Lemminkäinen and YIT will complete the merger
LEMMINKÄINEN CORPORATION STOCK EXCHANGE BULLETIN 15.2.2006, 09.15 LEMMINKÄINEN REVISES ITS STRATEGY Lemminkäinen Corporations Board of Directors has revised the Groups business strategy. The Groups strategic goals remain profitable growth and the maintenance of good solvency. The target level set for return on investment was raised. Good profitability is now regarded as a long-term average return on investment in excess of 18 %. Good solvency is equated with an equity ratio
LEMMINKÄINEN CORPORATION STOCK EXCHANGE BULLETIN 15.2.2006, 09.15 LEMMINKÄINEN REVISES ITS STRATEGY Lemminkäinen Corporations Board of Directors has revised the Groups business strategy. The Groups strategic goals remain profitable growth and the maintenance of good solvency. The target level set for return on investment was raised. Good profitability is now regarded as a long-term average return on investment in excess of 18 %. Good solvency is equated with an equity ratio in excess of 35 %. The means by which Lemminkäinen will achieve its goals are business diversity, local knowledge, strong market positions, and the ability to foresee demand changes and react quickly to them. Lemminkäinens service offering is the most diverse of all the Finnish construction companies. Activity in all areas of the construction sector, operations abroad, and the significant role that maintenance and refurbishment contracting plays in Lemminkäinens business are the key elements of the Groups steady long-term growth. Steady cash flow has enabled the Company to pursue an owner-friendly dividend policy. Over the next few years the Groups international business is expected to grow faster than its domestic operations. International business already accounts for a third of the Groups net sales. The growth in demand for servicing and maintenance is also expected to continue. LEMMINKÄINEN CORPORATION Juhani Sormaala Distribution: Helsinki Stock Exchange, key media Appendices: Lemminkäinen Group Strategy LEMMINKÄINEN GROUP STRATEGY Lemminkäinens business areas and markets Lemminkäinen operates in all areas of the construction sector. Its main business areas are building contracting, infrastructure construction, the building materials industry and technical building services. Lemminkäinens main markets are in the Baltic Rim region, where the Group has established a presence by setting up local subsidiaries. In specialised areas of construction Lemminkäinen serves its clients all over the world. Diversity and strength in the marketplace The Group offers its clients a diverse range of high-level building expertise in projects of different types and sizes. Lemminkäinen is able to exploit construction chain synergies in its operations. The stability of Lemminkäinens business in both the short and long term is largely attributable to the diversity of the Groups business portfolio. Operating in the fields of infrastructure construction, technical building services and the building materials industry reduces the Groups dependence on domestic demand for new construction and its cyclical fluctuations. Refurbishment contracting and operations abroad also lend support for the same purpose. Lemminkäinen focuses on those markets and selected product or service segments in which the Group commands leading or significant positions. Examples include asphalt paving, in which Lemminkäinen is the second biggest operator in the Nordic countries, and Palmbergs subsidiaries, which enjoy significant positions in their respective geographical areas. Speed of reaction and adaptability Lemminkäinen continuously follows and anticipates social development. Changes in customer needs are taken into account when developing the Groups business and service offering. When necessary, Lemminkäinen is able to respond to the needs of the market in new business areas as well. Examples of this are Lemminkäinens expansion into technical building services, facility servicing and telecommunications network construction. In its business operations Lemminkäinen emphasises the importance of speed of reaction and adaptability. The Group is continuously developing new and comprehensive service concepts. In developing its own products and services, Lemminkäinen makes a significant contribution to the development of the construction sector as a whole. Local knowledge and independence Lemminkäinens operations both in Finland and abroad are based on an understanding of the local conditions and construction environment. Lemminkäinens regional units have sufficient autonomy to ensure operational flexibility and the maintenance of good customer relations. For the companys employees this means added responsibility, but it also promotes motivation and commitment. Efficient management systems ensure that business is conducted appropriately. This local and independent business model combined with close contacts to stakeholder groups promotes the development of products and services and helps to identify new business opportunities. Financial targets The Groups strategic goals are profitable growth and the maintenance of good solvency. Good profitability is regarded as a long-term average return on investment in excess of 18 %. Good solvency is equated with an equity ratio in excess of 35 %. Future growth areas Lemminkäinen Group has grown at an average annual rate of 14 % over the past ten years and yet profitability has remained undiminished. Most of Lemminkäinens growth has been organic, but in the background there have also been acquisitions of companies and businesses both in Finland and abroad. The primary purpose of such acquisitions is to strengthen local market positions. Lemminkäinen Group has the capabilities to increase its housing production, depending on the market situation. Lemminkäinen will respond to the expected increase in demand for refurbishment contracting, servicing and maintenance, which already accounts for about 40 % of its business. The Groups technical building services have been expanded from HVAC contracting to servicing and the modernisation of piped and ducted systems. Over the next few years Lemminkäinens international business is expected to grow faster than its domestic operations. The asphalt paving and road construction markets in the Baltic states are clearly growing. As a consequence of Finnish industrys increased investments, there is demand for Lemminkäinens services in China, India and other countries. The growing markets of Eastern Europe are also future growth areas for Lemminkäinens building services. Continuity is essential Lemminkäinen was founded in 1910 and continuity has always been an essential element of its business strategy. Quality, reliability and the ability to foresee and adapt to change will enable Lemminkäinen to continue its sustained and profitable growth and thus serve as a durable foundation for the continuity of its business.