YIT announces new strategy and financial targets for 2025-2029, introduces a new segment structure
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- Stock Exchange Release
- 05.02.2015 07:00 CET
Financial Statements Bulletin 2014: Strong cash flow led to a decrease in net debt
STOCK EXCHANGE RELEASE FEBRUARY 5, 2015 AT 8:00 A.M.
Financial Statements Bulletin 2014: Strong cash flow led to a decrease in net debt
Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year.
October-December 2014 (Segment reporting, POC)
· Revenue decreased by 12% to EUR 461.0 (521.3) million. At comparable exchange rates, revenue decreased by 3%.
· Operating profit excluding non-recurring items amounted to EUR 31.4 (42.4) million and operating profit margin excluding non-recurring items was 6.8% (8.1%).
· Non-recurring items amounted to EUR -12.4 million.
· Operating cash flow after investments amounted to EUR 139.9 (76.3) million.
· Order backlog decreased by 22% from the end of September, amounting to EUR 2,125.9 million.
January-December 2014 (Segment reporting, POC)
· Revenue decreased by 3% to EUR 1,801.2 (1,858.8) million. At comparable exchange rates, revenue increased by 2%.
· Operating profit excluding non-recurring items amounted to EUR 126.4 (154.0) million and operating profit margin excluding non-recurring items was 7.0% (8.3%).
· Non-recurring items amounted to EUR -12.4 million.
· Operating cash flow after investments amounted to EUR 151.9 (-87.9) million.
· Board of Directors proposes a dividend of EUR 0.18 (0.38) per share, 40.0% (50.7%) of earnings per share.
Guidance for 2015 (segment reporting, POC)
The Group revenue growth is estimated to be in the range of -5 – 5% at comparable exchange rates.
The operating profit margin excluding non-recurring items is estimated to be below the level of 2014.
Kari Kauniskangas, President and CEO:
In spite of the turbulence in the markets, there were numerous successes in 2014. In Housing, we achieved record-high residential sales in Russia as well as in the Baltic countries and Central Eastern Europe. In Finland, active investor sales compensated for weak consumer demand. In Business Premises and Infrastructure, our order backlog grew and our competitiveness improved due to reorganization among other things. We also completed significant road projects ahead of schedule.
Improving capital efficiency and achieving positive cash flow were our key objectives heading into 2014. Our capital release program bore fruit, and by reacting to the changed operating environment we managed to improve cash flow by EUR 240 million year-on-year.
Feedback from our customers indicates that also our quality and service have improved. We focused on the development of personnel, which supported the implementation of the company’s values and management principles. We also placed particular focus on occupational safety, although we cannot be fully satisfied with the results.
Our operating environment will continue to pose challenges for us in 2015. We have reduced our risk level in Russia, and we are adapting to the changed operating environment while ensuring that we maintain critical operating volume. At the same time, we will ensure our readiness to increase production when the market situation allows it.
We will continue our active efforts to improve capital efficiency and maintain strong cash flow. In business development, our focus in 2015 will be on the implementation of the competitiveness program, improving the customer experience, and personnel development.
I would like to extend my warmest thanks to all YIT employees for their uncompromising commitment to the development of our business. I also wish to thank our customers, partners and shareholders for their trust in the work that we do. We want to continue to be deserving of your trust.
Key figures
Segment reporting, POC
| EUR million | 10–12/14 | 10–12/13 | Change | 1–12/14 | 1–12/13 | Change |
| Revenue | 461.0 | 521.3 | -12% | 1,801.2 | 1,858.8 | -3% |
| Housing | 318.9 | 347.7 | -8% | 1,200.3 | 1,152.2 | 4% |
| Finland, the Baltic countries and Central Eastern Europe | 189.2 | 196.0 | -3% | 726.5 | 656.2 | 11% |
| Russia | 129.7 | 151.7 | -14% | 474.1 | 496.0 | -4% |
| Business Premises and Infrastructure | 142.4 | 171.7 | -17% | 599.3 | 688.9 | -13% |
| Other items | -0.3 | 1.9 | 1.6 | 17.8 | ||
| Operating profit | 19.0 | 41.2 | -54% | 114.0 | 152.8 | -25% |
| Operating profit margin, % | 4.1% | 7.9% | 6.3% | 8.2% | ||
| Operating profit excluding non-recurring items |
31.4 | 42.4 | -26% | 126.4 | 154.0 | -18% |
| Housing | 35.6 | 36.0 | -1% | 119.5 | 136.3 | -12% |
| Finland, the Baltic countries and Central Eastern Europe | 17.5 | 15.4 | 13% | 63.7 | 66.2 | -4% |
| Russia | 18.1 | 20.5 | -12% | 55.8 | 70.2 | -20% |
| Business Premises and Infrastructure | 3.0 | 10.0 | -70% | 20.4 | 31.0 | -34% |
| Other items | -7.2 | -3.5 | -13.5 | -13.4 | ||
| Operating profit margin, % excluding non-recurring items | 6.8% | 8.1% | 7.0% | 8.3% | ||
| Housing | 11.2% | 10.3% | 10.0% | 11.8% | ||
| Finland, the Baltic countries and Central Eastern Europe | 9.2% | 7.9% | 8.8% | 10.1% | ||
| Russia | 14.0% | 13.5% | 11.8% | 14.1% | ||
| Business Premises and Infrastructure | 2.1% | 5.8% | 3.4% | 4.5% | ||
| Profit before taxes | 8.5 | 32.5 | -74% | 75.0 | 122.8 | -39% |
| Profit for the review period1 | 5.5 | 24.3 | -77% | 56.6 | 93.9 | -40% |
| Earnings per share, EUR | 0.04 | 0.19 | -79% | 0.45 | 0.75 | -40% |
| Operating cash flow after investments | 139.9 | 76.3 | 151.9 | -87.9 | ||
| Return on investment (last 12 months), % |
7.7% | 10.3% | 7.7% | 10.3% | ||
| Equity ratio at end of period, % | 32.4% | 37.8% | 32.4% | 37.8% | ||
| Net interest-bearing debt at end of period |
616.6 | 707.6 | -13% | 616.6 | 707.6 | -13% |
| Order backlog at end of period | 2,125.9 | 2,713.7 | -22% | 2,125.9 | 2,713.7 | -22% |
1 Attributable to equity holders of the parent company
Group reporting, IFRS
| EUR million | 10–12/14 | 10–12/13 | Change | 1–12/14 | 1–12/13 | Change |
| Revenue | 529.3 | 497.3 | 6% | 1,778.6 | 1,743.0 | 2% |
| Operating profit | 35.2 | 29.0 | 21% | 94.8 | 104.0 | -9% |
| Operating profit margin, % | 6.7% | 5.8% | 5.3% | 6.0% | ||
| Operating profit excluding non-recurring items |
47.6 | 30.2 | 58% | 107.3 | 105.2 | 2% |
| Operating profit margin, % excluding non-recurring items |
9.0% | 6.1% | 6.0% | 6.0% | ||
| Profit before taxes | 30.7 | 27.8 | 10% | 74.3 | 95.0 | -22% |
| Profit for the review period1 | 22.4 | 17.8 | 26% | 55.9 | 70.3 | -20% |
| Earnings per share, EUR | 0.18 | 0.14 | 29% | 0.44 | 0.56 | -21% |
| Operating cash flow after investments | 139.9 | 76.3 | 151.9 | -87.9 | ||
| Order backlog at end of period |
2,507.1 | 3,184.6 | -21% | 2,507.1 | 3,184.6 | -21% |
| Invested capital at end of period |
1,431.0 | 1,556.2 | -8% | 1,431.0 | 1,556.2 | -8% |
| Return on investment (last 12 months), % |
6.4% | 7.0% | 6.4% | 7.0% | ||
| Effective tax rate, % | 27.1% | 36.2% | 24.9% | 26.1% |
1 Attributable to equity holders of the parent company
| 12/14 | 12/13 | Change | 12/14 | 9/14 | Change | |
| Net interest-bearing debt, EUR million |
696.0 | 781.7 | -11% | 696.0 | 817.9 | -15% |
Gearing ratio, % |
129.9% | 112.0% | 129.9% | 127.2% | ||
| Equity ratio, % | 29.2% | 34.3% | 29.2% | 31.9% | ||
| Dividend per share, EUR | 0.182 | 0.38 | -53% |
2 Board of Directors’ proposal to the Annual General Meeting
Events after the review period
YIT changed its segment structure as of the beginning of 2015. The former Housing segment was split into Housing Finland and CEE and Housing Russia segments. The Housing Finland and CEE segment is equivalent to the former Housing Finland, the Baltic countries and Central Eastern Europe business area. The Business Premises and Infrastructure segment remained as before.
Reporting under the new segment structure will begin from the January–March 2015 interim report. The 2014 comparison figures for the new segment structure will be published in March 2015.
In January, YIT sold to consumers around 80 apartments in Finland, around 40 apartments in CEE and around 370 apartments in Russia. The strong sales in January in Russia is a result of consumers’ transferring assets to fixed property due to increased uncertainty.
Outlook for 2015
Guidance (segment reporting, POC)
The Group revenue growth is estimated to be in the range of -5 – 5% at comparable exchange rates.
The operating profit margin excluding non-recurring items is estimated to be below the level of 2014.
In addition to the market outlook, the guidance is based on the following factors: At the end of 2014, 40% of YIT’s order backlog was sold, in addition to which the company has signed a significant number of pre-agreements. Projects already sold and signed pre-agreements are estimated to contribute over one third of the total revenue in 2015. The rest of the revenue estimate is based on the 2015 sales volume estimate and capital release actions.
Operating profit margin excluding non-recurring items will be burdened by the following factors, in addition to the demanding market situation: The share of Housing Russia segment of the Group revenue is estimated to decrease due to the weakening of the ruble and the decline in the production volume, which will impact the operating profit margin negatively. In addition, investor sales which has lower margin than consumer sales and contracting are estimated to increase their share of revenue in Finland. Approximately half of the over EUR 380 million capital release program, started in autumn 2013, was carried out by the end of 2014. The execution of the program will be continued actively in 2015, and the capital release actions are estimated to have a negative effect on the operating profit margin.
Market outlook
Finland
In Finland, the macroeconomic uncertainty is estimated to affect the residential and business premises markets also in 2015.
Consumers are cautious, and the demand is expected to focus on small apartments in growth centres, whereas the investor demand is expected to remain good. Residential price development is estimated to be polarized especially between small and large apartments. Access to mortgage financing is estimated to remain good.
In Finland, the demand for business premises is estimated to remain modest and the real estate investors’ interest to focus on prime locations in the capital region. Tendering process is ongoing in several major route projects, and opportunities are also seen in business premises contracting.
Russia
The visibility is exceptionally weak in Russia. Economic uncertainty is estimated to have a negative impact also on the residential market. Consumers’ purchasing power is estimated to weaken, and the increasing inflation to increase the construction costs. At the same time, residential prices are expected to increase along with inflation. The demand is estimated to focus especially on small, either close to completion or completed apartments.
Access to mortgage financing is estimated to weaken, but the mortgage rates are expected to remain stable.
CEE-countries
In CEE-countries the residential and business premises markets are expected to be supported by the improved economic situation. However, the geopolitical tensions may have a negative impact especially in Latvia and Lithuania.
Access to mortgage financing is estimated to remain good and residential prices to increase moderately.
Board of Directors’ proposal for the distribution of distributable equity
The parent company’s distributable equity on December 31, 2014 is EUR 321,945,443.39, of which the net loss for the financial year is EUR 467,226.57.
The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 0.18 per share be paid, resulting in a total amount of proposed dividends of EUR 22,605,118.56.
After the distribution of dividends, the remaining profits will be left in the company's distributable assets.
No significant changes have taken place in the company’s financial position after the end of the financial year. The company’s liquidity is good and, in the view of the Board of Directors, the proposed dividend payout does not jeopardise the company’s solvency.
News conference for investors and media
YIT will arrange a news conference on February 5, 2015 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 noon (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 opportunity to ask questions also in Finnish.
Schedule in different time zones:
| Financial Statements Bulletin published | The investor and analyst event, conference call and live webcast | Recorded webcast available | |
| EET (Helsinki) | 8:00 | 10:00 | 12:00 |
| CET(Paris, Stockholm) | 7:00 | 9:00 | 11:00 |
| GMT (London) | 6:00 | 8:00 | 10:00 |
| EST (New York) | 1:00 | 3:00 | 5:00 |
Annual Report and Financial Statements
YIT Corporation's Annual Report and Financial Statements for 2014 will be published on the company's website on week 9.
Annual General Meeting 2015
YIT Corporation’s Annual General Meeting will be held on Wednesday, March 18, 2015 starting at 10 a.m. in the congress wing of Finlandia Hall, Helsinki.
The notice of the General Meeting, which contains the Board of Directors’ proposals to the Annual General Meeting, will be published in its entirety as a separate stock exchange release on February 5, 2015.
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