YIT?S INTERIM REPORT, JANUARY 1 - SEPTEMBER 30, 2004: NET SALES GROW BY 55 PER CENT AND OPERATING PR

YIT’S INTERIM REPORT, JANUARY 1 - SEPTEMBER 30, 2004: NET SALES GROW BY 55 PER CENT AND OPERATING PROFIT IMPROVES SIGNIFICANTLY

The YIT Group’s net sales in the January-September period grew by 55 per cent compared with the previous year and amounted to EUR 2,223.9 million (Jan-Sep/2003: EUR 1,435.7 million). A substantial share of the net sales growth was due to the integration of the Building Systems business into the Group on August 29, 2003. The business was acquired from ABB and it offers property services, technical building system and industrial services in the Nordic countries, Baltic countries and Russia. Net sales were also increased by the growth in residential construction in Russia and the Baltic countries.

The share of the Group’s net sales accounted for by its international activities grew from 20 to 39 per cent. Of the net sales, 61 per cent came from Finland, 30 per cent from the other Nordic countries, 5 per

cent from the Baltic countries and 3 per cent from Russia.

The share of net sales accounted for by the maintenance and servicing business increased from 23 to 32 per cent.

Operating profit increases significantly

All the business segments posted positive results. The Group’s operating profit before amortization of goodwill and goodwill on consolidation (EBITA) amounted to EUR 119.8 million (EUR 95.2 million), or 5.4 per cent (6.6%) of net sales. Operating profit (EBIT) was EUR 97.2 million (EUR 85.8 million) and the operating profit margin was 4.4 per cent (6.0%). Exclusive of non-recurring items in the comparison period (EUR 24.3 million), operating profit grew by 58 per cent. Profit before extraordinary items and taxes was EUR 85.1 million (EUR 75.4 million). Return on investment at the end of the 12-month period ending at the conclusion of the review period was 15.8 per cent (18.5%).

Earnings per share amounted to EUR 0.96 (EUR 0.86). Equity per share was EUR 7.05 (EUR 6.73). The equity ratio was 29.5 per cent (33.2%).

Order backlog amounts to one and a half billion

The Group’s uninvoiced backlog of orders had risen to EUR 1,521.0 million (EUR 1,416.5 million) by the end of the period. At the turn of the year, the backlog of orders was EUR 1,490.1 million. The Group’s backlog for international orders was EUR 596.8 million (EUR 291.9 million). Due to their nature, part of the Group’s maintenance and servicing operations are not included in the order backlog.

Earnings improve during every quarter

“Thanks to the large strategic acquisition carried out last year, YIT became, in terms of net sales, the largest Northern European company offering building system services. Every quarter of this year saw YIT break all its previous operating profit records,ö says Group CEO Reino Hanhinen.

“Of all the business segments, Construction Services has racked up especially good earnings this year. The profitability of Services for Industry has remained in the black during the downswing in investments prevailing over the past few years. YIT has invested in stepping up piping prefab manufacturing capacity, anticipating the large industrial and energy sector investments slated towards the end of the decade. Next year, both Services for Industry and Building Systems will begin to play a greater role in earnings performance alongside Construction Services and Data Network Services,ö continues Hanhinen.

The result for the third quarter was burdened by a non-recurring loss of EUR 4 million on Building Systems’ warship project. The project was transferred from ABB as part of the Building Systems acquisition.
The loss on the project has been booked in full in the third-quarter result of the present year. In spite of this, YIT achieved its best- ever operating profit during the quarter under review.

Market situation

According to financial forecast institutions, the rate of GDP growth will accelerate to 2.5 - 3.5 per cent in all the Nordic countries this year and the next, outpacing growth in the entire EU. Growth will level off at 2 - 3 per cent in 2006. The positive trend in the disposable income of households in the Nordic countries, coupled with slowly rising interest rates, shores up private consumption and demand for residences. Exports have begun to grow and it is estimated that investments will pick up towards the end of the present year and during next year.

Numerous large traffic infrastructure projects will begin in the Nordic countries both this year and the next, along with petrochemical and energy sector investment projects in which YIT’s Building Systems and Services for Industry may potentially participate. Finland’s fifth nuclear power plant is the most significant investment project in the energy sector in the years ahead. Growth in GDP and investments in the Baltic countries and Russia significantly outpaces growth in the Nordic countries.
Economic growth has strengthened the middle class in these countries and increased demand for modern housing. The EU membership of Estonia, Latvia and Lithuania improves the growth prospects of their economies in the longer term as well.

Over 55 per cent of the net sales of YIT’s Building Systems and over 65 per cent of the net sales of Services for Industry and Data Network Services are generated by maintenance and servicing operations, which evolve steadily in spite of cyclical market swings.
YIT’s Construction Services is more investment-intensive than the other business segments, and residential construction, especially in Finland, benefits from the stability of the euro interest rates.

Outlook for 2004

YIT’s net sales will see substantial growth, as the Building Systems business segment will enlarge net sales during the entire year.
Profit before extraordinary items and taxes will improve significantly compared with 2003. After demand peaked, volumes have levelled off in residential construction in Finland and the earnings potential of these operations remains strong. Residential production continues to grow in Russia and the Baltic countries. It is expected that the Building Systems business segment will have a positive effect on YIT’s full-year earnings per share for 2004.

Publication on November 2

An event for investment analysts and portfolio managers will be held at 13:00 (Finnish time) at YIT’s head office on Tuesday, November 2.
The address is Panuntie 11, 00620 Helsinki.

Interim Reports will not be printed; rather, they will be published as stock exchange releases and on the company’s site at www.yit.fi.
Copies of Interim Reports can be ordered from YIT Corporation, Corporate Communications, P.O. Box 36, FIN-00621 Helsinki, Finland, or fax +358 20 433 3746.

YIT CORPORATION

Reino Hanhinen Group CEO



For additional information, contact: Group CEO Reino Hanhinen, tel. +358 20 433 2454, reino.hanhinen@yit.fi Executive Vice President Esko Mäkelä, tel. +358 20 433 2258, esko.makela@yit.fi Veikko Myllyperkiö, Vice President, Corporate Communications, tel.
+358 20 433 2297, veikko.myllyperkio@yit.fi Petra Thorén, Manager, Investor Relations, tel. +358 20 433 2635, petra.thoren@yit.fi

ANNEXES Interim Report, January 1 - September 30, 2004 Consolidated income statement, balance sheet, cash flow statement, key figures and contingent liabilities as well as net sales, operating profit and order backlog by business segment and the Group’s quarterly trends.

Distribution: Helsinki Stock Exchange, principal media, www.yit.fi

 YIT CORPORATION’S INTERIM REPORT, JANUARY 1 - SEPTEMBER 30, 2004

YIT’S GROUP STRUCTURE

Once the Building Systems acquisition had been carried out, the Group’s operations were divided into four business segments at the beginning of September 2003: Building Systems, Construction Services, Services for Industry and Data Network Services.

The Construction Services business segment was formed from YIT Construction Ltd and the Data Network Services business segment from YIT Primatel Ltd. The former YIT Installation was divided into two new business segments. The Services for Industry business segment was formed from YIT Industria Ltd and YIT Service Ltd, which were part of YIT Installation, as well as the associated company Oy Botnia Mill Service Ab.

The Building Systems business segment was formed from the acquired Building Systems business and YIT Installation’s Scandinavia and Building Systems divisions. In addition, YIT Rapido Property Management Services Ltd from YIT Construction Ltd and the property network business from YIT Primatel Ltd were integrated into the Building Systems business segment as from the beginning of 2004. The acquired Building Systems business functions had net sales of EUR 335.1 million during the period from August 29 to December 31, 2003.
YIT Rapido Property Management Services had net sales of EUR 27.7 million in 2003 and the property network business had net sales of EUR 11.4 million.

In the case of Building Systems and Services for Industry, the net sales and order backlog figures presented below for 2003 are pro forma calculations.

YIT’S TARGET LEVELS ARE REVISED

On September 23, 2004, YIT Corporation’s Board of Directors amended its financial target levels for the 2005 - 2007 strategic period. The target level for return on investment was raised from 18 to 20 per cent. The target level for the equity ratio was lowered from 40 to 35 per cent. The new target level for return on investment is a better fit for the objectives set for the strategic period and supports the operational logic of YIT’s service strategy. The lowering of the equity ratio target better matches the risk level of YIT’s current business structure.

NET SALES UP 55 PER CENT

The YIT Group’s net sales in the January-September period rose to EUR 2,223.9 million (Jan-Sep/2003: EUR 1,435.7 million), representing growth of 55 per cent compared with the previous year. Of the net sales, 43 per cent were generated by Building Systems, 47 per cent by Construction Services, 6 per cent by Services for Industry and 4 per cent by Data Network Services.

Net sales by business segment (EUR million)

                       Jan-Sep/     Jan-Sep/     Change, %                        2004         2003                                                    Building Systems       969.3        241.9         *) Construction Services  1,055.6      961.4         10 Services for Industry  141.3        153.8         -8 Data Network Services  90.4         93.0          -3 Other items            -32.7        -14.4         *) YIT Group, total       2,223.9      1,435.7       55

*) Change over 100%

YIT’s service chain spans the entire life cycle of investments. YIT employs a life cycle strategy to seek better service capabilities, business growth and a steadier flow of income. A growing share of the Group’s net sales come from its industrial, property, telecom network and traditional infrastructure maintenance and servicing business.
During the review period, the share of net sales accounted for by this business rose to EUR 713.0 million (EUR 324.5 million), representing 32 per cent (23%) of total net sales.

The share of the Group’s net sales accounted for by its international activities was EUR 875.6 million (EUR 291.5 million), or 39 per cent (20%). Of the net sales, 61 per cent came from Finland, 30 per cent from the other Nordic countries, 5 per cent from the Baltic countries and 3 per cent from Russia.

YIT’s strategy is to bolster its construction services in the Baltic countries and Russia and, in addition to these services, strengthen its building system and data network services in all the Nordic countries.

OPERATING PROFIT INCREASES SIGNIFICANTLY

Operating profit before amortization of goodwill and goodwill on consolidation (EBITA) amounted to EUR 119.8 million (EUR 95.2 million), or 5.4 per cent (6.6%) of net sales. Operating profit (EBIT) was EUR 97.2 million (EUR 85.8 million) and the operating profit margin was 4.4 per cent (6.0%).

The operating profit for the comparison period was increased by EUR 30 million in capital gains from the sale of Makroflex and reduced by EUR 5.7 million in losses booked as a result of a ruling by the Helsinki District Court in February 2003. The claim concerned the conversion and additional works on the refurbishing of SOK’s former head office property that was completed in 1999. YIT has appealed the decision. Exclusive of non- recurring items in the comparison period, operating profit grew by 58 per cent.

Operating profit (EBIT) by business segment (EUR million)

                       Jan-Sep/     Jan-Sep/     Change, %                        2004         2003                                                    Building Systems       1.0          -             - Construction Services  82.9         78.9          5 Services for Industry  5.3          -             - Data Network Services  11.5         6.2           85 (YIT Installation)     -            7.3           - Other items            -3.5         -6.6          -47 YIT Group, total       97.2         85.8          13

Profit before extraordinary items and taxes was EUR 85.1 million (EUR 75.4 million). Profit after taxes was EUR 58.8 million (EUR 50.2 million). Return on investment at the end of the 12-month period ending at the conclusion of the review period was 15.8 per cent (18.5%).

Earnings per share amounted to EUR 0.96 (EUR 0.86). Equity per share was EUR 7.05 (EUR 6.73). The equity ratio was 29.5 per cent (33.2%).

ORDER BACKLOG AMOUNTS TO ONE AND A HALF BILLION

The Group’s market position is strong. The uninvoiced backlog of orders was EUR 1,521.0 million (EUR 1,416.5 million) at the end of the period. At the turn of the year, the backlog of orders was EUR 1,490.1 million. The Group’s backlog for international orders was EUR 596.8 million (EUR 291.9 million), representing 39 per cent of the entire backlog (21%). The margin of the order backlog is good. Due to their nature, part of the Group’s maintenance and servicing operations are not included in the order backlog.

Order backlog by business segment (EUR million)

                       Sep/2004     Sep/2003      Change, %                                                    Building Systems       564.6        419.9         34 Construction Services  752.8        868.7         -13 Services for Industry  115.5        62.6          85 Data Network Services  88.1         65.3          35 YIT Group, total       1,521.0      1,416.5       7

Construction Services’ order backlog contracted because the low demand for business premises resulted in projects being pushed back.
The major factor underlying the 85 per cent growth in the order backlog of Services for Industry was a large delivery and installation contract received from Fortum’s Diesel project.

THE GROUP’S FINANCIAL POSITION REMAINS GOOD

The Group’s financial position remained good during the review period. Interest-bearing liabilities amounted to EUR 291.6 million (EUR 281.8 million) at the end of the period and net debt to EUR 251.4 million (EUR 246.9 million). Net financial expenses were EUR 12.1 million (EUR 10.4 million), or 0.5 per cent (0.7%) of net sales.
At the end of the review period, liquid assets amounted to EUR 40.2 million (EUR 34.9 million). The gearing ratio at the end of the period was 57.8 per cent.

The proportion of fixed-interest loans in the Group’s entire loan portfolio was 70 per cent (56%). Loans raised directly on the capital and money markets amounted to 71 per cent (34%).

The construction-stage contract receivables sold to financing companies totalled EUR 187.4 million (EUR 180.5 million) at the end of the period. The interest paid on them to the financing companies, EUR 4.4 million (EUR 3.7 million), is included in net financial expenses.

Total assets in the consolidated balance sheet amounted to EUR 1,618.7 million (EUR 1,323.9 million) at the end of the period. The growth of the balance sheet was primarily due to the acquisition of Building Systems.

CAPITAL EXPENDITURES AND ACQUISITIONS

Gross capital expenditures on non-current assets included in the balance sheet totalled EUR 21.4 million (EUR 187.6 million) during the January-September period, representing 1.0 per cent (13.1%) of net sales. Investments in construction equipment amounted to EUR 5.6 million (EUR 5.4 million) and investments in information technology to EUR 3.5 million (EUR 3.2 million). Other production investments came in at EUR 1.5 million (EUR 0.5 million). Other investments, including the goodwill on consolidation of acquired companies, amounted to EUR 10.8 million (EUR 178.5 million). EUR 13.3 million in goodwill arising from the acquisition of ABB’s Building Systems business functions was amortized during the report period, along with EUR 1.2 million in goodwill on consolidation. EUR 7.8 million in goodwill on consolidation arising from other acquisitions was amortized.

CHANGES IN THE GROUP STRUCTURE

YIT Building Systems AB and YIT Calor AB, the Swedish subsidiaries of YIT Building Systems Oy, jointly formed a company named YIT Sverige AB as from October 1, 2004.

YIT Rapido Property Management Services Ltd merged into YIT Kiinteistötekniikka Oy on August 30, 2004, and YIT Safetytec Ltd followed suit on October 1, 2004.

YIT Latvija SIA and TOP Maja SIA, the Latvian subsidiaries of AS FKSM, were merged into the subsidiary SIA FKSM on August 31, 2004, and the company was renamed YIT Celtnieciba SIA. AS FKSM is part of Construction Services. YIT Construction Ltd thus operates in Latvia through YIT Celtnieciba SIA.

NUMBER OF EMPLOYEES

During the review period, the YIT Group employed 22,012 (13,846) people on average. At the end of the period, the Group had 22,013 employees (22,144). The growth in the average number of employees during the comparison period was due to the Building Systems acquisition. Of YIT’s employees, 55 per cent work in Finland, 36 per cent in the other Nordic countries and 9 per cent in the Baltic countries and Russia.

Personnel by business segment, Sept. 30, 2004

                            No.          Share of                                          the Group’s                                          employees Building Systems            12,451        57% Construction Services       4,934         22% Services for Industry       2,992         14% Data Network Services       1,341         6% Corporate Services          295           1% YIT Group, total            22,013        100%

Personnel by country, Sept. 30, 2004

                            No.          Share of                                          the Group’s                                          employees Finland                     11,993        55% Sweden                      4,322         20% Norway                      2,513         11% Denmark                     1,164         5% Estonia, Latvia and         1,188         5% Lithuania Russia                      833           4% YIT Group, total            22,013        100%

SHARE CAPITAL AND SHARES

YIT Corporation’s share capital was EUR 61,046,750 at the beginning of the review period and the number of shares outstanding was 30,523,375. Following the resolution of the Annual General Meeting, the nominal value of the share was changed from two euros to one euro (split) on March 26, 2004, thereby doubling the number of shares.
Share subscriptions carried out on the basis of the Series C share options from 2002 increased the share capital by EUR 35,130 on May 6, 2004, by EUR 78,060 on June 28, 2004, and by EUR 18,780 on August 23, 2004. The share capital was EUR 61,178,720 at the end of the period and the number of shares was 61,178,720.

During the review period, 250,305 of the Series C share options from 2002 were traded at an average price of EUR 19.49 each.

During the review period, no shares issues were organized and convertible bonds or bonds with warrants were not floated. At the end of the period, the Board of Directors did not have valid share issue authorizations or authorizations to issue convertible bonds or bonds with warrants.

The company did not own any of its shares during the report period nor did it have a valid authorization to purchase its own shares. The subsidiaries did not own shares in the parent company.

TREND IN SHARE PRICE AND TURNOVER

The average share price during the review period was EUR 15.78 (EUR 9.27), with a high of EUR 17.53 (EUR 11.38) and a low of EUR 13.51 (EUR 7.01). The closing rate was EUR 15.85 (EUR 11.00). Share turnover during the period amounted to EUR 492.5 million (EUR 187.6 million), with 31,206,346 (20,245,866) shares being traded. The figures have been converted to correspond with the doubled number of shares.

Market capitalization amounted to EUR 969.7 million (EUR 662.6 million) at the end of the period.

NUMBER OF SHAREHOLDERS RISES

The number of registered shareholders was 4,928 (3,271) at the beginning of the review period and 7,059 (3,997) at its end. The number of private investors grew by about 1,900 since the beginning of the year.

According to the nominee registers, 19.9 per cent of the shares (22.1%) were owned by foreigners at the beginning of the period and 24.5 per cent (20.1%) at the end. Other foreign ownership at the end of the review period amounted to 2.0 per cent (3.6%); thus, a total of 26.5 per cent (23.7%) of the company’s shares outstanding were owned by international investors.

No flagging notices on changes in holdings were made during the third quarter.

ADOPTION OF IAS/IFRS

The YIT Group started up preparations for adopting International Accounting Standards (IAS) in its financial statements in December 2001. The project that was initiated at that time assessed the differences between the Finnish accounting policies used by the Group and IAS and prepared a new accounting policy for drafting the consolidated financial statements in line with International Financial Reporting Standards (IFRS). The training of accounting personnel commenced in spring 2003 and a system project for the calculation of conversions was started up in November.

YIT will start reporting in line with IAS/IFRS as from the beginning of 2005. As preparatory measures, IFRS comparison figures have been calculated during the first and second quarters of 2004, in line with the currently valid standards, from the opening balance sheet dated January 1, 2004. By the end of the year, the Interim Reports for 2004 will have been converted to match IFRS.

The major changes in the accounting policy are the elimination of double net sales in developer contracting as well as changes in partial credits to account and the recording of 10-year commitments.
In IFRS, income and expenses are in no respects recorded twice; rather, a developer-contracting project is treated as a single entity. Partial credits to account will be carried out using the principle of degree of completion multiplied by degree of sale, whereas according to the current practice the project margin has been booked in the income statement on the basis of the degree of completion or the degree of sale, whichever is lower. In IFRS, 10- year commitments are recorded as provisions in the balance sheet, whereas they are presently recorded as expenses on the basis of their realization. The changes in the recording of developer-contracting projects will increase interest-bearing liabilities in the balance sheet, but reduce the balance sheet total. The legislative amendment that is under preparation will in all likelihood specify that the occupational disability portion of statutory entitlement pensions (TEL) is payment based and thus would not result in imputed liabilities that would reduce the company’s shareholders’ equity. A more detailed account of the other changes will be presented in the next annual financial statement bulletin.

MARKET SITUATION

The strong growth in the global economy has turned Nordic exports and investments into growth. Financial forecast institutions predict that the rate of growth in GDP in all the Nordic countries will rise to 2.5 - 3.5 per cent both this year and the next, that is, it will be faster than in all of the EU. Growth will level off at 2 - 3 per cent in 2006. The rate of growth in GDP and investments in Russia, Estonia, Latvia and Lithuania is twice as fast as in the Nordic countries. The risks for economic development primarily comprise inflation caused by the rapid price trend in oil and certain raw materials, which would impact on interest rate levels, as well as the slowing down of European economic development if the US dollar weakens. On the other hand, the high price of oil supports economic growth in Norway and Russia.

Finland

According to the business cycle barometer published by the Confederation of Finnish Industries EK in September, the cyclical outlook for industry, construction and the service sector is positive. In its business cycle report published in September, the Research Institute of the Finnish Economy ETLA predicts that the current upswing will peak in 2005. Investments would see the greatest growth in 2006. Investments still declined by 2.1 per cent last year.
They will grow by 2.5 per cent this year, 4.1 per cent the next and 4.9 per cent in 2006. ETLA predicts that construction output will grow by 3.5 per cent on average each year from 2003 to 2008, that is, at a significantly faster rate than in the previous five-year period.
The growth in civil engineering outpaces that of building construction thanks to large-scale traffic and energy infrastructure projects.

In October, the Confederation of Finnish Construction Industries RT estimated that residential construction will grow by 3 per cent both this year and the next. Residential start-ups during both years will amount to about 32,000. Demand for housing is supported by the continuing brisk population shift, growth in household disposable income and the still low, albeit moderately rising, interest rate level. VTT, which represents Finland in Euroconstruct, anticipates that renovation works will see average annual growth of 3 - 4 per cent over the next ten years. Growth in renovation supports demand in the building systems market (heating, water, air-conditioning, electricity, safety and automation contracting and maintenance).

The market for industrial, property and infrastructure maintenance will expand as the outsourcing trend progresses. The total market for telecom network construction and maintenance will not grow during the present year. However, demand for broadband connections will remain high. The outsourcing of operators’ field functions is also expected to continue in the future, increasing YIT’s market potential.

Sweden

The Swedish economy has begun to grow, with exports as the engine of growth. In September, Nordea predicted that GDP growth will amount to 3.4 per cent this year, 3.2 per cent next year and 2.5 per cent in 2006. Exports grew by 5.5 per cent last year. Nordea predicts that exports will grow by 8.4 per cent this year, 7.0 per cent the next and 5.9 per cent in 2006. Due to the rapid growth in exports, investments by industry will swing to growth of 2.5 per cent this year after two years in steep decline. Next year, investments by industry will already grow by 9.5 per cent, and will see growth of 7.0 per cent in 2006.

This year’s rapid growth in construction investments will slacken to 4.7 per cent next year and further to 2.9 per cent in 2006. According to the Swedish Construction Federation BI, construction investments by industry will begin this year and will grow by 10 per cent next year. At the end of September, BI reported that the downswing in construction is over. In the first half of the year, the number of residential start-ups was 25 per cent higher than in the corresponding period of the previous year. BI estimates that the rate of start-ups will slow down in the last part of the year and the number of residential start-ups during the entire year will rise to 24,500 residential units. In the next few years, about 25,000 residences will be started up annually. Other building construction will only begin to increase in 2006. Growth in building renovation will remain steady at about 2 per cent.

According to the business cycle barometer published by the Swedish National Institute of Economic Research KI at the end of October, the business climate for industry will continue to improve. The confidence indicators of the industrial sector and the construction industry are at their highest level in four years. The construction sector reports that the number of new orders coming in has risen rapidly during the past six months and that four out of five construction companies are satisfied with their order backlogs.
Construction is estimated to increase during the last quarter of the present year. Two out of three of the companies in this field anticipate that activity will increase next year. Decisions to start up numerous large industrial investments have already been made.
Industry’s high capacity utilization ratio and good financing opportunities support growth in investments.

Norway

There has been an upswing in the Norwegian economy since summer 2003.
According to Statistics Norway’s (SSB) business cycle barometer published at the end of October, industrial output, new orders and market prices rose in the third quarter. The capacity utilization ratio was 80 per cent. The value of the industrial business cycle indicator was at the boom level of 2 000.

SSB’s forecast in September estimates that GDP in mainland Norway will grow by 3.9 per cent this year and by 2.9 per cent in 2005. In 2006, growth will be 2.8 per cent. Fixed investments will increase by 8.4 per cent this year and by 4.7 and 4.4 per cent during the next two years. The rise in the price of oil has increased offshore investments. Private consumption will grow by 5 per cent this year and by 4.7 per cent the next. Growth in private consumption is estimated to rise to 5.1 per cent in 2006. The decline in Norges Bank’s key interest rate (“sight deposit rateö) from 7 to 1.75 per cent during the past two years supports consumption and investments.
Prognosesenteret estimates that the key interest rate will rise no higher than 2.5 per cent by the end of 2005. The moderate interest rate trend is supported by the slowing down of increases in consumer prices; this year, they will rise by 0.6 per cent, while they will increase by 1.6 per cent next year and by 2 per cent in 2006.

At the end of September, the Federation of Norwegian Construction Industries BNL predicted that the number of residential start-ups will rise to 28,000 residences this year and level off to around 27,000 during the next two years. According to Prognosesenteret, the construction of 19,235 residential units was started up during the first three quarters of the present year, up 28 per cent on the corresponding period of the previous year. In Oslo alone, the number of residential start-ups in the third quarter was 57 per cent higher than a year earlier. The population shift into Oslo has increased the share of the housing stock accounted for by blocks of flats, at the expense of single-family houses. In the first part of the year, a significant share of the residences were sold even before construction began. According to the housing construction association Boligprodusentenes Forening, sales will plateau towards the end of the year.

SSB reports that other building start-ups in the January-August period totalled 2.4 million square metres, an increase of 22 per cent on the corresponding period of the previous year. According to BNL, the trend in other buildings is similar to that in housing. BNL estimates that other building start-ups this year will amount to 3.3 million square metres and to 3.1 million square metres during each of the next two years.

Denmark

In its review in September, Nordea assessed that Denmark’s economy has entered an upswing, with private consumption and exports as the engines of growth. Investments will grow by 3.4 per cent this year.
During the next two years, the growth rate of investments will settle at about 2.5 per cent. Disposable income will increase thanks to tax relief in 2004 - 2007. The average GDP growth forecasts by financial research institutions for this and the next year are 2.2 and 2.4 per cent. Private consumption will grow by 3.4 per cent and 2.8 per cent this year and the next, respectively. Euroconstruct estimated in June that fixed investments will grow at a rate of 4 per cent on average in 2004 - 2006.

In June, Dansk Byggeri, the Danish Construction Association, assessed the outlook for the present and the next year as stable. The floor area of the residential buildings being started up will grow by 3 per cent both this year and the next. Market-financed residential construction maintains residential production at a stable level thanks to the favourable trend in household incomes and the low interest rates. 23,500 and 24,500 residential units will be started up during the present year and the next, respectively. Office and industrial facility construction will decline. Renovation will grow by 3 per cent this year, while it will only see minor growth next year. Activity is centred around Copenhagen and other large cities.
In October, Dansk Byggeri criticized the reliability of the building statistics kept by Statistics Denmark, as it has made a number of extensive revisions, hindering forecasting. According to Dansk Byggeri’s estimate, the latest information indicates that the trend in construction may be weaker than one might assume on the basis of July’s forecast. However, the business cycle barometer concerning the construction industry that was released in October is cautiously positive.

Baltic countries and Russia

Growth in GDP and investments in the Baltic countries and Russia significantly outpaces the Nordic countries. Economic growth in Russia amounts to about 7 per cent this year thanks to the high price of oil and strong domestic demand. Nordea predicts that investments in Russia will grow by 10 per cent during the present year and by 7 per cent the next.

The entry of Estonia, Latvia and Lithuania into the EU last May will maintain a double-figure investment growth rate both during the present year and the next. Estonia and Lithuania are already part of the ERM2 exchange rate mechanism, and Latvia will join it as from the beginning of 2005. EU subsidies and the direct investments brought in by EU membership will strengthen economic growth in the new member countries for many years to come. GDP growth has continued in the Baltic countries, stimulated by domestic consumption and investments, but exports will assume a greater importance in the next few years thanks to their rapid growth. At the same time, the current account balance problem will be alleviated.

The greater affluence of the middle class has strengthened demand for market-financed residences in the Moscow region, St Petersburg and in the capitals of the Baltic counties.

EARNINGS TRENDS OF THE BUSINESS SEGMENTS

BUILDING SYSTEMS

The net sales of Building Systems amounted to EUR 969.3 million (EUR 241.9 million). The maintenance and servicing business accounted for 56 per cent of the net sales of the business segment. The breakdown of net sales by country was as follows: Sweden, 37 per cent, Finland, the Baltic countries and Russia, 33 per cent, Norway, 22 per cent, and Denmark, 8 per cent.

The balance sheet of the acquired Building Systems business was included in the consolidated balance sheet for the first time on December 31, 2003. The first four-month period of its business operations that was booked began on August 29, 2003, and is recorded in the figures for the fourth quarter of 2003.
Building Systems’ operating profit before amortization of goodwill and goodwill on consolidation (EBITA) amounted to EUR 19.1 million.
Amortization of goodwill and goodwill on consolidation on the Building Systems acquisition amounted to EUR 14.5 million. The business segment’s operating profit (EBIT) amounted to EUR 1.0 million.

The Danish unit’s result for the period includes a loss provision of EUR 4 million due to an electrification project on two ships for the Royal Danish Navy. The project was transferred from ABB as part of the Building Systems acquisition. One of the ships has been completed and handed over, while the other will be completed in June 2005. The loss on the entire project – that is, both of the ships – has been recorded in the result for the report period.

The order backlog at the end of the period was EUR 564.6 million (EUR 419.9 million). At the end of the period, the business segment had 12,451 employees. Of them, 4,311 worked in Sweden, 4,022 in Finland, 2,513 in Norway, 1,164 in Denmark and 441 in Estonia, Latvia, Lithuania and Russia.

Combining the companies in Sweden bolsters the service range

The net sales of YIT Sverige AB, formed via the combining the companies operating in Sweden, amounted to EUR 362.5 million. The share of net sales accounted for by the maintenance and servicing business was 49 per cent. The order backlog was EUR 184.2 million (EUR 197.1 million).

The Building Systems business segments’ Swedish companies formed YIT Sverige AB on October 1, 2004. Thanks to the combining, YIT can now present itself as a single company offering a unique portfolio of technical installation works, operating and maintenance services and facility management services in Sweden.

On the whole, the Swedish market has developed favourably. The construction market is on the road to recovery, but there is variation in the trends within the field. Residential construction has surged, while other types of construction will still remain muted during the present year. Investments and industrial projects initiated on the heels of growth in exports have enlarged the building systems market during the present year. In full-year terms, the market for building system services will remain at the previous year’s level. In 2005 and 2006, these services are expected to grow by three to four per cent. The trend in the market for refurbishing, modernization and property services is stable and slight growth is expected in the years ahead.

During the report period, London & Regional Properties renewed its property management and development agreement with YIT. The properties amount to 1,250,000 square metres and they are located in different parts of Sweden. The new agreement will be in force until the end of February 2009.

A new order was received for ventilation installation works at AstraZeneca’s GMP plant in Södertälje. YIT’s Optilab system will be utilized in the regulation of the plant’s ventilation and air pressure.

YIT will also implement piping installation works for Stora Enso’s new paper machine in Kvarnsveden. The works will continue until 2005.

Growth expected in industrial demand in Finland

YIT Kiinteistötekniikka Oy’s net sales in Finland, the Baltic countries and Russia amounted to EUR 317.5 million during the review period. The share of net sales accounted for by the maintenance and servicing business was 65 per cent. The order backlog amounted to EUR 219.2 million (EUR 121.4 million).

The general market situation has remained largely unchanged since the last Interim Report. Demand for commercial premises will most likely remain upbeat during the rest of the year, but the construction of business premises will continue to be slight in the near future as well. Moderate public construction will continue in the growth areas, but will be sedate elsewhere. Production of new housing will remain stable during the rest of the year. It is expected that demand will pick up in industry. Maintenance and upkeep in property services are brisk, as is property management.

Growth in the markets of the Baltic countries significantly outpaces growth in Finland. Business operations in all the Baltic countries are still in the process of being integrated into the EU market. The Russian market is developing favourably, opening up opportunities in building equipment systems and property services.

During the third quarter, YIT started up HEPACE works, including patient security systems, at a care home for the mentally disabled that is located in Vaasa in the medical district of Central Ostrobothnia; HEPACE works at the Wetteri car dealership in Kajaani; HEPAC reconditioning works at the Porthania Building of the University of Helsinki; fire extinguisher works at the largest Bauhaus department store in the Nordic countries, which is located in Tampere; as well as fire extinguisher works at Finnforest Corporation’s module plant in Hartola and Halpahalli Oy’s central warehouse in Kokkola. Industrial sites that were started up were UPM Kymmene Oyj’s Siistaamo (deinking plant) project in Kaipola, machine room air-conditioning for M-real Corporation’s Helmi project in Kaskinen and the cabling of Helsinki Energy’s electric power station in Viikinmäki. In Lithuania, YIT Technika started up HEPACE works at a 14-story business building next to the Akropolis shopping centre.

The maintenance agreements that were signed included the extension of the maintenance agreement concerning the National Road Administration’s weather and traffic cameras, the extension of TeliaSonera Oyj’s property management agreement to cover 2005, including options for 2006 and 2007, and maintenance works at Wärtsilä’s properties in Vaasa.

Joint YIT projects include the construction of YIT Centres in Rovaniemi, Jyväskylä, Kokkola and Turku, numerous residential sites in different parts of Finland and St Petersburg, and projects such as the Pursiala power plant in Mikkeli for Etelä-Savon Energia Oy. One of the major ongoing joint projects is the construction of business premises for the Finnish Meteorological Institute and the Finnish Institute of Marine Research in Helsinki. The open automation system developed by YIT that will be installed on the premises opens the doors to intriguing new service concepts.

In August, a cooperation agreement was made with the Swedish Envac Group to launch its residential and office waste collection system on the Finnish and Russian markets. The system is based on advanced pneumatic technology. YIT’s Construction Services is assessing the implementation of the system at its major area development sites in Finland. The partnership has also sparked interest in Moscow, where the system could be used in luxury residences in the city centre and certain hospitals.

Construction of housing and commercial premises picks up in Norway

YIT Building Systems AS’s net sales amounted to EUR 213.2 million.
The share of net sales accounted for by the maintenance and servicing business was 72 per cent. The order backlog was EUR 75.1 million (EUR 54.4 million).

The number of residential start-ups grew, rising a third higher than last year, and it is believed that the full-year figure will be one- fifth higher than in the previous year. The market for the modernization of residences has also grown since last year. The trend in apartment building projects is significant to YIT.

The construction of commercial premises has also begun to grow in terms of the number of start-ups. The floor area of the kicked-off projects is about one-fifth larger than in the previous year. The construction of commercial premises is particularly brisk in the Oslo area.

Euroconstruct estimates the market to grow by slightly under 8 per cent in 2004. Due to the delay involved in the progress of projects from start-up to technical works, this trend will become apparent in YIT’s operations at around the turn of the year.

During the third quarter, YIT received orders for end-to-end technical solutions comprising electrical, plumbing and ventilation works from Heimdal Entreprenør for over one hundred energy-efficient residences that will be built in Trondheim, and from NCC for residences that will be built in Stavanger. YIT landed an order from Skanska for plumbing, sewerage, cooling and fire extinguisher systems for the company’s new head office in Oslo. A solution encompassing ventilation, electrical and plumbing works, sewerage, heating and fire extinguisher systems will be supplied to PEAB for a care home in Oslo.

Three new framework agreements on technical services were signed during the quarter. The agreement signed with Forsvarsbygg (the Norwegian Defence Estates Agency), which is responsible for the development and maintenance of army properties, covers all of the Norwegian Armed Forces’ southeastern locations. The agreement with CG Holding pertains to 55 retail stores, three large shopping centres and two glass and porcelain factories. The agreement with NetCom concerns power source and data communications services.

Cooperation with Carnegie Mellon University will be continued with a view to assessing opportunities for utilizing electrical and ventilation ducts in wireless communications. In a state-supported project, YIT is studying the potential for utilizing in Norway the technical concept employed in Finnish indoor ice rinks; possible applications include football and handball halls. YIT will continue to expand the use of the patented ClimaCeil electrical and ventilation system throughout the entire Group.

Upbeat outlook for the Danish economy

YIT A/S’s net sales amounted to EUR 76.1 million. The share of net sales accounted for by the maintenance and servicing business was 36 per cent. The order backlog was EUR 86.0 million (EUR 47.0 million).

The Danish unit’s result for the period includes a loss provision of EUR 4 million due to an electrification project on two ships for the Royal Danish Navy. The project was transferred from ABB as part of the Building Systems acquisition. One of the ships has been completed and handed over, while the other will be completed in June 2005. The loss on the entire project – that is, both of the ships – has been recorded in the result for the report period.

Nordea’s forecasts indicate that the Danish economy has developed as expected on the heels of private consumption. Exports are increasing gradually, but investments have not been started up yet.

It is expected that unemployment will begin to decline. The major risks in the economy have to do with the trend in the price of oil.
Economic balance will most likely be maintained, as there is no evidence of problems arising from the current account balance or inflation.

According to Statistics Denmark, expectations are positive for the trend in the construction, production and service industries during the next quarter.

During the third quarter, YIT landed a ventilation order for A.P.
Moller – Mærsk’s head office in Copenhagen. In addition, an agreement was signed with the Pedagogical University of Denmark in Copenhagen for an end-to-end technical solution, including electrical, ventilation and piping installation works. The agreement also includes project management in the old university building’s modernization project.

CONSTRUCTION SERVICES

The net sales of Construction Services grew by 10 per cent compared with the previous year and amounted to EUR 1,055.6 million (EUR 961.4 million). The maintenance business accounted for 2 per cent of this figure (3%) and international operations were valued at 18 per cent of net sales (14%). Net sales include double net sales (sale of condominium shares in own production) of EUR 143.2 million (EUR 168.4 million).

Operating profit amounted to EUR 82.9 million (EUR 78.9 million).
Operating profit for the comparison period included EUR 24.3 million in non-recurring items. The order backlog was EUR 752.8 million (EUR 868.7 million) at period’s end. The order backlog contracted because the low demand for business premises resulted in projects being pushed back. At the end of the period, the business segment had 4,934 employees.

During the third quarter, the business segment focused on improving the profitability of its Finnish operations and increasing developer- based residential construction in Russia and the Baltic countries.

Sales of residences levelling off

Housing sales levelled off from the record peak seen in the first part of the year in the Greater Helsinki area of Finland and, in the case of international operations, in Russia and the Baltic countries.
During the quarter, sales of residences went well in the municipalities surrounding the Greater Helsinki area and in other growing cities. During the review period, 1,788 (1,685) market- financed non-rental residential units were sold in Finland, while 785 (349) were sold in Russia and the Baltic countries. Demand for new residences is expected to remain good during the last quarter.

The construction of 2,099 residences (2,509) was started up during the review period in Finland. Of these, 1,980 (2,227) were market- financed. At the end of the period, 2,889 (3,534) residences were under construction, of which 2,770 (2,977) were market-financed.
2,429 (1,444) market-financed residences were completed during the period. There were 234 (119) completed unsold residences at the end of the period.

In international operations, growth in residential construction continued in line with the strategy. The construction of 3,167 new residences was started up in Russia, Estonia, Latvia and Lithuania during the review period. The number of residences started up during the corresponding period of the previous year was 199. The number of residences completed was 199 (214). At the end of the period, 3,815 (973) market-financed non-rental residential units were still under construction. There were 9 (19) completed unsold residences at the end of September.

The prices of residences have risen significantly in Russia during the past year. The rate of price increases plateaued during the quarter under review. During the past year, the selling prices of the market-financed residences built by YIT in the Russian and Baltic markets have averaged about one-third of the prices of residences sold in Finland.

It is estimated that the market outlook for developer-based residential construction will remain good in all of YIT’s market areas. In Finland, the outlook is bolstered by the population shift from one municipality to another, consumers’ belief in the positive development of their own finances and the low interest rate level.
Strong economic growth supports demand for new residences in Russia and the Baltic countries. YIT can meet demand thanks to its good plot reserves. The estimated number of market-financed residential start- ups in 2004 is about 2,600 in Finland (start-ups in 2003: 2,826) and 3,700 in Russia and the Baltic countries (351).

YIT’s plot reserves, September 30, 2004

                        Building rights   Capital tied                         and               into                         zoning            plot                         potential,        reserves,                         1,000 m2 of       EUR million                         floor area Finland                                    Residential plots       1,415             157 Business premise plots  883               118 Total                   2,298             275                                            Baltic countries and                       Russia Residential plots       401               18                                            Total                   2,699             293

Other building construction

The high vacancy rate of business premises in Finland continued to put the brakes on the start-up of new business premise projects.
Demand remained reasonable in the case of commercial and logistics premises. Competition for new business premise construction and renovation contracts remained tight. Investments by industry are expected to recover, and this will improve demand for industrial construction during the rest of the year.

New building construction contracts landed in the third quarter included the Kaskinen BCTMP plant for M-real Corporation, the Kartanonkoski school for the City of Vantaa, the refurbishing of the Aurorakoti House for the City of Espoo, the extension of the TAVI Building for the Public Works Department of the City of Helsinki, the structural frame contract of the University of Lapland’s Faculty of Arts for Senate Properties, a Lidl store in Lieto, the rental housing site Kiinteistö Oy Vihdin Haapakyläntie 2 for YH Suomi Oy, the residential building Kiinteistö Oy Oulun Isokatu 4 for the Oulu Cooperative Bank, the Asuintalo Vuorela residential building for Siilinjärven Vuokratalot Oy, the Paikunen waste water treatment plant in Pärnu, the Ärimaja shopping centre in Tallinn, a gas compressor plant for Öresundskraft in Sweden, the Johvi concert hall for Eesti Kontsert, the Jurmala spa for SIA Ärimaja in Latvia, a storage building for ZAO Ford Motor Company’s engine factory in Vsevolodsk, Russia, and the extension of a factory building for UAB Lietlinen in Kaunas.

Many new area contracts in public road maintenance

The total volume of civil engineering works increased compared with the previous year, but price competition remained heated. The trend in the market situation for tunnelling and underground construction is estimated to be positive, as large projects are entering the tendering stage.

New competitive contracts landed during the review period included improvement works on the Itäväylä motorway for the Public Works Department of the City of Helsinki, Transformer Station M120 for Neste Engineering, the subterranean structures of the penitentiary of Southwestern Finland for Senate Properties, the reconditioning of the former landfill site in Myllypuro for the Public Works Department of the City of Helsinki and an instrumentation connection building for Neste Jacobs Oy.

YIT strengthened its position in public road maintenance. The new maintenance agreements landed during the period were the Espoo regional contract from 2004 to 2009, the Nummi regional contract from 2004 to 2007, the Pietarsaari regional contract from 2004 to 2009, the Imatra regional contract from 2004 to 2009, the Raisio regional contract from 2004 to 2007 and the Iisalmi regional contract from 2004 to 2007.

Development projects

During the quarter, projects were started up to develop personnel processes, especially in recruitment and orientation, as well as to develop the YIT Home customer process and customer relationship management.

During the report period, YIT sold its product model technology and expertise to Graphisoft, and made a partnership agreement with this Hungarian company on the further development of product model technology.

In addition, YIT is on board a joint project with major municipal clients and construction companies that develops life-cycle models for the building construction sector. The project is led by the Confederation of Finnish Construction Industries RT.

SERVICES FOR INDUSTRY

The net sales of Services for Industry amounted to EUR 141.3 million (EUR 153.8 million) in the January-September period. The maintenance business accounted for 67 per cent of net sales. The value of international operations was 7 per cent of net sales.

The operating profit was EUR 5.3 million. The order backlog at the end of the period was EUR 115.5 million (EUR 62.6 million). Of this amount, EUR 12.9 million represents the international backlog of works. At the end of the period, the business segment had 2,992 employees.

Demand for investments swinging to growth

The net sales of Services for Industry have declined compared with the previous year, mainly due to a contraction in investments. After a long muted period, demand for investments is expected to increase in the latter part of the year.

The business segment’s order backlog rose by 57 per cent during the quarter now ended and was 85 per cent higher at the end of September than in the corresponding period of the previous year. One of the reasons behind the strong growth in the order backlog was the orders for the steel structures of a residual oil and hydrogen unit, piping and equipment installation for Fortum’s Diesel project, which were won in tough international competition. A new project that was landed in Finland comprised the delivery of deinking plant piping for UPM’s Kaipola plants; their construction will commence immediately. In the case of exports, orders for significant boiler repairs and both power plant piping and boiler deliveries were received for sites in Sweden, continental Europe, Ireland, South America and China.

In the case of investment projects that are being started up, the commercial tender requests concerning the first piping of OL3, Finland’s fifth power plant, are currently being calculated.

In spite of its relatively good outlook, the capacity of YIT’s Services for Industry will remain partly unused in the first quarter of 2005. After that, the capacity utilization ratio will rise buoyantly as works on the Diesel project begin.

Major deliveries to boiler manufacturers

During the report period, major piping and boiler prefabs were delivered to all Finnish boiler manufacturers: Andritz Oy, Foster Wheeler Energia Oy, Kvaerner Power Oy and Noviter Oy. The deliveries were related to the customers’ exports to countries such as Estonia, Germany, Portugal, Brazil and China.

The key project in exports comprised the delivery of piping systems for a large combined gas power plant in Riga for Demag Delaval Industrial Turbomachinery Ab. Deliveries were also ongoing to Foster Wheeler Energia Oy in Ireland and, most recently, to Cellulosa Arauco y Constitucio S.A. in Chile.

The process and heat-recovery piping of a thermomechanical pulping plant that is part of Stora Enso’s WARMA project and Wisapower Oy’s power plant piping project were seen to completion.

The construction of on-pier crude oil lines progressed at Fortum’s refinery in Porvoo, as did the construction work on the underground piping of the hydrogen and residual oil units under the Diesel project. Other deliveries related to the Diesel project will continue until early 2006. Works on the PM2 piping project for Stora Enso in Summa will last until the first months of next year. The pipe rack installation works at M-real’s Kaskinen mill will continue until January 2005.

YIT’s internal cooperation expands in maintenance

Market trends have been favourable for industrial maintenance and operations have been as brisk as in previous summers. A great many shutdown works were carried out in the forest industry and at nuclear power plants during the review period.

In nuclear power plant maintenance, preparations got under way during this year’s maintenance shutdown for the highly demanding Timo project, which is related to the replacement of high-pressure turbines at Teollisuuden Voima’s power plants. The deliveries will primarily be carried out during the 2005 and 2006 shutdowns. The focus of other power plant maintenance shifted to plants in Loviisa and Sweden during the report period.

Industrial Maintenance Services has expanded its cooperation with the industrial unit of YIT Sverige AB, which is part of the Building Systems business segment. In early autumn, major maintenance shutdown deliveries were made jointly to forest industry plants on the eastern coast of Sweden, such as to M-real in Örnsköldvik and Husum and to SCA in Obbola, where the works are still ongoing.

Demand for instrumentation installation works improved significantly compared with the first part of the year. The most significant instrumentation delivery will go to Linde AG’s AGA air gas plant in Tornio. An agreement concerning projecting and design services was made for M-real’s BCTMP project in Kaskinen.

DATA NETWORK SERVICES

In Data Network Services, 2004 has been an improvement on the previous year. Net sales in the January-September period amounted to EUR 90.4 million (EUR 93.0 million; comparable figure: EUR 84.6 million). About 76 per cent of net sales (60%) were based on long- term customer agreements and 24 per cent (40%) on project production.
Operating profit was EUR 11.5 million (EUR 6.2 million). The order backlog at the end of the period amounted to EUR 88.1 million (EUR 65.3 million). At the end of the period, the business segment had 1,341 employees.

The improvement in the earnings trend is largely due to the business segment’s own development and efficiency-boosting measures. Factors underlying the increase in the share accounted for by the maintenance and servicing business include the significant decline in mobile network project works and the transition in service demand to smaller- scale maintenance and conversion works.

In the telecom business, competition between operators will continue to heat up. Development is taking place in broadband networks and connections and the provision of related IT services. Competition is also opening up the market for installation services, giving entry to external service providers. In the case of mobile networks, competition between teleoperators cuts down on investments and the demand for installation services.

Record sales of broadband connections

Sales of broadband connections are breaking all records. Demand has been affected by the sizeable decline in the monthly charges of end customers and the operators’ constant first-time customer offers. The turnkey services marketed by the operators have increased YIT’s load in fieldwork.

The broadband trend has also slightly increased demand for project deliveries for the fixed telecom network. Growth in broadband connections also increases the need for network maintenance services and IT helpdesk services.

The trend in broadband connections is expected to remain at its present level in the near future. The greater need for maintenance services is forecast to be evident next year.

Market for installation services opening

The market for installation services is opening up gradually as competition between teleoperators becomes more severe. This trend has increased YIT’s opportunities for offering its services, but also ushered in cost pressures.

The outsourcing of installation works is expected to partly increase in the near future. Changes in operating methods will impact on the development of the installation market; however, they will generate demand in open competition only a few years down the line, when the grace periods related to these arrangements come to an end.

During the first part of the year, YIT made new partnership agreements with teleoperators. The new agreements expanded the customer base and thereby increased YIT’s work volume in installation services.

3G network investments implemented gradually in the mobile market

Tough price competition between operators in the mobile network market has reduced investments and the demand for installation services. The market is recessed also partly due to the ongoing sweeping changes in technology.

No great peak is expected in 3G network investments. This third- generation technology enables faster data transfer. Instead of a revolution, investments are expected to be realized at a slower pace, as network evolution occurring in step with new service development and the resulting need for greater network capacity. In Finland, 3G networks went live in limited regions during the report period.

Achieving greater efficiency in service processes and fieldwork

Development efforts have focused on seeking new service packages in technical helpdesk services and on measures supporting the opening up of the installation market in both helpdesk services and telecom networks.

YIT’s internal cooperation has zeroed in on developing the harnessing of joint customer accounts. Development work at the corporate and local levels has focused on customers operating in numerous localities and on public administration.

The IT platform of Data Network Services has been modernized to achieve greater efficiency in service processes and improve the service level. Field operations are being honed by means of a joint project with Tekes, which seeks efficiency in the production control and logistics of field services. Cooperation with educational institutions has been firmed up to ensure that enough labour is available in the years ahead.

OUTLOOK FOR 2004

YIT’s net sales will see substantial growth, as the Building Systems business segment will enlarge net sales during the entire year.
Profit before extraordinary items and taxes will improve significantly compared with 2003. After demand peaked, volumes have levelled off in residential construction in Finland and the earnings potential of these operations remains strong. Residential production continues to grow in Russia and the Baltic countries. It is expected that the Building Systems business segment will have a positive effect on YIT’s full-year earnings per share for 2004.

Helsinki, November 1, 2004

Board of Directors

CONSOLIDATED FINANCIAL STATEMENTS, SEPTEMBER 30, 2004 (Unaudited)

INCOME STATEMENT (EUR million)

                          Jan-Sep/    Jan-Sep/   Change,  Jan-Dec/                               2004        2003         %      2003

Net sales                  2,223.9     1,435.7        55   2,389.7 - of which                    international activities		     875.6       291.5        *)     672.5 - sale of shares in                     own production               143.2       168.4       -15     243.1 Operating income and       expenses		  -2,091.4    -1,328.2        57  -2,253.3 Depreciation and value                  adjustments                  -12.7       -12.3         3     -17.7 Operating profit                        before amortization of                                             goodwill and goodwill          on consolidation (EBITA)			     119.8        95.2        26     118.7 % of net sales                5.4%        6.6%         -      5.0% Amortization of               goodwill and goodwill on consolidation	     -22.6        -9.4        *)     -20.1 Operating profit              (EBIT)                        97.2        85.8        13      98.6 % of net sales                4.4%        6.0%         -      4.1% Financial income and                   expenses, net                -12.1       -10.4        16     -14.2 Profit before                  extraordinary items           85.1        75.4        13      84.4 % of net sales                3.8%        5.3%         -      3.5% Extraordinary income             0           0         0         0 Extraordinary expenses           0           0         0         0 Profit before taxes           85.1        75.4        13      84.4 % of net sales                3.8%        5.3%         -      3.5% Profit for the report          period                        58.8        50.2        17      48.4 % of net sales               2.6 %        3.5%         -      2.0%

*) Change over 100%

Projects have been booked in the income statement on the basis of the degree of completion or the degree of sale, whichever is lower. After the changeover to IAS, partial credits to account will be carried out using the principle of degree of completion multiplied by degree of sale as from the beginning of 2005.

Deferred tax liabilities and the minority share of depreciation difference have been taken into account in the profit for the review period. Income taxes have been accounted for as a share of the estimated taxes for the entire financial year, calculated in proportion to the result for the review period.

INCOME STATEMENT (the third quarter of 2004 compared with the third quarter of 2003)

                          Jul-Sep/   Jul-Sep/   Change,%                               2004       2003                                               Net sales                    719.5      503.6         43 - of which                    international activities		     293.8      109.9         *) - sale of shares in own        production		      35.4       57.2        -38 Operating income and         expenses                    -670.4     -467.9         43 Depreciation and write-        downs			      -4.4       -4.0         10 Operating profit before        amortization of goodwill and goodwill on consolidation (EBITA)			      44.7       31.7         41 % of net sales                6.2%       6.3%          - Amortization of                goodwill and goodwill on consolidation	      -7.7       -3.8         *) Operating profit (EBIT)       37.0       27.9         33 % of net sales                5.1%       5.5%          - Financial income and           expenses, net                 -4.8       -4.0         20 Profit before                  extraordinary items           32.2       23.9         35 % of net sales                4.5%       4.7%          - Extraordinary income             0          0          0 Extraordinary expenses           0          0          0 Profit before taxes           32.2       23.9         35 % of net sales                4.5%       4.7%          - Profit for the report          period                        23.8       14.7         62 % of net sales                3.3%       2.9%          -

*) Change over 100%

BALANCE SHEET (EUR million)

                             Sep/2004  Sep/2003  Change,% Dec/2003 ASSETS                                                             Intangible assets                                                  - Goodwill                      155.9       0.5        *)    168.9 - Other intangible assets        12.1     147.8       -92     11.8 Goodwill on consolidation        75.4      66.2        14     78.0 Tangible assets                  66.9      57.9        16     66.8 Investments                                                        - Other investments               7.7      35.3       -78      7.9 Inventories                     451.1     395.4        14    380.8 Receivables                     809.4     585.9        38    781.0 Marketable securities             0.9       9.4       -90     11.9 Cash and cash equivalents        39.3      25.5        54     48.4 Total assets                  1,618.7   1,323.9        22  1,555.5                                                                    LIABILITIES Share capital                    61.2      60.2         2     61.0 Other shareholders’ equity      370.2     345.1         7    347.3 Minority interests                3.3       2.4        38      3.4 Provisions                       22.7       8.8        *)     27.3 Non-current liabilities         225.8     113.5        99    210.9 Current liabilities             935.5     793.9        18    905.6 Total shareholders’ equity     and liabilities               1,618.7   1,323.9        22  1,555.5

*) Change over 100%

CONSOLIDATED CASH FLOW STATEMENT (EUR million)

                             Jan-Sep/  Jan-Sep/   Change, Jan-Dec/                                  2004      2003         %     2003 Cash flow from operating                                           activities Profit before extraordinary       items                            85.1      75.4        13     84.4 Adjustments, total               38.1      -1.5        *)     30.7 Cash flow before change in                                  net working capital             123.2      73.9        67    115.1 Change in net working            capital			        -83.2     -12.6        *)     25.4 Cash flow from operations                                   before financial items and                                taxes			         40.0      61.3        -35   140.5 Interest paid                   -13.7     -12.1        13    -14.7 Dividends received                  0       0.3         -      0.3 Interest received                 1.0       1.0         0      2.7 Taxes paid                      -23.2     -20.4        14    -31.2 Net cash from operating            activities                        4.1      30.1       -86     97.6                                                                    Cash flow from investing                                           activities Capital expenditure on                                     tangible and intangible           assets			        -22.4    -159.4       -86   -230.5 Proceeds from sale of                                        tangible and intangible            assets			          2.9      34.7       -92     37.5 Investments in other assets      -0.5     -28.7       -98     -2.4 Proceeds/losses from sale                 of investments                    1.5       0.3        *)      1.4 Net cash used in investing       activities                      -18.5    -153.1       -88   -194.0                                                                    Cash flow from financing                                           activities Rights issue                      0.9       4.5       -80      9.5 Purchase/sale of own shares         -      12.4         -     12.4 Change in loan receivables        2.1      -5.2        *)      0.1 Change in short-term debt        26.7     126.9       -79     23.6 Borrowing of long-term debt      59.9      15.5        *)    117.7 Repayment of long-term debt     -58.6      -8.9        *)    -19.2 Dividends paid                  -36.8     -26.3        40    -26.3 Net cash used in financing        activities                       -5.8     118.9         -    117.8                                                                    Change in liquid assets         -20.2      -4.1        *)     21.4                                                                    Liquid assets at beginning        of period                        60.3      38.9        55     38.9 Liquid assets at end of          period                           40.1      34.8        15     60.3

*) Change over 100%

KEY FIGURES

                                   Sep/      Sep/  Change,    Dec/                                    2004      2003        %    2003                                          Earnings per share, EUR             0.96  0.86**)     12   0.82**) Earnings per share, EUR, diluted    0.95  0.84**)     13   0.82**) Equity per share, EUR               7.05  6.73**)      5   6.69**) Average share price during the       period, EUR                        15.78  9.27**)     70  10.35**) Share price at end of period,            EUR                                15.85  11.00**)    44  13.45**) Market capitalization at end of                             period, EUR million                969.7  662.6       46     821.1 Weighted average share-issue           adjusted number of shares                                 outstanding, thousands            61,095  58,576**)    4 59,104**)                                 Weighted average share-issue             adjusted number of shares                                        outstanding, thousands, diluted   61,711  59,678**)    3 59,248**)                          Share-issue adjusted number of                     shares outstanding at end of       period, thousands                 61,179  60,236**)    2 61,047**)                               Net interest-bearing debt at end                             of period, EUR million             251.4    246.9        2   204.4 Return on investment, from the              last 12 months,%                   15.8%    18.5%        -   16.8% Equity ratio,%                     29.5%    33.2%        -   28.3% Gearing ratio,%                    57.8%    60.6%        -   49.6% Gross capital expenditures on                               non-current assets, EUR million     21.4    187.6       -89  232.9 -% of net sales                     1.0%    13.1%        -    9.7% Order backlog at end of period,   EUR million 1)                   1,521.0  1,416.5        7 1,490.1 - of which international orders    596.8    291.9       *)   569.5 Average personnel                 22,012   13,846       59  16,212

*) Change over 100% **) The doubling of the number of shares, which came into effect March 26, 2004, has been taken into account.
1) Portion of binding orders not recognized as income.

CONTINGENT LIABILITIES (EUR million)

                               Sep/2004 Sep/2003 Change,% Dec/2003 Mortgages given as security                                        for loans - For own commitments              29.3     29.8       -2     29.8 Other collateral given for own                                     commitments - Securities pledged                  0      0.2        -      0.2 Leasing commitments                45.0     19.6       *)     50.7 Other commitments                                                  - Purchase commitments            180.8    129.7       39      7.3 - Responsibility for external                debts of companies held in          inventories                        42.5        0        -     44.5 - Other commitments                 0.6      0.5       20      1.2 Guarantees                                                         - On behalf of associated            companies			    0.7      0.9      -22      0.7 - On behalf of others               2.6     17.3      -85      9.0 Mortgages given by companies                                  held in inventories; for                                           commitments of Group companies       and for own commitments             4.0      2.1       90      2.1 Liability under derivative                                         contracts 2) - Value of underlying                                              instruments -- Interest rate swaps             70.0        0        -     20.0 -- Foreign currency forward         contracts                          70.1     75.7       -7     70.8 - Fair value                                                       -- Interest rate swaps             69.5        0        -     19.7 -- Foreign currency forward         contracts                          68.2     74.4       -8     72.1

*) Change over 100% 2) Derivative contracts have been taken out mainly to hedge foreign currency loans and foreign currency cash flows from projects.

NET SALES BY BUSINESS SEGMENT (EUR million)

At the beginning of September 2003, the YIT Group’s operations were divided into four business segments: Building Systems, Construction Services, Services for Industry and Data Network Services. The Construction Services business segment was formed from YIT Construction Ltd and the Data Network Services business segment from YIT Primatel Ltd. Former YIT Installation was divided into two new business segments: Building Systems and Services for Industry. In the case of Building Systems and Services for Industry, the net sales and order book figures presented for 2003 are pro forma calculations. The balance sheet of the acquired Building Systems business was included in the consolidated balance sheet for the first time on December 31, 2003. The first four-month period of its business operations that was booked began on August 29, 2003, and is recorded in the figures for the fourth quarter of 2003.

                             Jan-Sep/  Jan-Sep/   Change, Jan-Dec/                                  2004      2003         %     2003 Building Systems                969.3     241.9        *)    681.0 Construction Services         1,055.6     961.4        10  1,398.5 Services for Industry           141.3     153.8        -8    209.7 Data Network Services            90.4      93.0        -3    130.0 Other items                     -32.7     -14.4        *)    -29.5 YIT Group, total              2,223.9   1,435.7        55  2,389.7

*) Change over 100%

OPERATING PROFIT BEFORE AMORTIZATION OF GOODWILL AND GOODWILL ON CONSOLIDATION (EBITA) BY BUSINESS SEGMENT (EUR million)

                             Jan-Sep/  Jan-Sep/   Change, Jan-Dec/                                  2004      2003         %     2003 Building Systems                 19.1         -         -     -7.1 Construction Services            84.4      81.1         4    111.1 Services for Industry             5.8         -         -      9.7 Data Network Services            14.0       8.7        61     14.0 (YIT Installation)                  -      12.0         -          Other items                      -3.5      -6.6       -47     -9.0 YIT Group, total                119.8      95.2        26    118.7

OPERATING PROFIT (EBIT) BY BUSINESS SEGMENT (EUR million)

                             Jan-Sep/  Jan-Sep/   Change, Jan-Dec/                                  2004      2003         %     2003 Building Systems                  1.0         -         -    -19.7 Construction Services            82.9      78.9         5    107.8 Services for Industry             5.3         -         -      8.8 Data Network Services            11.5       6.2        85     10.7 (YIT Installation)                          7.3                    Other items                      -3.5      -6.6       -47     -9.0 YIT Group, total                 97.2      85.8        13     98.6

ORDER BACKLOG BY BUSINESS SEGMENT AT END OF PERIOD (EUR million)

                             Sep/2004  Sep/2003  Change,% Dec/2003 Building Systems                564.6     419.9        34    502.3 Construction Services           752.8     868.7       -13    817.7 Services for Industry           115.5      62.6        85     67.2 Data Network Services            88.1      65.3        35    102.9 YIT Group, total              1,521.0   1,416.5         7  1,490.1

QUARTERLY FIGURES, Q1/2003 - Q3/2004 (EUR million)

                           Q1/    Q2/   Q3/    Q4/   Q1/    Q2/   Q3/                           2003   2003  2003   2003  2004   2004  2003                                                    Net sales, MEUR          431.5  500.6 503.6  954.0 713.1  791.3 719.5 Operating profit (EBIT),    MEUR                       6.9   51.0  27.9   12.8  28.0   32.2  37.0 % of net sales             1.6   10.2   5.5    1.3   3.9    4.1   5.1 Financial income and                                             -4.8 expenses, net, MEUR       -3.6   -2.8  -4.0   -3.8  -3.7   -3.6 Profit before taxes,        MEUR                       3.3   48.2  23.9    9.0  24.3   28.6  32.2 % of net sales             0.8    9.6   4.7    0.9   3.4    3.6   4.5                                                                       Balance sheet total at 1,067.7      1,323.9      1,520.0      1,618.7                end of period, MEUR           1,176.3      1,555.5      1,587.6                                                                        Earnings/share, EUR **)   0.03   0.58  0.25  -0.04  0.27   0.30  0.39 Equity/share, EUR **)     5.85   6.43  6.73   6.69  6.36   6.66  7.05 Share price at end of      period, EUR **)           7.35   8.50 11.00  13.45 15.40  16.74 15.85            Market capitalization at                                         end of period, MEUR     428.6  497.1 662.6  821.1 940.1 1,023.8 969.7                                                                       Cash flow from operating                                          activities, MEUR          12.5  -40.7  58.3   67.5  20.2  -12.4  -3.7 Return on investment                                              from the last 12           months,%                  17.0   20.4  18.5   16.8  20.8   16.5  15.8 Equity ratio,%            34.7   34.8  33.2   28.3  27.7   28.1  29.5 Net interest-bearing                                             debt at end of period,    MEUR                     122.4  139.5 246.9  204.4 220.5  243.1 251.4 Gearing ratio,%           35.6   36.9  60.6   49.6  56.3   59.1  57.8                                                                       Gross capital              expenditures, MEUR         5.1    9.1 173.4   45.3   6.1   10.9   4.4

Order backlog at end of       1,091.8      1,490.1      1,569.8 period, MEUR           1,008.3      1,416.5      1,478.2      1,521.0     Personnel at end of            13,087       21,939       21,952 period                  12,459       22,144       21,654       22,013            **) The doubling of the number of shares, which came into effect March 26, 2004, has been taken into account.
           NET SALES BY BUSINESS SEGMENT (EUR million)

                           Q1/   Q2/    Q3/   Q4/    Q1/    Q2/   Q3/                           2003  2003   2003  2003   2004   2004  2004                                                   Building Systems          80.8  75.7   85.4 439.1  316.9  336.0 316.4 Construction Services    280.6 343.8  337.0 437.1  338.3  387.7 329.6 Services for Industry     48.4  55.4   50.0  55.9   42.7   49.2  49.4 Data Network Services     25.5  30.9   36.6  37.0   24.4   30.8  35.2 Other items               -3.8  -5.2   -5.4 -15.1   -9.2  -12.4 -11.1 Group total              431.5 500.6  503.6 954.0  713.1  791.3 719.5            The figures presented for Building Systems and Services for Industry for the first three quarters of 2003 are pro forma calculations. The figure for Building Systems’ fourth quarter includes the net sales of the acquired business operations over a four-month period.

OPERATING PROFIT (EBIT) BY BUSINESS SEGMENT (EUR million)

                           Q1/   Q2/    Q3/   Q4/    Q1/    Q2/   Q3/                           2003  2003   2003  2003   2004   2004  2004 Building Systems                         -19.7***)  -1.3    1.6   0.7                    Construction Services      9.5  47.8   21.6  28.9   30.1   26.8  26.0 Services for Industry                      8.8***)  -0.1    2.4   3.0                      Data Network Services     -1.7   2.4    5.5   4.5    0.6    2.9   8.0 (YIT Installation)         1.8   3.7    1.8                           Other items               -2.7  -2.9   -1.0  -2.4   -1.3   -1.5  -0.7 Group total                6.9  51.0   27.9  12.8   28.0   32.2  37.0

***) During the three first quarters of 2003 MEUR 7.3 is included in the operating profit of YIT Installation.

ORDER BACKLOG BY BUSINESS SEGMENT AT END OF PERIOD (EUR million)

                           Q1/   Q2/    Q3/   Q4/    Q1/    Q2/   Q3/                           2003  2003   2003  2003   2004   2004  2004 Building Systems         133.5 145.6  419.9 502.3  557.2  566.5 564.6 Construction Services    699.3 784.9  868.7 817.7  735.6  810.6 752.8 Services for Industry     81.0  71.3   62.6  67.2   76.0   73.5 115.5 Data Network Services     94.5  90.0   65.3 102.9  109.4  119.2  88.1 Group total                  1,091.8      1,490.1       1,569.8                        1,008.3      1,416.5      1,478.2      1,521.0