IR Newsletter - Result info Q2/2022

Key discussion points of the result 

What were the highlights of Q2 for YIT?
The main highlight of the quarter was the closure of the sale of YIT´s Russian businesses. YIT was able to negotiate a strong deal, close it according to the agreed terms, and withdraw from all operations in Russia. The quarter was also highlighted by YIT´s improved profitability despite the prevailing market instability.

In Q2, YIT´s adjusted operating profit for Q2 was EUR 25 million (24) and adjusted operating profit margin improved to 4.5% (3.4). What were the main drivers behind the result?
While revenue decreased year-on-year, the relative profitability improved. Housing achieved a good result in market instability despite the lower number of apartment completions, but the improved profitability was driven by the successful continued transformation in Business Premises and Infrastructure. The result in Business Premises was supported by sales of two self-developed projects during the quarter, but the underlying operational performance also continued on a solid level.

What was the operating environment like in Q2?
Market turbulence was noticeable: while supply chains were finding new balances, consumer confidence was deteriorating due to rising interest rates and inflation. Demand has come down from last year’s exceptionally strong levels and there are uncertainties in the near term. However, some markets are affected less than others; while demand for housing was also impacted in Central Eastern Europe, the demand outlook remains cautiously positive in that market.

Regarding construction materials, the uptick in material inflation continued during the quarter, but there are signs of stabilising prices. Material availability has remained at a good level as a result of hard work of procurement and project organizations, as well as YIT´s strong relationships with suppliers.

How did the strategy execution progress during the quarter?
YIT´s strategy execution continued successfully and is on the right track. For example, the new agile operating model and focus on project management already brought substantial productivity gains. Renewed focus on core businesses is developing well, while the diversified business model provides protection against market turbulence.

Guidance 2022

In Housing, completions of consumer apartments are expected to decrease compared to 2021. In Business Premises, operational performance will continue to improve. Infrastructure will gradually improve, while still impacted by certain legacy low-margin projects. In Property Development, there are several promising projects in the pipeline.

YIT expects its Group adjusted operating profit for continuing operations to be higher than in 2021 (2021: EUR 85 million).

Temporary shutdowns or slower progress on construction sites and delayed completions due to the COVID-19 pandemic or challenges in construction material and labour availability could lead to the postponement of revenue and profit from one quarter or year to another. YIT aims to mitigate the impact of increased construction material costs by actively managing its customer
relations, contracts, and procurement. Rising interest rates and overall inflation could have an impact on consumer demand and result in lower-than-expected apartment sales. Due to an increased number of apartments under construction, YIT expects to tie up more capital as the year progresses.

Materials

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