YIT Interim Report Q2/2014 presentation
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- YIT reported fairly good results for Q2/2014 despite challenging market conditions in Finland. Revenue and order backlog grew in the quarter. - Housing segment revenue increased due to higher apartment completion rates and land sales in Finland. Revenue also grew strongly in the Baltic countries and CEE. - Operating profit decreased 9% year-over-year for the group due to lower volumes and profitability in the Business Premises and Infrastructure segment. Profitability in Housing was impacted by capital release actions and a change in geographical mix.
YIT Interim Report Q2/2014 presentation
- 1. Interim Report January – June, 2014 Kari Kauniskangas, President and CEO
- 2. YIT | 2 | Interim Report January – June 2014 1 Group development 2 Housing 3 Business Premises and Infrastructure 4 Financial position and key ratios 5 Outlook and guidance 6 Appendices Contents
- 4. YIT | 4 | Interim Report January – June 2014 • Fairly good results despite continued challenging market situation in Finland and capital release actions • Strong efforts to release capital continued, results expected later in 2014 • Guidance specified Highlights in Q2/2014 Maailmanpylväs Jyväskylä, Finland
- 5. YIT | 5 | Interim Report January – June 2014 452 431 455 521 403 451 7.9% 8.9% 8.2% 7.9% 6.7% 7.7% Q1 Q2 Q3 Q4 Q1 Q2 Revenue Operating profit margin Revenue and order backlog grew in Q2/2014 All figures according to segment reporting (POC) • Revenue growth supported by increased sales in the Baltic countries and Central Eastern Europe (CEE), higher completion rate of sold apartments and the approx. EUR 25 million plot sales to the Hypo Group • EBIT decreased by 9% y-o-y • Order backlog grew in Business Premises and Infrastructure and Housing Russia Group revenue and profitability (EUR million, %) Order backlog (EUR million) 65% 65% 35% 35% 2,697 2,924 3/2014 6/2014 Unsold Sold 8%5% 2013 2014
- 6. YIT | 6 | Interim Report January – June 2014 EBIT – bridge Q2/2013 – Q2/2014 38.3 34.7 8.6 -6.9 -1.7 -1.3 0.1 -2.5 YIT Group Q2/2013 Volume Profitability Volume Profitability Other items FX-impact YIT Group Q2/2014 (EUR million), change Q2/2013 – Q2/2014: -9% Housing Business Premises and Infrastructure • Revenue growth boosted EBIT in Housing • Profitability was negatively impacted by capital release and the change in geographical mix in Housing as well as lower volume in Business Premises and Infrastructure
- 7. Housing 2 Novo Orlovsky St. Petersburg, Russia
- 8. YIT | 8 | Interim Report January – June 2014 286 248 270 348 281 304 12.2% 12.3% 12.9% 10.2% 10.3% 9.9% Q1 Q2 Q3 Q4 Q1 Q2 Revenue Operating profit margin Housing: Revenue increased clearly All figures according to segment reporting (POC) • Revenue grew by 30% y-o-y at comparable exchange rates, growth in all geographical regions • Profitability was impacted by capital release and the change in geographical mix Revenue and profitability (EUR million, %) Order backlog (EUR million) 2,027 2,172 3/2014 6/2014 7% 23% 2013 2014
- 9. YIT | 9 | Interim Report January – June 2014 Housing: Operating environment in Finland in Q2/2014 • Consumers continued to be cautious, but investors remained active Prices of old apartments, Index (2010=100) New drawdowns of mortgages and average interest rate, (EUR million, %) Consumer confidence 1/2010-6/2014 85 90 95 100 105 110 115 2010 2011 2012 2013 2014 Finland Capital region Rest of Finland -5 0 5 10 15 20 25 2010 2011 2012 2013 2014 Consumer confidence Long-term average • Polarisation of residential prices between the capital region and other parts of Finland continued • Good demand for small, affordable apartments 0.0 1.0 2.0 3.0 4.0 5.0 0 500 1,000 1,500 2,000 2,500 2010 2011 2012 2013 2014 New drawdowns of mortgages Average interest rate • Mortgage interest rates stayed on a low level and margins continued to decrease slightly • The volume of new housing loans started to recover Sources: Statistics Finland and Bank of Finland
- 10. YIT | 10 | Interim Report January – June 2014 Housing: Operating environment in the Baltic countries and Central Eastern Europe (CEE) in Q2/2014 • Positive development in the macro economy has supported the residential market • Ukrainian crisis impacted economic sentiment in the Baltic countries Economic sentiment Average interest rate of mortgages (%)Consumer confidence -50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0 5 2010 2011 2012 2013 2014 Estonia Latvia Lithuania The Czech Republic Slovakia 80 85 90 95 100 105 110 115 2010 2011 2012 2013 2014 Estonia Latvia Lithuania The Czech Republic Slovakia • Consumer confidence has strengthened and residential prices have increased slightly 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 2011 2012 2013 2014 Estonia Latvia Lithuania The Czech Republic Slovakia • Interest rates of mortgages have remained on a low level • Consumers’ access to financing has remained good Sources: European Commission and National Central Banks
- 11. YIT | 11 | Interim Report January – June 2014 Housing Finland, the Baltic countries and CEE: Revenue increased clearly All figures according to segment reporting (POC) • Higher completion rate of sold apartments and the approx. EUR 25 million plot sales boosted revenue in Finland • Good progress continued in the Baltic countries and CEE Revenue (EUR million) Order backlog (EUR million) 189 132 140 196 173 187 Q1 Q2 Q3 Q4 Q1 Q2 957 953 3/2014 6/2014 0% 42% 2013 2014
- 12. YIT | 12 | Interim Report January – June 2014 Housing Finland, the Baltic countries and CEE: Operating profit boosted by strong revenue All figures according to segment reporting (POC) • Profitability was negatively impacted by the bundle deals with investors and the plot sales to the Hypo Group, which did not have an earnings effect • Profitability continued to improve in the Baltic countries and CEE • Operative invested capital decreased slightly Operating profit and profitability (EUR million, %) Return on operative invested capital (EUR million, %) 22.4 13.7 14.7 14.9 16.8 16.2 11.9% 10.4% 10.5% 7.6% 9.7% 8.6% Q1 Q2 Q3 Q4 Q1 Q2 Operating profit Operating profit margin 651.8 649.0 621.9 65.7 60.0 62.6 10.3% 9.7% 10.1% 12/2013 3/2014 6/2014 Operative invested capital Operating profit, 12 month rolling Return on operative invested capital, 12 month rolling 18% 2013 2014
- 13. YIT | 13 | Interim Report January – June 2014 Housing: Sales volume satisfactory in Finland • Good activity in investor sales • Soft consumer demand • Some improvement towards the end of the quarter • In July, sales have been at previous year’s level • Focus on smaller and more affordable apartments in start-ups Sold apartments (units) Apartment start-ups (units) 440 334 381 400 314 333 275 383 243 323 339 332 715 717 624 723 653 665 Q1 Q2 Q3 Q4 Q1 Q2 To consumers To investors (funds) 532 592 418 219 409 399 54 383 135 150 285 281 586 975 553 369 694 680 Q1 Q2 Q3 Q4 Q1 Q2 To consumers To investors (funds) 2013: Total of 2,483 2013: Total of 2,779 2013 2014 1-6/2014: Total of 1,318 1-6/2014: Total of 1,374 2013 2014
- 14. YIT | 14 | Interim Report January – June 2014 Housing: Sales continued to grow in the Baltic countries and CEE • Strong growth in housing sales continued in Q2/2014 • In July, sales have grown from previous year’s level • Start-ups increased according to positive expectations on demand • YIT Reding was selected as the construction company and real estate developer of the year in Slovakia Sold apartments (units) Apartment start-ups (units) 109 134 133 145 180 207 Q1 Q2 Q3 Q4 Q1 Q2 2013: Total of 521 114 286 134 189 246 276 Q1 Q2 Q3 Q4 Q1 Q2 2013: Total of 723 2013 2014 2013 2014 1-6/2014: Total of 387 1-6/2014: Total of 522
- 15. YIT | 15 | Interim Report January – June 2014 Housing Finland, the Baltic countries and CEE: More small and affordable apartments in the sales portfolio • The share of the Baltic countries and CEE of the sales portfolio increased to 35% (27% in 6/2013) • The sales rate of apartments under construction has increased both in Finland and the Baltic countries and CEE 4,615 5,156 5,111 4,642 4,808 4,907 637 660 683 624 633 686 5,252 5,816 5,794 5,266 5,441 5,593 51% 49% 50% 50% 50% 50% Q1 Q2 Q3 Q4 Q1 Q2 Under construction Completed, unsold Sales rate, % 2013 2014 Apartment inventory (units)
- 16. YIT | 16 | Interim Report January – June 2014 Housing: Operating environment in Russia in Q2/2014 • The ruble strengthened • Housing demand decreased from the high level in Q1/2014 Prices of new apartments, Index (2009=100) Mortgage stock and average interest rate, (RUB billion, %) EUR/RUB exchange rate • Residential prices remained stable on average • Mortgage interest rates have remained stable, but expected to increase • The role of mortgages has continued to increase 40 60 80 100 120 140 160 180 Moscow Yekaterinburg Rostov-on-Don Kazan St. Petersburg 10 11 12 13 14 15 16 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Mortgage stock Average interest rate Sources: Reuters, YIT and Bank of Russia 35 37 39 41 43 45 47 49 51 53
- 17. YIT | 17 | Interim Report January – June 2014 Housing Russia: Revenue grew by 16% y-o-y at comparable exchange rates All figures according to segment reporting (POC) • Sales volume normalized after the acceleration in Q1/2014 • Sales volume increased slightly y-o-y • The order backlog grew from 3/2014 due to the strengthening of the ruble (EUR 60 million) and new start-ups Revenue (EUR million) Order backlog (EUR million) 98 116 130 152 109 117 Q1 Q2 Q3 Q4 Q1 Q2 1,071 1,219 3/2014 6/2014 14% 0% 2013 2014
- 18. YIT | 18 | Interim Report January – June 2014 Housing Russia: Operating profit decreased All figures according to segment reporting (POC) • Operating profit decreased y-o-y, but improved from Q1/2014 • Profitability was negatively impacted by higher share of lower-margin projects compared to Q2/2013 • Operative invested capital increased due to infra investments in area development projects and the strengthening of the ruble Operating profit and profitability (EUR million, %) Return on operative invested capital (EUR million, %) 12.6 17.0 20.1 20.5 12.2 13.8 12.9% 14.6% 15.4% 13.5% 11.2% 11.8% Q1 Q2 Q3 Q4 Q1 Q2 Operating profit Operating profit margin 574.0 549.2 601.6 70.2 69.7 66.6 12.3% 12.4% 11.4% 12/2013 3/2014 6/2014 Operative invested capital Operating profit, 12 month rolling Return on operative invested capital, 12 month rolling -19% 2013 2014
- 19. YIT | 19 | Interim Report January – June 2014 1,146 941 1,106 1,906 714 1,675 Q1 Q2 Q3 Q4 Q1 Q2 931 130889 1,037 1,162 1,392 1,132 1,061 38% 51% 46% 43% 41% 46% Q1 Q2 Q3 Q4 Q1 Q2 Sold apartments Bundle deals Financed with mortgages, % Housing Russia: H1/2014 start-ups in line with sales • Sales have decreased after the strong Q1/2014 • Two bundle deals totalling 130 apartments with Norilsk Nickel • Share of cash buyers decreased from Q1/2014 • In July, sales have slowed down from previous year’s level Sold apartments (units) and share of sales financed with a mortgage (%) Apartment start-ups (units) 2013: Total of 5,099 2013: Total of 4,480 (44%) 2013 2014 1-6/2014: Total of 2,193 (44%*) 2013 2014 1-6/2014: Total of 2,389 * Excluding the bundle deals
- 20. YIT | 20 | Interim Report January – June 2014 Housing Russia: Solid sales portfolio • Sales rate of apartments under construction continued to increase • Completions on a very low level (199 units), expected to increase clearly towards the end of the year • Completed unsold apartments on an exceptionally low level • Portfolio geographically well balanced 2,168 1,978 2,223 3,267 3,030 4,136 4,198 4,317 4,305 4,309 3,663 3,618 2,924 3,223 3,369 3,204 3,769 4,184 9,290 9,518 9,897 10,780 10,462 11,938 Q1 Q2 Q3 Q4 Q1 Q2 St. Petersburg Moscow Oblast Yekaterinburg, Kazan, Rostov-on-Don, Moscow city, Tyumen Apartment inventory (units) Apartments under construction by city (units) 9,290 9,518 9,897 10,780 10,462 11,938 696 617 562 416 346 257 9,986 10,135 10,459 11,196 10,808 12,195 34% 36% 38% 37% 39% 40% Q1 Q2 Q3 Q4 Q1 Q2 Under construction Completed, unsold Sales rate, % 2013 2014 2013 2014
- 22. YIT | 22 | Interim Report January – June 2014 Business Premises and Infrastructure: Operating environment in Q2/2014 • Business premises market remained weak • Infra market relatively stable, a pick-up in the M&A activity Granted building permits in Finland, thousand m3 Retail trade confidence in the Baltic countries and Slovakia Confidence indicators in Finland 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 2010 2011 2012 2013 2014 Commercial buildings (left) Office buildings (right) • End-users cautious in the business premises market • Investor interest on a good level in prime locations, but weak elsewhere • Positive macro outlook continues to support the business premises market in the Baltic countries and Slovakia -40.0 -30.0 -20.0 -10.0 0.0 10.0 20.0 30.0 2010 2011 2012 2013 2014 Manufacturing Services Retail trade Construction -40 -30 -20 -10 0 10 20 30 40 2010 2011 2012 2013 2014 Estonia Latvia Lithuania Slovakia Sources: EK Confederation of Finnish Industries, Statistics Finland and European Commission
- 23. YIT | 23 | Interim Report January – June 2014 669 752 3/2014 6/2014 Business Premises and Infrastructure: Volume still on a low level, order backlog increased All figures according to segment reporting (POC) • Revenue negatively impacted by low volume in business premises in the Helsinki region • Revenue increased from the low Q1/2014 level in infra services as construction continued after the winter break for example in E18 projects • Positive development in the order backlog in several business units Revenue (EUR million) Order backlog (EUR million) 159 177 181 172 121 147 Q1 Q2 Q3 Q4 Q1 Q2 12% -17% 2013 2014
- 24. YIT | 24 | Interim Report January – June 2014 Business Premises and Infrastructure: Profitability recovered from Q1/2014 All figures according to segment reporting (POC) • The segment’s low volume had a negative impact on profitability • Operative invested capital increased due to progress in production of ongoing business premises projects Operating profit and profitability (EUR million, %) Return on operative invested capital (EUR million, %) 3.1 9.9 8.0 9.5 0.2 6.9 1.9% 5.6% 4.4% 5.5% 0.2% 4.7% Q1 Q2 Q3 Q4 Q1 Q2 Operating profit Operating profit margin 189.8 208.8 233.2 30.5 27.6 24.6 20.6% 15.6% 12.0% 12/2013 3/2014 6/2014 Operative invested capital Operating profit, 12 month rolling Return on operative invested capital, 12 month rolling -31% 2013 2014
- 25. YIT | 25 | Interim Report January – June 2014 Business Premises: Focus on sales of ongoing projects Bisnespaja Avia Vantaa, Finland • Strong efforts in the sales of self-developed projects, more results expected in autumn • Sale of Bisnespaja Avia in April • Negotiations of other major business premises projects proceeded, but terms and conditions tough • Construction of BW Tower, in connection with the new Lahti bus and freight terminal, was started • The Tripla-project proceeded as planned • Zoning has progressed ahead of schedule • Projects in the Baltic countries and CEE are progressing well • The Prisma retail store was opened in Vilnius, Lithuania • Success in contracting – new deals signed • Good progress in leasing of Grand office, Vilnius, sales expected in autumn
- 26. YIT | 26 | Interim Report January – June 2014 Infrastructure projects progressing well, new orders ensured Road maintenance Espoo, Finland • Service contracts for road maintenance won in Espoo, Salo, Kuhmo and Mikkeli. Total value of the contracts is approx. EUR 68 million • Alliance agreement to build a bus and freight terminal in Lahti signed, total value for YIT is approx. EUR 15 million • Works continued in E18 projects after winter break
- 27. Financial position and key ratios 4 Toive residential area St. Petersburg, Russia
- 28. YIT | 28 | Interim Report January – June 2014 Cash flow after investments and dividends targeted to be positive in 2014 • Cash flow still negative in Q2 • Cash flow of plot investments EUR 32.4 million in Q2 (Q2/2013: EUR 51.4 million) • Mostly previous commitments • Cash flow of financial items EUR 13.6 million in Q2 • Dividend of EUR 47.7 million paid in H1 -5 -77 -82 76 -12 -16 59 -79 -156 -88 -95 -34 Q1 Q2 Q3 Q4 Q1 Q2 Operating cash flow after investments Rolling 12 months 2013 2014 2013: EUR -88 million 1-6/2014: EUR -29 million
- 29. YIT | 29 | Interim Report January – June 2014 Invested capital increased slightly from the end of March due to the strengthening of the ruble Return on investment (%), rolling 12 monthsInvested capital (EUR million) 15.0% 13.9% 12.3% 10.3% 10.2% 9.6% Q1 Q2 Q3 Q4 Q1 Q2 1,443 1,493 1,593 1,559 1,554 1,604 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2013 2014 All figures according to segment reporting (POC) Strategic target: Return on investment 20%
- 30. YIT | 30 | Interim Report January – June 2014 Net debt increased slightly • Net debt (IFRS) increased slightly due to growth in capital tied into production • Strong liquidity buffer as back-up for operational activities • Undrawn committed credit facilities EUR 330 million • Overdraft facilities EUR 65 million Interest-bearing debt (EUR million), IFRS Maturity structure of long-term debt, 6/2014 2013 2014 66 206 131 61 14 2 2014 2015 2016 2017 2018 2019 678 764 857 782 840 860 64 50 52 76 80 75 742 814 910 858 920 936 Q1 Q2 Q3 Q4 Q1 Q2 Net debt Cash and cash equivalents
- 31. YIT | 31 | Interim Report January – June 2014 2.7 3.2 3.9 4.2 4.8 5.1 3.0 3.6 4.8 5.8 6.9 9.1 Q1 Q2 Q3 Q4 Q1 Q2 POC IFRS Net debt/EBITDA (IFRS) rose due to very low residential completions in Russia Financial covenant tied to the Group’s equity ratio (minimum level of 25.0%) according to Group reporting (IFRS) in bank loans and RCFs Net debt/EBITDA (Multiple, x)Equity ratio (%)Gearing (%) 40.7 38.5 37.0 37.8 35.0 36.4 37.3 34.9 33.6 34.3 31.6 32.2 Q1 Q2 Q3 Q4 Q1 Q2 POC IFRS 76.4 91.2 101.1 91.3 108.4 103.2 94.0 109.8 123.7 112.0 132.1 130.4 Q1 Q2 Q3 Q4 Q1 Q2 POC IFRS 2013 2014 Note:Q1/2013 non-IFRS figures, published May 21, 2013. 2013 2014 2013 2014
- 32. YIT | 32 | Interim Report January – June 2014 Weakening of the ruble weighed on the Q2/2014 results • The Russian ruble was 18% weaker compared to the comparison period in H1/2014 Principles of managing currency risks • Sales and costs typically in same currency, all foreign currency items hedged no transaction impact • Currency positions affecting the income statement are hedged • Loans to subsidiaries in local currency (excluding equity-like investments in Russia), EUR 151.3 million in 6/2014 to Russian subsidiaries • Equity and equity-like investments in Russia not hedged • Considered to be of permanent nature • FX changes recognized as translation difference in equity • Total exposure: EUR 400.4 million in 6/2014 Revenue split 2013 Impact of changes in foreign exchange rates (EUR million) RUB 27% Other 4% EUR 69% Q1/2014 Q2/2014 Revenue, POC -21.8* -19.2* EBIT, POC -2.9* -2.5* Order backlog, POC -81.6** 60.0** Equity, IFRS (translation difference) -29.9** 20.8** ** Compared to the corresponding period in 2013 ** Compared to the end of previous quarter
- 33. YIT | 33 | Interim Report January – June 2014 Modest progress in capital release Target for capital release Actions in Q2/2014 Cumulative progress since 9/2013 Reducing the inventory of unsold completed apartments in Finland >EUR 50 million • Active sales to investors covering a wide variety of apartments • No net progress in reducing the number of apartments so far due to high completions Selling own-developed business premises projects (currently under construction) EUR 80 million • Sale of Bisnespaja Avia • Sales value of approx. EUR 40 million* (not fully visible in revenue and cash flow yet) Slow-moving assets >EUR 150 million • Several smaller deals in Russia, the Baltic countries and CEE • EUR 24 million sold or agreed (not fully visible in revenue and cash flow yet) New off-balance sheet partnership models in plot acquisitions >EUR 100 million • Sale of plots to two residential property funds administered by the Hypo Group worth approx. EUR 25 million • Further approx. EUR 25 million deal agreed to be executed in autumn 2014 • The value of plots financed by external partner EUR 34 million *In addition approx. EUR 30 million worth Phase 2 of office properties of Tikkurila Commercial Centre Dixi sold to Etera Mutual Pension Insurance Company • More results expected in H2/2014 • The Ukrainian crisis has increased cautiousness of Western players in Russia which has slowed down the sales of slow-moving assets
- 34. Outlook and guidance 5 Konepaja residential area Helsinki, Finland
- 35. YIT | 35 | Interim Report January – June 2014 Market outlook 2014, Housing • Housing start-ups expected to decrease. Forecasted start-ups 26,500 units in Finland in 2014 (RT Confederation of Finnish Construction Industries, June 2014) while the estimated long-term annual need is 24,000-29,000 units (VTT Technical Research Centre of Finland, January 2012) • YIT expects housing prices to remain stable on average, polarization continues • Macro uncertainties and below-average consumer confidence continue to impact the residential market • Mortgage interest rates are expected to remain low Finland • Housing construction volumes expected to increase in the Baltic countries (Forecon, June 2014) • Housing start-ups expected to decrease slightly in the Czech Republic and increase slightly in Slovakia (Euroconstruct, June 2014) • YIT expects housing prices to increase slightly The Baltic countries, the Czech Republic and Slovakia • Housing construction is estimated stay on a par with the previous year (Forecon, June 2014) • YIT expects housing prices to be stable and mortgage rates to increase in H2/2014 • Weakened macro outlook might impact the residential market • Prolongation and escalation of the Ukrainian crisis would probably have a negative effect on YIT´s business operations Russia Housing starts* Housing prices Mortgage interest rates Consumer confidence Housing construction volumes**, The Baltic countries Housing starts**, The Czech Republic and Slovakia Housing prices Housing construction volumes*** Housing prices Mortgage interest rates Consumer confidence *Source: RT Confederation of Finnish Construction Industries, June 2014 **Sources: Forecon and Euroconstruct, June 2014 ***Source: Forecon, June 2014
- 36. YIT | 36 | Interim Report January – June 2014 Market outlook 2014, Business Premises and Infrastructure • Demand for business premises expected to remain weak as the market reacts to improvements in the economy with a lag • Commercial construction is expected to increase by 17% and office construction to decrease by 13% (Euroconstruct, June 2014) • Demand for good projects in prime locations expected to be good Business premises in Finland • New non-residential construction is expected to grow by 9% in the Baltic countries (Forecon, June 2014) • New non-residential construction is expected to decrease by 8% in Slovakia (Euroconstruct, June 2014) Business premises in the Baltic countries and Slovakia • Infrastructure construction forecasted to decrease slightly (Euroconstruct, June 2014) • Competition for smaller contracts expected to remain tough • The government expected to initiate further investment into the rail network in the capital region (west metro extension) Infrastructure in Finland Market* Commercial construction* Office construction* Vacancy rate New non-residential construction**, the Baltic countries New non-residential construction**, Slovakia Infrastructure construction*** Competition ***Source: Euroconstruct, June 2014 *Source: Euroconstruct, June 2014 **Sources: Forecon and Euroconstruct, June 2014
- 37. YIT | 37 | Interim Report January – June 2014 The Group revenue based on segment reporting is estimated to grow by 0–5% (previously 0–10%) at comparable exchange rates. The operating profit margin based on segment reporting is estimated to be in the range of 7.5–8.0% (previously 7.5–8.5%) excluding non- recurring items. Continuing uncertainty over the general macroeconomic development impacts YIT’s business operations and customers. Prolongation and escalation of the Ukrainian crisis would probably have a negative effect on YIT´s business operations. Guidance for 2014 specified Showroom at Housing fair Finland 2014 Jyväskylä, Finland
- 38. YIT | 38 | Interim Report January – June 2014 Timo Lehtinen Chief Financial Officer (CFO) +358 45 670 0626 timo.lehtinen@yit.fi Sanna Kaje Vice President, Investor Relations +358 50 390 6750 sanna.kaje@yit.fi Follow YIT on Twitter @YITInvestors YIT´s Capital Markets Day September 25, 2014 in Helsinki More information
- 39. Appendices 6 Ring Rail Line tunnel Vantaa, Finland
- 40. YIT | 40 | Interim Report January – June 2014 I. Key figures and additional information about financial position II. Ownership III. General economic indicators IV. Housing indicators: Finland, the Baltic countries and Central Eastern Europe, Russia V. Business premises indicators: Finland, the Baltic countries and Slovakia Infrastructure construction: Finland VI. Industrial indicators: Finland Appendices Merenkulkijanranta residential area Helsinki, Finland
- 41. Key figures and additional information about financial position I
- 42. YIT | 42 | Interim Report January – June 2014 Key figures EUR million 4-6/2014 4-6/2013 Change 1-6/2014 1-6/2013 Change Revenue 451.4 430.9 5% 854.5 882.9 -3% Operating profit 34.7 38.3 -9% 61.5 74.2 -17% Operating profit margin 7.7% 8.9% 7.2% 8.4% Operating profit, excluding non-recurring items 34.7 38.3 -9% 61.5 74.2 -17% Operating profit margin, excluding non-recurring items 7.7% 8.9% 7.2% 8.4% Order backlog 2,923.9 2,810.8 4% 2,923.9 2,810.8 4% Profit before taxes 25.7 29.8 -14% 43.9 60.4 -27% Profit for the review period* 20.0 23.0 -13% 34.2 46.4 -26% Earnings per share, EUR 0.16 0.18 -11% 0.27 0.37 -27% Operating cash flow after investments -16.4 -76.9 -28.7 -82.2 Return on investment, last 12 months 9.6% 13.9% 9.6% 13.9% Equity ratio 36.4% 38.5% 36.4% 38.5% Personnel at the end of the period 6,358 6,904 -8% 6,358 6,904 -8% * Attributable to equity holders of the parent company All figures according to segment reporting (POC)
- 43. YIT | 43 | Interim Report January – June 2014 Balanced debt portfolio Debt portfolio 6/2014, EUR 936 million Maturity structure Bonds, 29% Commercial papers, 18% Construction stage financing, 31% Insurance companies, 9% Banks, 13% Floating rate, 38% Average interest rate 2.74% Fixed rate, 62% Average interest rate 3.08% Average interest rate: 2.95% Maturity profile (excluding construction stage financing) (EUR million), 6/2014 2014 2015 2016 2017 2018 2019 228.6 211.4 131.4 60.5 14.0 1.8 0 100 200 300 400 500 600 700 Q3/2014 Q3/2015 Q3/2016 Q3/2017 Q3/2018 Q3/2019 Commercial Papers Pension loans Bank loans Bonds 0 100 200 300 400 Q3/2014 Q3/2015 Q3/2016 Q3/2017 Q3/2018 Revolving credit facilities
- 44. YIT | 44 | Interim Report January – June 2014 Capital invested in plot reserves Business Premises and InfrastructureHousing Russia*Housing Finland, the Baltic countries and CEE 1,818 1,801 373 350 2,191 2,151 6/2013 6/2014 The Baltic countries and CEE Finland Building rights, thousand sq. m. 2,751 2,440 6/2013 6/2014 1,003 1,116 6/2013 6/2014 6/2014: EUR 249.9 million Finland: 70.1% The Baltic countries and CEE: 29.9% Building rights, thousand sq. m. Building rights, thousand sq. m. 6/2013: EUR 297.1 million 6/2014: EUR 286.1 million 6/2013: EUR 95.5 million 6/2014: EUR 88.2 million 6/2013: EUR 267.5 million Finland: 73.9% The Baltic countries and CEE: 26.1% *Includes Gorelovo industrial park
- 45. Ownership II
- 46. YIT | 46 | Interim Report January – June 2014 YIT’s major shareholders Shareholder Shares % of share capital 1. Structor S.A. 12,750,000 10.02 2. Varma Mutual Pension Insurance Company 8,432,100 6.63 3. Herlin Antti 4,274,180 3.36 4. Mandatum Life Insurance Company Limited 4,171,675 3.28 5. Elo Mutual Pension Insurance Company 3,335,468 2.62 6. OP funds 2,546,361 2.00 7. Nordea funds 1,888,028 1.48 8. Svenska Litteratursällskapet i Finland r.f. 1,680,400 1.32 9. YIT Corporation 1,637,346 1.29 10. The State Pension Fund 1,635,000 1.29 Ten largest total 42,350,558 33.29 Nominee registered shares 25,113,332 19.74 Other shareholders 59,759,532 46.97 Total 127,223,422 100.00 June 30, 2014
- 47. YIT | 47 | Interim Report January – June 2014 3,271 4,928 7,456 9,368 14,364 15,265 25,515 29,678 32,476 36,547 36,064 37,723 39,251 42,402 43,752 45,294 44,264 24.8% 22.1% 27.9% 39.9% 45.9% 52.9% 36.5% 38.7% 37.9% 32.2% 34.8% 35.8% 34.7% 33.6% 33.8% 31.0% 30.9% 12/2002 12/2003 12/2004 12/2005 12/2006 12/2007 12/2008 12/2009 12/2010 12/2011 12/2012 3/2013 6/2013 9/2013 12/2013 3/2014 6/2014 Nr of shareholders Non-Finnish ownership, % of share capital More than 44,000 shareholders Number of shareholders and share of non-Finnish ownership, June 30, 2014
- 49. YIT | 49 | Interim Report January – June 2014 Strongest growth expected in the Baltic countries Unemployment rate in YIT’s operating countries, %GDP-growth in YIT’s operating countries, % 0 5 10 15 20 25 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E Finland Estonia Latvia Lithuania The Czech Republic Slovakia Russia 3.4 1.3 0.5 1.5 12 13 14E 15E Russia 4.9 2.5 5.0 5.0 12 13 14E 15E Moscow Region 4.8 3.2 3.5 3.5 12 13 14E 15E St. Petersburg -1.0 -1.4 -0.5 1.0 12 13 14E 15E Finland -1.0 -0.9 2.0 2.4 12 13 14E 15E The Czech Republic 1.8 0.9 2.2 3.1 12 13 14E 15E Slovakia 3.7 3.3 3.3 4.0 12 13 14E 15E Lithuania 5.0 4.1 3.8 4.0 12 13 14E 15E Latvia 3.9 0.8 2.0 3.0 12 13 14E 15E Estonia Sources: GDP-growth: World Bank, June 2014, Finland: Nordea, June 2014, St. Petersburg and Moscow Region: Forecon, June 2014, Unemployment: Euroconstruct and Forecon, June 2014
- 50. Housing indicators Finland The Baltic countries Central Eastern Europe (CEE) Russia IV
- 51. YIT | 51 | Interim Report January – June 2014 Finland – Housing start-ups expected to decrease in 2014 33,946 33,503 30,175 22,903 22,415 32,833 31,091 28,334 27,12026,500 27,500 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E Consumer confidence - Views on economic situation in one year Volume of new mortgages and average interest rate Residential start-ups, units Prices of new dwellings Sources: Residential start-ups: 2005-2013 Statistics Finland, 2014E - 2015E RT Confederation of Finnish Construction Industries, June 2014, Consumer confidence: Statistics Finland June 27, 2014 House prices: Statistics Finland April 28, 2014, Loans and Interest rates: Bank of Finland June 30, 2014 Index EUR million % -30 -20 -10 0 10 20 30 Own economy Finland’s economy Balance 0 2 4 6 8 10 12 14 16 0 500 1,000 1,500 2,000 2,500 3,000 3,500 New drawdowns of housing loans Average interest rate of new housing loans 90 100 110 120 130 140 150 160 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Finland Capital region Rest of Finland
- 52. YIT | 52 | Interim Report January – June 2014 Housing indicators have weakened slightly in Finland Sources: Confederation of Finnish Construction Industries RT, June 2014, Construction confidence: Confederation of Finnish Industries EK, June 2014, Construction cost index: Statistics Finland July 15, 2014 Building permits, start-ups and completions, million m3 Construction confidence Unsold completed units (residential development projects) Construction cost index (2005=100) Balance -80 -60 -40 -20 0 20 40 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Building permits Start-ups Completions 95 100 105 110 115 120 125 130 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total index Labour Materials Other inputs
- 53. YIT | 53 | Interim Report January – June 2014 Household debt relatively low in Finland House price index in different countries Households debt to GDP (%) Source: Eurostat July 17, 2014 0 20 40 60 80 100 120 140 160 European Union The Czech Republic Denmark Germany Estonia Latvia Lithuania Slovakia Finland Sweden Norway 40 60 80 100 120 140 160 180 200 European Union The Czech Republic Denmark Germany Estonia Latvia Lithuania Slovakia Finland Sweden Norway
- 54. YIT | 54 | Interim Report January – June 2014 The Baltic countries – Growth is expected in residential construction 5,900 9,400 8,100 4,200 1,900 2,700 2,100 2,200 2,900 2,800 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 5,100 7,100 5,300 3,000 2,300 1,900 2,000 3,100 2,500 2,500 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 7,300 9,300 11,800 9,400 3,700 5,000 5,200 5,900 7,200 6,900 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E New residential construction in the Baltic countries, EUR millionResidential completions in Lithuania, units Residential completions in Latvia, unitsResidential completions in Estonia, units Source: Forecon, June 2014 0 100 200 300 400 500 600 700 800 900 1,000 2008 2009 2010 2011 2012 2013 2014E 2015E Lithuania Estonia Latvia
- 55. YIT | 55 | Interim Report January – June 2014 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2007 2008 2009 2010 2011 2012 2013 2014E The Czech Republic Prague 20,600 18,100 28,300 20,300 16,200 12,700 13,100 14,700 14,900 15,400 0 5,000 10,000 15,000 20,000 25,000 30,000 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E The Czech Republic and Slovakia – Start-ups forecasted to remain relatively low 43,700 43,800 43,500 37,300 28,200 27,500 23,800 22,100 21,000 21,000 0 10,000 20,000 30,000 40,000 50,000 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E Housing prices in the Czech Republic and Prague CZK/ sq. m. Housing prices in Slovakia and Bratislava, EUR/ sq. m. Residential start-ups in the Czech Republic , units Residential start-ups in Slovakia, units Sources: Residential start-ups: Euroconstruct June 2014, Other data: The Czech Republic: JLL 2013, Slovakia: National Bank of Slovakia, June 2014 0 500 1,000 1,500 2,000 2,500 2007 2008 2009 2010 2011 2012 Q1/2013 Q2/2013 Q3/2013 Q4/2013 Q1/2014 Slovakia Bratislava
- 56. YIT | 56 | Interim Report January – June 2014 Russia – Housing indicators support demand New residential construction, EUR billion Consumer confidence 40 60 80 100 120 140 160 180 200 20 30 40 50 60 70 80 90 100 Yekaterinburg Rostov-on-Don Kazan St. Petersburg Moscow (right axis) House prices in primary markets, thousand RUB (1/2009-6/2014) -40 -35 -30 -25 -20 -15 -10 -5 0 3/2009 3/2010 3/2011 3/2012 3/2013 3/2014 Consumer confidence Long-term average* *Average 12/1998-6/2014 50 55 60 65 70 75 80 2010 2011 2012 2013 2014E 2015E 2016E Tuhannet Inflation in building materials 6/2011-6/2014 0% 2% 4% 6% 8% 10% 12% 6/2011 12/2011 6/2012 12/2012 6/2013 12/2013 6/2014 Sources: House prices: YIT, New residential construction volume: Forecon, June 2014, Inflation in building materials: PMR Construction review, Consumer confidence: Reuters
- 58. YIT | 58 | Interim Report January – June 2014 Non-residential construction forecasted to pick up slightly Sources: Euroconstruct and Forecon, June 2014 0 500 1,000 1,500 2,000 2,500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E Office buildings Commercial buildings Industrial buildings 0 200 400 600 800 1,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E Office buildings Commercial buildings Industrial buildings New non-residential construction in Slovakia, EUR millionNew non-residential construction in The Baltic countries, EUR million 0 100 200 300 400 500 600 700 800 2009 2010 2011 2012 2013 2014E 2015E Estonia Latvia Lithuania New non-residential construction in Finland, EUR millionNew non-residential construction volumes, index 40 60 80 100 120 140 2009 2010 2011 2012 2013 2014E 2015E Finland Estonia Latvia Lithuania Slovakia
- 59. YIT | 59 | Interim Report January – June 2014 Finland – Yields have increased slightly Prime yields in Helsinki Metropolitan Area, % Office yields in Helsinki Metropolitan Area, % Sources: Catella Property Market Trends Finland, February 2014, Newsec Property Outlook, March 2014 Vacancy rates in Helsinki Metropolitan Area Rental levels of office space in Helsinki Metropolitan Area, EUR / sq. m. / year
- 60. YIT | 60 | Interim Report January – June 2014 The Baltic countries – Yields are expected to decrease Source: Newsec Property Outlook, March 2014 Prime office yields in the Baltic countries, % Prime office rents in the Baltic countries, % and EUR / sq. m. / year Prime retail rents in the Baltic countries, % and EUR / sq. m. / yearPrime retail yields in the Baltic countries, %
- 61. YIT | 61 | Interim Report January – June 2014 Infrastructure construction – Market expected to decrease slightly in 2014 Roads 36% Railways 14%Other transport 2% Telecom- munications 13% Energy & water works 24% Other 11% Infrastructure market in Finland, EUR million Infrastructure sectors in Finland (2013) 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E New Renovation Source: Euroconstruct, June 2014
- 63. YIT | 63 | Interim Report January – June 2014 Industrial investments are estimated to increase slightly in Finland Manufacturing sector’s fixed investments in Finland Investments in the economy (national accounts) EK Investment Survey Source: EK The Confederation of Finnish Industries June 2014 Industrial confidence Industrial production expectations -60 -40 -20 0 20 40 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
- 64. YIT | 64 | Interim Report January – June 2014 Disclaimer This presentation has been prepared by, and the information contained herein (unless otherwise indicated) has been provided by YIT Corporation (the “Company”). By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations. This presentation is being furnished to you solely for your information on a confidential basis and may not be reproduced, redistributed or passed on, in whole or in part, to any other person. This presentation does not constitute or form part of and should not be construed as, an offer to sell, or the solicitation or invitation of any offer to buy, acquire or subscribe for, securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investments decision whatsoever. The information contained in this presentation has not been independently verified. No representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither the Company nor any of its respective affiliates, advisors or representatives nor any other person shall have any liability whatsoever (in negligence or otherwise) for any loss however arising from any use of this presentation or its contents or otherwise arising in connection with the presentation. Each person must rely on their own examination and analysis of the Company and the transactions discussed in this presentation, including the merits and risks involved. This presentation includes “forward-looking statements”. These statements contain the words "anticipate", “will”, "believe", "intend", "estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company’s financial position, business strategy, plans and objectives of management for future operations, including without limitation those regarding the demerger plan and its execution, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The Company cautions you that forward-looking statements are not guarantees of future performance and that its actual financial position, business strategy, plans and objectives of management for future operations may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Company's financial position, business strategy, plans and objectives of management for future operations are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. Neither the Company nor any other person undertakes any obligation to review or confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation.