YIT’s Financial statements bulletin 2020

YIT’s Financial statements bulletin 2020

Strong full-year results in the housing segments overshadowed by project management issues in certain projects and a negative fair value change

• Group’s adjusted operating profit amounted to EUR 85 million (165).
• Fair value changes amounted to EUR -15 million in 2020, compared to the positive changes of EUR 79 million in 2019.
• Financial settlements in three challenging projects were EUR 50 million in total in 2020.
• Balance sheet was strengthened by a strong operating cash flow after investments of EUR 336 million (51), partly offset by translation differences and weak profitability.
• Dividend proposal EUR 0.14 per share (0.28 + extra dividend of 0.12).
• On 21 December 2020, YIT’s Board of Directors appointed Markku Moilanen as YIT Corporation’s President and CEO. He shall take up his position by 1 July 2021 at the latest.

October-December

• Revenue decreased by 15% to EUR 975 million (1,152).

• Adjusted operating profit was EUR 56 million (121).
• Adjusting items amounted to EUR 1 million (24).
• Operating profit was EUR 55 million (97).
• Earnings per share were EUR 0.19 (0.35).
• Operating cash flow after investments amounted to EUR 146 million (132).
• Investments in plots, including leased plots, were EUR 43 million (106).
• Net interest-bearing debt was EUR 628 million (862).
• Gearing was 68% (81).
• Impact of IFRS 16 lease liabilities to net interest-bearing debt was EUR 235 million (261) and to gearing 26 percentage points (25).
• Order book amounted to EUR 3,528 million (4,131).
• Combined lost time injury frequency was 9.8 (10.7).
• Customer satisfaction rate (NPS) was 51 (50).

January-December

• Revenue decreased by 10% to EUR 3,069 million (3,392).

• Adjusted operating profit decreased to EUR 85 million (165).
• Operating profit decreased to EUR 35 million (80).
• Earnings per share were EUR 0.13 (0.07).
• Operating cash flow after investments increased to EUR 336 million (51).
• Result for the period including discontinued operations amounted to EUR 27 million (15).
• The Board of Directors proposes that a dividend of EUR 0.14 per share (0.28 + extra dividend of 0.12) be paid for the year 2020 and that the dividend shall be paid in two equal instalments.

Key figures

Nordic paving and mineral aggregates businesses sold on 1 April 2020, are reported as discontinued operations. Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year.

Antti Inkilä, Interim President and CEO

“YIT’s year 2020 was mixed. The Group’s adjusted operating profit amounted to EUR 85 million (165). The result includes negative fair value changes of EUR 15 million (positive changes of EUR 79 million) mainly related to the Mall of Tripla investment, which reflects increased market yields caused by the COVID-19 pandemic. Financial settlements in three challenging projects, Myllypuro Campus, Hertsi Mall and the Tripla project, had a negative impact of EUR 50 million in our adjusted operating profit in 2020.

On a positive note, the results in the housing segments were very strong in 2020. Behind this strong performance was not only favourable market situation but also increased market share. We expect this solid development to continue supported by higher apartment start-ups in 2021. Our vigorous work to develop relationships with customers and enhance digital tools has now started to bear fruit. A giant leap in digital sales was achieve in 2020 with a 144% increase in the online reservations compared to the previous year. The customer feedback has been excellent throughout the year and our customer satisfaction rates (Net Promoter Score) increased to 62 (51) in Housing Finland and CEE and to 60 (57) in Housing Russia.

Our measures to minimise the impacts of the COVID-19 pandemic were also successful. We kept our construction sites open with only minor disturbances and we completed projects according to plans.

Our strategy execution remained determined in 2020, and we continued to focus on the core of our strategy, sustainable urban development. We streamlined our business portfolio by completing the sale of the Nordic paving and mineral aggregates businesses and made a decision to close down operations in Norway. Our balance sheet was strengthened, and our full-year operating cash flow after investments was solid at EUR 336 million (51).

Furthermore, the target to halve the CO2 emission of our own operations by 2030 got an excellent start in 2020 with a 21% decrease. We have speeded up work in several sustainability areas, including the prevention of the grey economy and improving occupational safety. Our good development in 2020 gives us confidence that the end-targets are well within our reach.

Overall, we made great progress in several areas in 2020. However, the development of our Business premises business was disappointing, and the Infrastructure segment’s underlying project performance was not satisfactory. It is clear that we need to take a substantial step towards change in project management in both of these segments. This work has already started, and we are expecting tangible results already this year.

The year 2020 was challenging in many ways but we managed to navigate through the challenges. I would like to thank our employees, customers and partners for their excellent work and strong commitment. Looking ahead, we have a solid portfolio of projects we have won but which have not yet been added to the order book. We also have a strong plot reserve and competent personnel, and we will continue to select projects in which we can utilise our capabilities and strengths in the best way.

In light of weak Group result in 2020 with an EPS of EUR 0.13 per share, the Board of Directors has decided to propose to the Annual General Meeting a dividend of EUR 0.14 per share. Despite the strong operating cash flow after investments, supported by the sale of the Nordic paving and mineral aggregates businesses, we have faced significant translation differences mainly from the weakened Russian Rouble that negatively impacted our equity by EUR 87 million. In addition, the actions to streamline our business portfolio led to adjusting items of EUR 50 million during the year. Our key target remains to ensure increased profitability and to execute on our strategy through continued focus on top location plot investments and development. This requires a strong balance sheet as well as increasing number of apartment start-ups in our housing business. Consequently, the Board of Directors felt it to be prudent to propose a lower dividend compared to the previous year.”

Results

October-December

At the end of the fourth quarter 2020, YIT’s order book amounted to EUR 3,528 million (4,131). Order book decreased in housing segments and Infra segment but increased in the Business premises and Partnership properties segments in total. At the end of the quarter, 82% of the order book was sold (69).

The Group’s revenue was EUR 975 million (1,152). Revenue decreased in Business premises, Housing Russia and Infra segments. In Housing Finland and CEE and the Partnership properties segments revenue increased.

The Group’s adjusted operating profit amounted to EUR 56 million (121) and the adjusted operating profit margin to 5.7% (10.5). The profitability was impacted by a EUR -16 million fair value change of the Mall of Tripla investment in Partnership properties, following increased market yields caused by the COVID-19 pandemic. On the contrary, the corresponding period included positive fair value changes of EUR 77 million from the Mall of Tripla investment and other investment properties. Operationally, profitability in the fourth quarter of 2020 was supported by solid results in the housing segments driven by strong housing sales. Furthermore, Business premises’ adjusted operating profit returned positive. In the Infrastructure, profitability weakened slightly.

YIT’s operating profit was EUR 55 million (97). The adjusting items amounted to EUR 1 million (24) including, among others, operating profit from operations to be closed.

January-December

The Group’s revenue amounted to EUR 3,069 million (3,392). Revenue increased in Housing Finland and CEE supported by an increase in consumer apartment completions, and in Housing Russia as a result of strong apartment sales levels, as well as the change in revenue recognition over time. Revenue decreased in the Business premises as the comparison period included a revenue from the Tripla project. Revenue of Infrastructure was relatively flat, and revenue of Partnership properties was higher compared to the previous year.

The Group’s adjusted operating profit was EUR 85 million (165) and the adjusted operating profit margin 2.8% (4.9). The fair value changes amounted EUR -15 million in 2020, compared to EUR 79 million in 2019. Operationally, the year was mixed. The housing segments posted strong results driven by higher sales and improved margin levels. On the other hand, Business premises’ profitability was heavily burdened by financial settlements of EUR 50 million in three challenging projects.

YIT’s operating profit was EUR 35 million (80). The adjusting items amounted to EUR 50 million (85). Key adjusting items include a write-down of EUR 12 million related to the decision to close down Infrastructure operations in Norway and a write-down of EUR 13 million in operations to be closed in Russia. Other adjusting items are mainly related to operating profit from operations to be closed.

Result before taxes was EUR -6 million (40). Result for the period amounted to EUR -8 million (5) and result for the period including discontinued operations amounted to EUR 27 million (15). Gain on sale of Nordic paving and mineral aggregate businesses amounted to EUR 55 million.

Guidance for 2021

In 2021, housing completions are expected to decrease in Housing Finland and CEE compared to 2020. In Housing Russia, solid underlying performance is estimated to continue. In Business premises, performance is expected to stabilise. Project management issues in the Infrastructure segment are burdening earnings but those issues are expected to be resolved as the year progresses. In Partnership properties, portfolio development is expected to continue.

YIT expects its full-year 2021 adjusted operating profit to be higher than in 2020 (EUR 85 million). The fourth quarter is expected to be clearly the strongest.

The result is dependent on certain project completions and contract closings towards the end of the year. Temporary shutdowns or slower progress on construction sites and delayed completions due to the COVID-19 pandemic could lead to the postponement of revenue and profit from one quarter or year to another. The pandemic may also lead to changes in market yields, which may have impacts on the fair value of the investments.

News conference for investors and media

YIT will arrange a news conference on Wednesday, 3 February 2021 at 10.00 a.m. Finnish time (EET, at 8.00 a.m. GMT). The results will be presented by Antti Inkilä, Interim President and CEO of YIT Corporation, and CFO Ilkka Salonen. The news conference will be held as a live webcast that can be followed on the company’s web site at www.yitgroup.com/webcast. A recording of the webcast will be available at the same address later that day.

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 +358 (0)9 8171 0310

• Participants from Sweden +46 (0)8 5664 2651
• Participants from UK and outside of Nordic countries +44 (0)33 3300 0804

The participants will be asked to provide the following confirmation code: 73305090#.

Questions can be asked via conference call and should be asked in English. At the end of the event, the media has the opportunity to ask questions also in Finnish.

The event is targeted for analysts, portfolio managers and the media. Welcome!

For further information, please contact:

Tommi Järvenpää, Vice President, Investor Relations, YIT Corporation, tel. +358 (0)40 576 0288, tommi.jarvenpaa@yit.fi
Ilkka Salonen, CFO, YIT Corporation, tel. +358 (0)45 359 4434, ilkka.salonen@yit.fi

YIT CORPORATION

Tommi Järvenpää
Vice President, Investor Relations

Distribution: NASDAQ Helsinki, major media, www.yitgroup.com

YIT is the largest Finnish and a significant North European urban developer and construction company. Our goal is to create more sustainable, functional and attractive cities and living environments. We develop and build apartments, business premises and entire areas. We also specialise in demanding infrastructure construction. We own properties together with our partners, which supports the implementation of our significant development projects. We also provide our customers with services that increase the value of properties. We employ approximately 7,400 professionals in ten countries: Finland, Russia, Sweden, Norway, Estonia, Latvia, Lithuania, the Czech Republic, Slovakia and Poland. Our revenue in 2020 was approximately EUR 3.1 billion. YIT Corporation's share is listed on Nasdaq Helsinki Oy. www.yitgroup.com