investment 18% over the cycle
  -- Equity ratio at least 35%

In addition, Lemminkänen has defined a short-term financial target of reaching
return on investment of over 15% by the end of 2016. 

On the long term, Lemminkäinen is aiming for a stable distribution of
dividends, with at least 40 per cent of the profit for the financial year
distributed to shareholders. The company will not pay any dividends for 2014
without the consent of certain lenders. 

President and CEO Casimir Lindholm (as of 1 August 2014) comments:

“Within the past few months we have started Lemminkäinen's turnaround. Thanks
to the measures already taken during Q2/2014, our cost structure is lighter and
our balance sheet is stronger. Our first priority for 2014 is to safeguard that
we implement all the efficiency initiatives deriving from our Deliver 2014
efficiency improvement programme, and secure a firm foothold for Lemminkäinen's
future success.” 

“The next step is to ensure that we can fully leverage our strong market
position in infrastructure construction. This will require continuously more
efficient internal operations, adapting the best practices globally, developing
our know-how and improving customer relations. The same business excellence
targets apply to our building construction business, where we will focus on the
profitable customer segments and areas in Finland and Russia.” 

New reporting structure

Lemminkäinen aligns its reporting structure with its updated strategy as of 1
August 2014. The interim report for January-September 2014 will be based on the
new reporting structure. 

The new reportable business segments will be:

  -- Infrastructure construction
  -- Building construction, Finland
  -- Russian operations 

The previous Scandinavia business segment will be integrated into the
Infrastructure segment. The building construction business in Sweden will be
reported under Infrastructure construction. Russian operations will include
both building construction and infrastructure construction activities. 

LEMMINKÄINEN CORPORATION
Corporate Communications


ADDITIONAL INFORMATION:
Berndt Brunow, Chairman of the Board of Directors and interim President and CEO
Tel. +358 2071 54524
berndt.brunow@lemminkainen.com

Casimir Lindholm, President and CEO (as of 1 August 2014)
Tel. +358 2071 54524
casimir.lindholm@lemminkainen.com

Ilkka Salonen, CFO
Tel. +358 2071 54524
ilkka.salonen@lemminkainen.com

Katri Sundström, Head of Investor Relations
Tel. +358 2071 54813
katri.sundstrom@lemminkainen.com


DISTRIBUTION:
NASDAQ OMX Helsinki
Key media
www.lemminkainen.com

Together with our customers we create conditions that make living, working and
travelling functional, safe and healthy. We operate in northern Europe and
employ about 6,000 experts. In 2013, our net sales were about EUR 2.0 billion.
Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic Exchange
Helsinki. www.lemminkainen.com