YIT’s Interim Report January-March 2024

YIT’s Interim Report January-March 2024   

Cash flow and financial position improved, profitability impacted by the Finnish housing market and rising yields 

First quarter 2024 in brief 

• Order book was EUR 3,091 million (31 Dec 2023: 3,157). Order book remained stable in Housing and Business Premises and decreased slightly in Infrastructure. At the end of the quarter, 74% of the order book was sold (31 Dec 2023: 74%). 

• Revenue decreased to EUR 412 million (455). In Housing, revenue decreased mainly due to lower number of completions in the Baltic and CEE countries. Revenue increased in Business Premises and decreased in Infrastructure, mainly due to revenue decrease in businesses to be closed down.  

• The underlying operating performance was on the previous year's level, but the adjusted operating profit decreased to  
  EUR -14 million (-3). The decrease was mainly due to a decrease in the fair value of Tripla Mall caused by a yield increase, impacting the adjusted operating profit by EUR -12 million. The adjusted operating profit margin was -3.4% (-0.7).  

• Operating cash flow after investments increased significantly to EUR 1 million (-216). Cash and cash equivalents at the end of the period amounted to EUR 268 million (31 Dec 2023: 128), supported by the successful financing arrangement. 

• Net interest-bearing debt decreased to EUR 768 million (837), and gearing improved to 89% (101). Both net interest-bearing debt and gearing also decreased compared to the previous quarter. 

• In Housing, adjusted operating profit decreased to EUR -4 million (4), impacted by low consumer sales in Finland and a lower number of completions in the Baltic and CEE countries. Consumer apartment start-ups increased to 478 (29), All the start-ups in the first quarter were in the Baltic and CEE countries. The number of unsold completed apartments increased to 1,359 (31 Dec 2023: 1,267). 

• In Business Premises, adjusted operating profit decreased to EUR -11 million (-7). The underlying performance for the segment improved and was positive. Based on market data, the yield for the Tripla Mall was increased during the quarter. The increase in the yield impacted the adjusted operating profit of the segment by EUR -12 million. 

• In Infrastructure, adjusted operating profit amounted to EUR 1 million (1).  

• On 9 January 2024, YIT announced that it had agreed on the sale of the entire share capital of service equipment business YIT Kalusto Oy to Renta Oy. The transaction was completed on 29 February 2024. 

• Result for the period was EUR -16 million (-14). 

• On 12 March 2024 YIT announced that it had executed a substantial financing arrangement including equity and enhancements to existing loan terms, leading to an improvement in liquidity in excess of EUR 100 million. The financing arrangement comprised a directed share issue of EUR 33.5 million at market price, an issue of EUR 36 million convertible notes due in March 2029 with a coupon of 8% p.a. and a strike price of EUR 2.25 per share. Furthermore, lenders agreed to make amendments to the existing revolving credit facility (EUR 300 million) and the term loan (EUR 140 million) including maturity extensions and other positive amendments to key loan terms and postponements of amortisations. Combined, the amendments to loan terms increase available liquidity by over EUR 30 million. Above mentioned agreed amendments to existing loan facilities have entered into force in April 2024. 

Key figures 

EUR million	1–3/24	1–3/23	1–12/23
Revenue	412	455	2,163
Operating profit	-8	-7	51
Operating profit, %	-2.0	-1.6	2.4
Adjusted operating profit	-14	-3	41
Adjusted operating profit margin, %	-3.4	-0.7	1.9
Result before taxes	-22	-19	-5
Result for the period	-16	-14	3
Earnings per share, EUR	-0.08	-0.07	-0.01
Operating cash flow after investments	1	-216	-137
Net interest-bearing debt	768	837	795
Gearing ratio, %	89	101	94
Equity ratio, %	33	33	33
Return on capital employed, % (ROCE, rolling 12 months)	1.8	6.0	2.5
Order book	3,091	3,542	3,157
Combined lost time injury frequency (cLTIF, rolling 12 months)	11.4	13.5	12.1
Customer satisfaction rate (NPS)	53	47	54

Unless otherwise noted, the figures in brackets in this report refer to the corresponding period in the previous year. 

Comments from the President and CEO, Heikki Vuorenmaa 

”Year 2024 started on a positive note, with continued strong housing sales in Central Eastern Europe and a clear pick-up in the Baltic countries, and in total, our consumer apartment sales increased by 59% compared to the previous year. Expectations of a decline in the euro area interest rates have moderated since the end of last year, and the outlook for interest rates remains subject to considerable uncertainty. As expected, this led to a continued low level of housing sales in Finland during the first quarter. The unique characteristics of the Finnish housing market and its sensitivity to interest rates is postponing the recovery of the market.  

We improved our Group operating cash flow after investments by over EUR 200 million on a year-on-year basis. Our cash flow for the last 12 months was positive, and indebtedness decreased. Progress is connected to the successful execution of the transformation program and the capital release actions. There is still work to be done to bring the capital efficiency to the desired level and to reduce the indebtedness of the company. We will determinately continue to take the required measures towards these goals. 

The Housing segment’s profitability continued to be muted due to prevailing market conditions in Finland and significantly less completions in the quarter in the Baltic and CEE countries. In the Baltic and CEE countries, the market recovery started earlier and has continued positively, especially in Poland, the Czech Republic, and Latvia. The past quarter was the fifth consecutive quarter with increased consumer apartment sales for YIT in the Baltic and CEE countries. This year, over 70% of our apartments will be completed outside Finland, so the good market conditions are key to the segment's performance. While there remains uncertainty regarding the timing of the recovery of the Finnish housing market, we are at full speed with our housing operations in our other operating countries. 

In Business Premises, revenue increased and the underlying performance improved. Burden from the fixed price contracts starts to be behind and segment can focus on increasing margins. While the segment's underlying performance improved and was positive, the reported adjusted operating profit decreased mainly due to a decrease in fair values driven by the increase of the market yield for Tripla Mall.  

In Infrastructure, the operations continued to be solid in the quarter. As a result of the decision to close down the Swedish operations and the successful divestment of the equipment services business, we focus on businesses in which we have a competitive advantage. The Finnish infrastructure market is active and there are several tenders ongoing, that fit our expertise well. As an example of the recent successes, we signed an agreement on the implementation of the excavation contract for Espoo City Rail in March.  

Given the market uncertainty in Finland, we have focused on securing our cash and liquidity position. The substantial financing arrangement announced in March was a major milestone on our journey, including equity, convertible notes and enhancements to existing loan terms. It improved our liquidity by more than EUR 100 million and enables us to carry out the required capital release measures with optimized timing. We continue to firmly focus on improving our segments’ profitability and completing our transformation. As we do this, a strong financial position will allow us to evaluate growth opportunities, both in the contracting segments and in the Baltic and CEE operations.”  

Results 

January-March 
YIT’s order book decreased slightly from the previous quarter to EUR 3,091 million (31 Dec 2023: 3,157). The order book remained stable in Housing and Business Premises and decreased slightly in Infrastructure. At the end of the quarter, 74% of the order book was sold (31 Dec 2023: 74%). 

YIT’s revenue decreased from the comparison period to EUR 412 million (455). In Housing, revenue decreased mainly due to lower number of completions in the Baltic and CEE countries. Revenue increased in Business Premises and decreased in Infrastructure, mainly due to the revenue decrease in businesses to be closed down.  

The underlying operating performance was on the previous year's level, but the adjusted operating profit decreased to EUR -14 million (-3). The decrease was mainly due to a decrease in the fair value of Tripla Mall caused by a yield increase, impacting the adjusted operating profit by EUR -12 million. Adjusted operating profit margin was -3.4% (-0.7). In Housing, adjusted operating profit was negatively affected by low consumer sales in Finland and the lower number of completions in the Baltic and CEE countries. In Business Premises, adjusted operating profit decreased. The underlying performance for the segment improved and was positive. Based on market data, the yield for the Tripla Mall was increased during the quarter. In Infrastructure, adjusted operating profit remained stable. 

YIT’s operating profit was EUR -8 million (-7). Adjusting items were EUR -6 million in the first quarter (4), mainly related to the gain on sale of the equipment services business YIT Kalusto Oy, offset by the costs of transformation program and operating profit from operations to be closed down. Net finance costs increased to EUR 14 million (12) due to increased market interest rates and interest rate margins. The result for the period was EUR -16 million (-14). 

Guidance and outlook for 2024 

YIT expects its Group adjusted operating profit for continuing operations to be EUR 20–60 million in 2024. The operating cash flow after investments is expected to be positive.  

The housing market recovery in the Baltic countries and Central Eastern Europe is expected to continue. In Finland, the housing market is expected to continue to be weak in the second and third quarters of the year. In Business Premises and Infrastructure, the underlying operational performance is expected to improve.  

YIT’s performance will be supported by the increased efficiencies from the transformation program launched on 10 February 2023.  

Changes in the macroeconomic environment, especially in interest rates, may impact the housing market demand and the fair value of investments. Delayed apartment completions could lead to the postponement of revenue and profit from one quarter or year to another. Actions to release capital may have an impact on the company’s profit. 

Webcast for investors and the media  

A webcast and an international telephone conference will be arranged on 30 April 2024 at 10:00 a.m. EEST (7:00 a.m. GMT). The results will be presented by Heikki Vuorenmaa, President and CEO of YIT Corporation, and CFO Tuomas Mäkipeska.    

The webcast can be followed at https://yit.videosync.fi/q1-2024/ and at the company’s web site at www.yitgroup.com/investors. A recording of the webcast will be available at the same address later that day.   

The teleconference can be accessed by registering at: https://palvelu.flik.fi/teleconference/?id=50048710. After the registration, participants will be provided with phone numbers and a conference ID to access the conference. To ask a question, please dial *5 on your telephone keypad to enter the queue.   

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

For further information: 
Essi Nikitin, Vice President, Investor Relations, YIT Corporation, tel. +358 50 581 1455, essi.nikitin@yit.fi

YIT Corporation 

Tuomas Mäkipeska 
CFO 

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

YIT is a leading construction and development company. Building on over 110 years of experience, we develop and build sustainable living environments: functional homes, future-proof public and commercial buildings, and infrastructure to support the green transition. We employ approximately 4,300 professionals in eight countries. Our revenue in 2023 was EUR 2.2 billion. YIT Corporation's shares are listed on Nasdaq Helsinki.   

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