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Kurs & Likviditet
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| Land | Finland |
|---|---|
| Lista | Mid Cap Helsinki |
| Sektor | Industri |
| Industri | Anläggning & bygg |
YIT Corporation Stock exchange release November 1, 2019 at 08:00 a.m.
YIT's Interim report January 1-September 30, 2019
July-September
- Revenue grew 10% from the comparison period and was EUR 807.5 million (734.4).
- Adjusted operating profit(1) amounted to EUR 25.7 million (31.4) and adjusted operating profit margin was 3.2% (4.3).
Operating profit amounted to EUR 18.4 million (27.3) and operating profit margin was 2.3% (3.7).
Reported operating cash flow after investments amounted to EUR -27.3 million (reported -33.0).
Order backlog was approximately on the same level as in the previous quarter, EUR 4,764.3 million (4,806.4).
Adjusted net debt(2) was EUR 723.4 million.
- Adjusted gearing(2) was 74.4%.
- Adjusted earnings per share for continuing operations were EUR 0.05 (0.10) and earnings per share for the review period were EUR 0.13 (0.17).
- Revenue increased 8% year-on-year and was EUR 2,239.1 million (2,073.2).
- Adjusted operating profit(1) amounted to EUR 44.5 million (32.7) and adjusted operating profit margin was 2.0% (1.6).
- Operating profit amounted to EUR -16.5 million (18.5) and operating profit margin was -0.7% (0.9). The operating profit includes adjusting items of EUR 61 million (14.2). Key adjusting items include write-downs of EUR 35 million and provisions of EUR 9 million related to the closing down or selling of certain businesses in Russia. Other adjusting items are mainly related to merger related fair value cost effects and integration costs.
- Realised cumulative synergies by the end of the third quarter were EUR 36 million.
- Reported operating cash flow after investments amounted to -81.4 EUR million (reported -55.8).
- Adjusted earnings per share for continuing operations were EUR -0.05 (0.00) and earnings per share for the review period were EUR -0.28 (-0.10).
(1) Adjusted operating profit reflects the result of ordinary course of business and does not include material reorganisation costs, impairment charges or other items affecting comparability. Adjusted operating profit is disclosed to improve comparability between reporting periods. Adjusting items are defined more precisely in note 4 in the tables section.
(2) Definitions of financial key performance indicators can be found in table 4.3 in the tables section.
YIT announced on July 4, 2019 the sale of its Nordic paving and mineral aggregate businesses and on June 20, 2019 measures in Russia to reduce capital and enhance profitability.
Continuing and discontinued operations- The text section of this interim report concerns continuing operations, i.e. the five reported segments listed below.
- Nordic paving and mineral aggregates businesses are classified as held-for-sale assets and reported as discontinued operations.
- Reported and pro forma income statements of comparative periods have been retrospectively restated and published on July 22, 2019.
- The result of discontinued operations is presented in the income statement net of tax on the line "Result for the period, discontinued operations".
- Assets and liabilities related to discontinued operations are presented in separate line items in the balance sheet in current assets and current liabilities from June 30, 2019 onwards. Assets are reported as "Assets classified as held-for-sale" and liabilities as "Liabilities directly associated with assets classified as held-for-sale"
- Balance sheet is not restated for comparative periods.
- Cash flow statement is not restated.
- From the second quarter of 2019 on, YIT's continuing operations include five reported segments: Housing Finland and CEE, Housing Russia, Business premises, Infrastructure projects and Partnership properties.
- The former Paving segment is no longer reported.
- Road maintenance in Finland, previously reported in the former Paving segment, is reported as part of Infrastructure projects.
- Paving business in Russia, previously reported in the former Paving segment, is reported under "Other items" in segment reporting.
- Segment figures for comparative periods have been retrospectively restated and published on July 22, 2019.
- YIT and Lemminkäinen merged on February 1, 2018.
- In this interim report, comparison figures are pro forma figures so that the financial statements of merged Lemminkäinen for the financial period January 1-January 31, 2018, excluding above mentioned discontinued operations, are included in the pro forma figures and presented in the tables in the columns "Pro forma, restated 1-9/18" and "Pro forma, restated 1-12/18".
Additional information regarding the presentation of financial information is available at the end of the explanatory statement of the interim report.
Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year, are restated pro forma and of the same unit.
Kari Kauniskangas, President and CEO:
In the third quarter, group revenue increased year-on-year, and adjusted operating profit decreased as anticipated. Mall of Tripla opened as scheduled on October 17, attracting more than a million visitors right after its first opening week.
In the Infrastructure projects segment, revenue and profitability growth continued. The segment's profitability was on a good level at approximately 4.5%. The segment's order backlog has grown over 50% from the beginning of the year. After the reporting period, YIT was selected by the City of Helsinki, Finland, as the main alliance partner for the Crown Bridges tramway project.
Our dedicated work to improve customer experience and the consumers' trust in our brand were visible in the Housing Finland and CEE segment's sales figures. In Finland, sales to consumers grew 46% quarter-on-quarter and 22% year-on-year. The segment's adjusted operating profit decreased year-on-year, in line with our expectations, due to the clearly lower number of completions in Finland. The segment's consumer start-ups have been increased supported by good demand and high pre-booking rates. Sales to institutional investors continued to be good as well. At the end of the period, YIT agreed on the construction of rental housing projects worth approximately EUR 112 million for a company jointly established with Ålandsbanken.
In the Business premises segment, revenue increased year-on-year, but operating profit decreased year-on-year and was negative in the third quarter. The operating profit was impacted by project cost increases in the completion phase of Mall of Tripla and two other large projects. With regard to Mall of Tripla, after four years of construction we are proud to have successfully completed the largest shopping mall in the Nordic countries in time for its planned grand opening on October 17, 2019. The start of the operations has been a success: the one-million-visitor milestone was reached right after the first week of operation. The Tripla project is the biggest project in YIT's history, and as a whole it is uniquely profitable for us. The project will exceed the initial profit target even though costs in the third quarter were higher than anticipated. In the fourth quarter, the Partnership properties segment will recognise a significant positive effect in operating profit of fair valuation of the Mall of Tripla. After the reporting period, the company has won for instance the public private partnership bidding for the City of Espoo, Finland, on three day care centres and five large schools with 20 years maintenance, total contract value of approximately EUR 240 million.
The profitability of the Housing Russia segment improved due to a bigger number of project completions than last year, higher project margins and synergy savings visible in the segment's cost structure. Another factor contributing to the improved profitability of the segment was this summer's decision to focus business operations in profitable units and to discontinue operations in unprofitable or capital-intensive regions.
In September, we published our updated strategy and presented it in closer detail at our Capital Markets Day at the end of the month. We have taken decisive steps in implementing our strategy in the past year and we will achieve our targeted financial stability after the planned sale of the Scandinavian paving and mineral aggregates businesses has been completed in 2020. Now we are concentrating our efforts on improving profitability as well as developing and growing the non-cyclical Partnership properties and services businesses. In Partnership properties, we strive to extend our role in the value chain towards managing real estate assets, property management and life-cycle responsibility. In services, we target to be a holistic service provider, which means that also for instance rental apartments will be a larger part of our offering. Additionally, we will step up sustainability as we aim to considerably reduce our CO2 emissions in the years to come.
Our outlook is positive. YIT's order backlog is strong, and after the completion of Mall of Tripla, fair valuation of the investment will be done during the last quarter. We estimate that the adjusted operating profit of the company's continuing operations will increase from the comparison period also in the last quarter of the year.
Key figures, IFRS
+--------------+------------+-------------+------+------------+------------+------+---------+
|EUR million |Reported7-9/|Pro forma, |Change|Reported1-9/|Pro forma, |Change|Pro |
| | |restated | | |restated | |forma, |
| | |7-9/18 | | |1-9/18* | |restated |
| | | | | | | |1-12/18* |
| |19 | | |19 | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Revenue, |807.5 |734.4 |10% |2,239.1 |2,073.2 |8% |3,201.0 |
|continuing | | | | | | | |
|operations | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Housing |251.8 |244.2 |3% |794.5 |803.9 |-1% |1,157.9 |
|Finland and | | | | | | | |
|CEE | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Housing |52.7 |55.8 |-6% |132.5 |147.4 |-10% |274.1 |
|Russia | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Business |252.2 |211.4 |19% |738.4 |606.5 |22% |1,045.2 |
|premises | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Infrastructure|250.0 |215.2 |16% |584.0 |511.9 |14% |716.8 |
|projects | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Partnership | | | |0.1 | | |0.0 |
|properties | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Other items |0.8 |7.8 | |-10.4 |3.5 | |7.1 |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Operating |18.4 |27.3 |-33% |-16.5 |18.5 | |104.7 |
|profit, | | | | | | | |
|continuing | | | | | | | |
|operations | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Operating |2.3% |3.7% | |-0.7% |0.9% | |3.3% |
|profit | | | | | | | |
|margin, %, | | | | | | | |
|continuing | | | | | | | |
|operations | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Adjusted |25.7 |31.4 |-18% |44.5 |32.7 |36% |132.0 |
|operating | | | | | | | |
|profit, | | | | | | | |
|continuing | | | | | | | |
|operations | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Housing |14.0 |23.9 |-41% |52.4 |74.8 |-30% |103.3 |
|Finland and | | | | | | | |
|CEE | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Housing |0.3 |-7.8 | |-7.3 |-28.9 |75% |-32.8 |
|Russia | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Business |-6.9 |8.7 | |3.3 |11.7 |-72% |67.8 |
|premises | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Infrastructure|11.5 |5.9 |95% |8.6 |-5.8 | |-6.5 |
|projects | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Partnership |3.1 |-0.2 | |1.4 |-1.0 | |26.9 |
|properties | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Other items |3.7 |0.9 | |-14.0 |-18.0 | |-26.7 |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Adjusted |3.2% |4.3% | |2.0% |1.6% | |4.1% |
|operating | | | | | | | |
|profit margin,| | | | | | | |
|% | | | | | | | |
|continuing | | | | | | | |
|operations | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Housing |5.6% |9.8% | |6.6% |9.3% | |8.9% |
|Finland and | | | | | | | |
|CEE | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Housing |0.5% |-14.0% | |-5.5% |-19.6% | |-12.0% |
|Russia | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Business |-2.7% |4.1% | |0.5% |1.9% | |6.5% |
|premises | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Infrastructure|4.6% |2.7% | |1.5% |-1.1% | |-0.9% |
|projects | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Partnership | | | | | | | |
|properties | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Adjusting |7.3 |4.0 |80% |61.0 |14.2 |330% |27.2 |
|items | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Profit before |7.4 |20.7 |-64% |-47.1 |-7.0 | |71.4 |
|taxes | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Profit for the|6.4 |19.5 |-67% |-54.1 |-8.1 | |48.7 |
|review period | | | | | | | |
|, | | | | | | | |
|continuing | | | | | | | |
|operations | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Profit for the|20.1 |16.6 |21% |-4.2 |-12.4 |66% |-15.4 |
|review period | | | | | | | |
|, | | | | | | | |
|discontinued | | | | | | | |
|operations | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Profit for the|26.5 |36.0 |-26% |-58.4 |-20.4 |-186% |33.3 |
|review | | | | | | | |
|period** | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Earnings per |0.13 |0.17 |-24% |-0.28 |-0.10 |-180% |0.16 |
|share | | | | | | | |
|for the review| | | | | | | |
|period, EUR | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Adjusted |0.05 |0.10 |-50% |-0.05 |0.00 | |0.32 |
|earnings | | | | | | | |
|per share for | | | | | | | |
|the | | | | | | | |
|review period,| | | | | | | |
|continuing | | | | | | | |
|operations, | | | | | | | |
|EUR | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Operating cash|-27.3 |-33.0**** |17% |-81.4 |-55.8**** |-46% |148.64 |
|flow | | | | | | | |
|after | | | | | | | |
|investments | | | | | | | |
| | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Net interest |982.7 |767.8**** |28% |982.7 |767.8**** |28% |562.94 |
|-bearing debt | | | | | | | |
|at | | | | | | | |
|the end | | | | | | | |
|of the period | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Adjusted net |723.4 |n/a | |723.4 |n/a | |n/a |
|interest | | | | | | | |
|-bearing | | | | | | | |
|debt | | | | | | | |
|at the end of | | | | | | | |
|the | | | | | | | |
|period*** | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Gearing ratio |101.0 |75.5**** | |101.0 |75.5**** | |53.64 |
|at | | | | | | | |
|the end of the| | | | | | | |
|period, % | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Adjusted |74.4 |n/a | |74.4 |n/a | |n/a |
|gearing | | | | | | | |
|ratio at the | | | | | | | |
|end of | | | | | | | |
|the period***,| | | | | | | |
|% | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Equity ratio |31.0 |34.8**** | |31.0 |34.8**** | |38.14 |
|at the | | | | | | | |
|end of the | | | | | | | |
|period, | | | | | | | |
|% | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Adjusted |34.0 |n/a | |34.0 |n/a | |n/a |
|equity | | | | | | | |
|ratio at the | | | | | | | |
|end of | | | | | | | |
|the period***,| | | | | | | |
|% | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Adjusted |9.0% |n/a | |9.0% |n/a | |n/a |
|return on | | | | | | | |
|capital | | | | | | | |
|employed*** | | | | | | | |
|(ROCE, rolling| | | | | | | |
|12m), % | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
|Order backlog,|4,764.3 |4,806.4***** |-1% |4,764.3 |4,806.4*****|-1% |4 285.6**|
|at | | | | | | | |
|the end of the| | | | | | |* |
|period, | | | | | | |* |
|continuing | | | | | | |* |
|operations | | | | | | | |
+--------------+------------+-------------+------+------------+------------+------+---------+
* Comparisons include pro forma figures with Lemminkäinen's financial statements for the accounting period of January 1-January 31, 2018, excluding discontinued operations.
** Attributable to the equity holders of the parent company.
*** Definitions of financial key performance indicators can be found in table 4.3 in the tables section.
**** Reported.
***** Restated reported.
Guidance for 2019
The Group revenue of continuing operations for 2019 is estimated to be in the range of +6% and +2% compared to the 2018 combined revenue of continuing operations (pro forma, restated 2018: EUR 3,201.0 million). Previously the company estimated the revenue in 2019 to be in the range of +5% and -3% compared to 2018.
In 2019, the adjusted operating profit of continuing operations is estimated to be EUR 160-185 million (pro forma, restated 2018: EUR 132.0 million). Previously the company estimated the adjusted operating profit of continuing operations in 2019 to be EUR 160-200 million.
Guidance rationale
The result guidance for 2019 is based, for instance, on the estimated time of completion of residential projects under construction and the company's solid order backlog. At the end of September, 78% of the order backlog was sold.
Significant fluctuation is expected to take place between the quarters due to normal seasonal variation, closing of sales of business premises projects, the timing of completion of residential projects and the fair valuation of Mall of Tripla. As in 2018, the last quarter of the year is expected to be clearly the strongest. The company estimates that the adjusted operating profit for the fourth quarter of 2019 will increase from the comparison period (pro forma, restated 10-12/2018: EUR 99.3 million).
Factors affecting the guidance
The most significant factors with which YIT can meet the market demand are sales and pricing, project and project risk management, product development and product offering, measures to reduce production costs, cost management and measures affecting capital efficiency.
Factors outside of YIT's sphere of influence are mainly related to global economic development, functionality of financing markets and interest rate, political environment, economic development in areas of operation, changes in demand for apartments and business premises, availability of resources such as key persons, functionality of labour markets, changes in public and private sector investments and changes in legislation, permit and authorisation processes and the duration thereof, as well as development of foreign exchange rates.
Due to the long-term nature of construction and urban development projects, changes in demand may be quicker than the company's ability to adapt its offering.
Events after the review period
Fair valuation of the Mall of Tripla investment
The Mall of Tripla shopping mall was opened in Pasila, Helsinki, Finland, on October 17, 2019. In the last quarter of the year, the Partnership properties segment will recognise a significant positive effect in operating profit of fair valuation of the investment in the company Mall of Tripla Ky. YIT's share of ownership in Mall of Tripla Ky is 38.75%.
The Tripla urban centre includes the Mall of Tripla, the largest shopping mall in the Nordic countries measured by number of shops, one of the largest hotels in Finland, 50,000 square metres of office space, the new Pasila railway station and more than 400 apartments. The project is estimated to be completed during the year 2020.
Large projects added into the order backlog
After the reporting period, a project company formed by YIT Corporation and Meridiam Investments II was selected by the City of Espoo, Finland, for the public private partnership project including financing, design, construction and maintenance for 20 years of three day care centres and five large schools to be built over the next five years. The total worth of the project is approximately EUR 240 million.
Additionally, YIT was selected by the City of Helsinki, Finland, as the main alliance partner for the Crown Bridges tramway project. The Crown Bridges will connect the Laajasalo, Korkeasaari and Kalasatama districts of Helsinki to the city centre with a 10-kilometre tramway.
News conference for investors and media
YIT will arrange a news conference on Friday, November 1, 2019 at 10:00 a.m. Finnish time (EET, at 8:00 a.m. GMT) at YIT's head office, Panuntie 11, 00620 Helsinki, Finland. The event is in English and targeted for analysts, portfolio managers and the media. Welcome!
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 the same address later that day.
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). Conference call numbers are:- Participants from Finland +46 (0)8 5033 6574
- Participants from Sweden +46 (0)8 5033 6574
- Participants from Norway +47 2100 2610
- Participants from UK and outside of Nordic countries +44 (0)330 336 9105
The participants will be asked to provide the following confirmation code: 7487054.
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.
For further information, please contact:
Tiina Kuusisaari, Manager, Investor Relations, YIT Corporation, tel. +358 40 52 88 154, tiina.kuusisaari@yit.fi
YIT CORPORATION
Ilkka Salonen
CFO
Distribution: Nasdaq Helsinki, major media, www.yitgroup.com (https://www.yitgroup.com/en)
YIT is the largest Finnish and significant North European construction company. We develop and build apartments and living services, business premises and entire areas. We are also specialised in demanding infrastructure construction and paving. Together with our customers, our nearly 10,000 professionals are creating more functional, more attractive and more sustainable cities and environments. We work in 11 countries: Finland, Russia, Scandinavia, the Baltic States, the Czech Republic, Slovakia and Poland. The new YIT was born when over 100-year-old YIT Corporation and Lemminkäinen Corporation merged on February 1, 2018. Our pro forma revenue for 2018 was approximately EUR 3.2 billion. YIT Corporation's share is listed on Nasdaq Helsinki Oy. www.yitgroup.com (https://yitgroup.sharepoint.com/teams/investor-relations/External/04.%20Osavuosikatsaukset/2019/Osavuosikatsaus_Q2_2019/www.yitgroup.com)