2014-10-30 07:00:00 CET

2014-10-30 07:00:06 CET


REGULATED INFORMATION

Finnish English
YIT - Interim report (Q1 and Q3)

Interim Report January 1 – September 30, 2014: Active investor sales boosted cash flow and revenue


Helsinki, Finland, 2014-10-30 07:00 CET (GLOBE NEWSWIRE) -- YIT CORPORATION    
              INTERIM REPORT                     OCTOBER 30, 2014 AT 8:00 A.M. 

Interim Report January 1 - September 30, 2014: Active investor sales boosted
cash flow and revenue 

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

July-September 2014 (Segment reporting, POC)

  -- Revenue increased by 7% to EUR 485.7 (454.7) million. At comparable
     exchange rates, revenue increased by 10%.
  -- Operating profit amounted to EUR 33.5 (37.4) million and operating profit
     margin was 6.9% (8.2).
  -- The order backlog decreased by 6% from the end of June, amounting to EUR
     2,736.0 million.
  -- Operating cash flow after investments amounted to EUR 40.7 (-82.0) million.

 January-September 2014 (Segment reporting, POC)

  -- Revenue remained at previous year's level and was EUR 1,340.2 (1,337.6)
     million. At comparable exchange rates, revenue increased by 4%.
  -- Operating profit amounted to EUR 95.1 (111.6) million and operating profit
     margin was 7.1% (8.3).
  -- Operating cash flow after investments amounted to EUR 12.0 (-164.2)
     million.

Guidance for 2014 lowered in October

The Group revenue based on segment reporting is estimated to grow by 0-5% at
comparable exchange rates. The operating profit margin based on segment
reporting is estimated to be in the range of 6.5-7.3% excluding non-recurring
items. 

Increased uncertainty over the general macroeconomic development impacts YIT's
business operations and customers. 

Kari Kauniskangas, President and CEO:

Active investor sales and efforts to strengthen cash flow started to bear fruit
in the third quarter. This was reflected in increased revenue, strong operating
cash flow and net debt beginning to decrease. 

The result of the Business Premises and Infrastructure segment improved in the
third quarter, supported by the sales of self-developed business premises
projects. Our strategy of increasing the number of cooperation projects also
progressed successfully, as we signed agreements on new alliance contracts. In
the Housing segment, revenue grew but profitability declined. 

We lowered our guidance for 2014 regarding the operating profit margin in
October. Sales in Russia are estimated to fall below the previously projected
level, and the operating profit margin is also weighed down by actions
implemented throughout the Group to ensure strong cash flow for the remainder
of the year. We will continue our efforts to improve project profitability and
cash flow within the framework of a new Group-wide competitiveness programme,
and our goal is to increase return on investment to 15 per cent and reduce net
debt to under EUR 600 million by the end of 2016 in accordance with our new
short-term targets. 

Our strategic focus areas were kept unchanged as a result of our annual
strategy work. However, the significance of financial operating space is
emphasised in a changing operating environment, and in order to even out
cyclicality, the weighting of Central Eastern Europe will be increased as the
third geographic pillar in parallel with Finland and Russia. 

Our success depends on continuously improving the customer experience and
producing a high added value for the customer. One example of success was YIT
project finishing second in the public vote at the Jyväskylä Housing Fair in
Finland, which was the highest ranking ever achieved by an apartment building
project in voting at the fair. 

Key figures

Segment reporting, POC

EUR million           7-9/14   7-9/13  Change   1-9/14   1-9/13  Change  1-12/13
--------------------------------------------------------------------------------
Revenue                485.7    454.7      7%  1,340.2  1,337.6      0%  1,858.8
--------------------------------------------------------------------------------
Housing                296.4    270.4     10%    881.4    804.5     10%  1,152.2
--------------------------------------------------------------------------------
Finland, the Baltic    177.4    140.0     27%    537.2    460.2     17%    656.2
 countries and                                                                  
 Central Eastern                                                                
 Europe                                                                         
--------------------------------------------------------------------------------
Russia                 119.0    130.4     -9%    344.4    344.3      0%    496.0
--------------------------------------------------------------------------------
Business Premises      188.8    181.4      4%    456.9    517.2    -12%    688.9
 and Infrastructure                                                             
--------------------------------------------------------------------------------
Other items              0.5      2.8              1.9     15.9             17.8
--------------------------------------------------------------------------------
Operating profit        33.5     37.4    -10%     95.1    111.6    -15%    152.8
--------------------------------------------------------------------------------
Operating profit        6.9%     8.2%             7.1%     8.3%             8.2%
 margin, %                                                                      
--------------------------------------------------------------------------------
Operating profit        33.5     37.4    -10%     95.1    111.6    -15%    154.0
 excluding                                                                      
non-recurring items                                                             
--------------------------------------------------------------------------------
Housing                 25.1     34.8    -28%     84.0    100.4    -16%    136.3
--------------------------------------------------------------------------------
Finland, the Baltic     13.3     14.7     -9%     46.3     50.8     -9%     66.2
 countries and                                                                  
 Central Eastern                                                                
 Europe                                                                         
--------------------------------------------------------------------------------
Russia                  11.7     20.1    -42%     37.7     49.6    -24%     70.2
--------------------------------------------------------------------------------
Business Premises       10.3      8.0     29%     17.3     21.0    -17%     31.0
 and Infrastructure                                                             
--------------------------------------------------------------------------------
Other items             -1.8     -5.4             -6.3     -9.8            -13.4
--------------------------------------------------------------------------------
Operating profit        6.9%     8.2%             7.1%     8.3%             8.3%
 margin, %                                                                      
 excluding                                                                      
 non-recurring                                                                  
 items                                                                          
--------------------------------------------------------------------------------
Housing                 8.5%    12.9%             9.5%    12.5%            11.8%
--------------------------------------------------------------------------------
Finland, the Baltic     7.5%    10.5%             8.6%    11.0%            10.1%
 countries and                                                                  
 Central Eastern                                                                
 Europe                                                                         
--------------------------------------------------------------------------------
Russia                  9.9%    15.4%            10.9%    14.4%            14.1%
--------------------------------------------------------------------------------
Business Premises       5.4%     4.4%             3.8%     4.1%             4.5%
 and Infrastructure                                                             
--------------------------------------------------------------------------------
Profit before taxes     22.6     29.9    -24%     66.5     90.3    -26%    122.8
--------------------------------------------------------------------------------
Profit for the          16.8     23.1    -27%     51.0     69.6    -27%     93.9
 review period1                                                                 
--------------------------------------------------------------------------------
Earnings per share,     0.13     0.18    -28%     0.41     0.55    -25%     0.75
 EUR                                                                            
--------------------------------------------------------------------------------
Operating cash flow     40.7    -82.0             12.0   -164.2            -87.9
 after investments                                                              
--------------------------------------------------------------------------------
Return on               9.1%    12.3%             9.1%    12.3%            10.3%
 investment                                                                     
(last 12 months), %                                                             
--------------------------------------------------------------------------------
Equity ratio at end    35.8%    37.0%            35.8%    37.0%            37.8%
 of period, %                                                                   
--------------------------------------------------------------------------------
Net                    741.6    774.4     -4%    741.6    774.4     -4%    707.6
 interest-bearing                                                               
 debt                                                                           
at end of period                                                                
--------------------------------------------------------------------------------
Order backlog at     2,736.0  2,813.4     -3%  2,736.0  2,813.4     -3%  2,713.7
 end of period                                                                  
--------------------------------------------------------------------------------



Group reporting, IFRS

EUR million           7-9/14   7-9/13  Change   1-9/14   1-9/13  Change  1-12/13
--------------------------------------------------------------------------------
Revenue                492.4    363.0     36%  1,249.3  1,245.7      0%  1,743.0
--------------------------------------------------------------------------------
Operating profit        28.1     11.7    140%     59.6     75.0    -20%    104.0
--------------------------------------------------------------------------------
Operating profit        5.7%     3.2%             4.8%     6.0%             6.0%
 margin, %                                                                      
--------------------------------------------------------------------------------
Profit before taxes     21.3      8.8    143%     43.6     67.2    -35%     95.0
--------------------------------------------------------------------------------
Profit for the          16.3      7.6    114%     33.5     52.5    -36%     70.3
 review period1                                                                 
--------------------------------------------------------------------------------
Earnings per share,     0.13     0.06    117%     0.27     0.42    -36%     0.56
 EUR                                                                            
--------------------------------------------------------------------------------
Operating cash flow     40.7    -82.0             12.0   -164.2            -87.9
 after investments                                                              
--------------------------------------------------------------------------------
Order backlog        3,278.5  3,259.5      1%  3,278.5  3,259.5      1%  3,184.6
at end of period                                                                
--------------------------------------------------------------------------------
Invested capital     1,551.6  1,602.9     -3%  1,551.6  1,602.9     -3%  1,556.2
at end of period                                                                
--------------------------------------------------------------------------------
Return on               6.1%     9.8%             6.1%     9.8%             7.0%
 investment                                                                     
(last 12 months), %                                                             
--------------------------------------------------------------------------------
Effective tax rate,    23.9%    13.5%            23.3%    22.0%            26.1%
 %                                                                              
--------------------------------------------------------------------------------

1 Attributable to equity holders of the parent company

                            9/14    9/13  Change    9/14    6/14  Change   12/13
--------------------------------------------------------------------------------
Net interest-bearing       817.9   857.3     -5%   817.9   860.2     -5%   781.7
 debt,                                                                          
EUR million                                                                     
--------------------------------------------------------------------------------
Gearing ratio, %          127.2%  123.7%          127.2%  130.4%          112.0%
--------------------------------------------------------------------------------



Events after the review period

In October, residential sales to consumers are estimated to be around 150 units
in Finland, around 70 units in the Baltic countries and Central Eastern Europe
and around 400 units in Russia. 

Outlook for 2014

Housing

In the long term, residential demand in Finland will be supported by migration
to growth centres. Furthermore, the population and the number of households
will increase with continued migration and the increasing number of one-person
households. YIT estimates that the demand for small apartments, in particular,
will remain good. 

Apartment start-ups are expected to decrease in Finland. According to RT's
(Confederation of Finnish Construction Industries) October 2014 estimate, the
construction of 25,000 apartments will start in Finland during 2014. According
to a report published by VTT Technical Research Centre of Finland in January
2012, the annual need for the production of new apartments amounts to
24,000-29,000 apartments. 

YIT estimates that residential prices in Finland will remain stable on average
in 2014, but the polarisation of prices will continue. The increase in
construction costs is expected to be moderate. The interest rates of mortgages
are forecasted to remain low. However, the macroeconomic uncertainty and
consumer confidence being below the long-term average are expected to continue
to affect the Finnish housing market. 

Residential demand in the Baltic countries is expected to be supported by
economic growth. Furthermore, the poor condition of residential buildings
creates a need for new, high-quality apartments. The volume of residential
construction is estimated to grow in the Baltic countries and Slovakia (Forecon
and Euroconstruct, June 2014). Euroconstruct (June, 2014) estimated that
residential start-ups will decline slightly in the Czech Republic. YIT
estimates that housing prices will increase slightly in the Baltic countries
and Central Eastern Europe. The weakened macroeconomic outlook in Russia is
expected to have an effect also on the Baltic economies. 

In Russia, the volume of residential construction is estimated to remain
unchanged from the previous year (Forecon, June 2014). YIT estimates that
housing prices in Russia will remain stable on average and that interest rates
on mortgages will increase towards the end of the year. The weakened
macroeconomic outlook in Russia may have a negative effect on the housing
market. 

The long-term 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 middle class is expected to grow in proportion to the
population and the number of households is expected to increase. The
development of the mortgage market in Russia has also contributed to the
expansion of the potential buyer base. YIT has promoted the availability of
mortgages to consumers through extensive cooperation with partner banks. 

Business Premises and Infrastructure

The demand for business premises is expected to remain weak in Finland.
Commercial construction is expected to remain unchanged year-on-year, while
office construction is slowed down by high vacancy rates (RT, October 2014).
Real estate investors' interest in good projects in prime locations is expected
to be good, and long-term tenants are appreciated. 

In the Baltic countries, business premises construction is estimated to
increase by 9% in 2014 (Forecon, June 2014). In Slovakia, business premises
construction is expected to decrease by 8% in 2014 (Euroconstruct, June 2014). 

Infrastructure construction in Finland is estimated to decrease slightly
year-on-year (RT, October 2014). Competition is expected to remain tight,
especially for smaller contracts. The government is expected to initiate
further investment into the rail network in the capital region (west metro
extension). 

News conference for investors and media

YIT will arrange a news conference on October 30, 2014 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 p.m. (EET) at
the same address. 

Conference call

The news conference can be participated also through a conference call.
Conference call participants are requested to dial in at least five minutes
prior to the start of the conference, at 9:55 a.m. (EET), to number +44 20 3194
0550. 

During the webcast and conference call, all questions should be presented in
English. At the end of the event the media has the possibility to ask questions
also in Finnish. 

Schedule in different time zones:

                    Interim Report  The investor and analyst event,     Recorded
                         published                  conference call      webcast
                                                   and live webcast    available
--------------------------------------------------------------------------------
EET (Helsinki)               08:00                            10:00        12:00
--------------------------------------------------------------------------------
CET (Paris,                  07:00                            09:00        11:00
 Stockholm)                                                                     
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GMT (London)                 06:00                            08:00        10:00
--------------------------------------------------------------------------------
US EDT (New                  02:00                            04:00        06:00
 York)                                                                          
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For additional information, please contact:

Timo Lehtinen, Chief Financial Officer, YIT Corporation, tel. +358 45 670 0626,
timo.lehtinen@yit.fi 
Sanna Kaje, Vice President, Investor Relations, YIT Corporation, tel. +358 50
390 6750, sanna.kaje@yit.fi 



YIT CORPORATION

Kari Kauniskangas
President and CEO



Distribution: NASDAQ OMX, principal media, www.yitgroup.com

YIT is a construction industry leader. We create better living environments in
Finland, Russia, the Baltic countries, the Czech Republic and Slovakia. Over
100 years of experience have secured for 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
caring for our customers, partners and personnel. We have more than 6,000
employees in seven countries. In 2013, our revenue amounted to nearly EUR 1.9
billion. Our share is listed on Nasdaq OMX Helsinki. www.yitgroup.com