Interim Report January – March 2017 Kari Kauniskangas, President and CEO
Contents 1 Group development in Q1/2017 2 Housing Finland and CEE 3 Housing Russia 4 Business Premises and Infrastructure 5 Financial position and key ratios 6 Outlook and guidance 7 Appendices Naujoji rivjera residential project Vilnius, Lithuania | Interim Report January – March 2017 YIT | 2
1 Group development in Q1/2017 Mäepealse residential project Tallinn, Estonia
Key messages in Q1/2017 • Group revenue and operating profit grew clearly, profitability as expected • Strong residential sales in Finland and CEE • Housing Russia was weak due to low sales • Revenue grew in Business Premises and Infrastructure, profitability was low • Strong cash flow supported by capital efficiency measures, leading to the decrease in net debt Hotel in Tripla project Helsinki, Finland | Interim Report January – March 2017 YIT | 4
Group Revenue increased in Q1, profitability stable • Revenue increased by 32% y-o-y, boosted by capital efficiency measures of approximately EUR 50 million, and strong consumer sales especially in Finland • Profitability remained stable y-o-y • Order backlog remained stable q-o-q Revenue and adjusted operating profit margin (EUR million, %) Order backlog (EUR million) 2016: EUR 1,784 million, 4.5% 0% 32% 2,613 2,618 514 479 464 444 362 60% 61% 5.6% 4.3% 4.3% 3.5% 3.3% 40% 39% Q1 Q2 Q3 Q4 Q1 12/2016 3/2017 2016 2017 Unsold Sold Revenue Adjusted operating profit margin All figures according to segment reporting (POC) Note: The adjusted operating profit margin does not include material reorganisation costs, impairment or other items impacting comparability | Interim Report January – March 2017 YIT | 5
EBIT-bridge Q1/2016 – Q1/2017 • Positive EBIT development in Housing Finland and CEE due to strong residential sales • Profitability of Business Premises and Infrastructure was low due to weakened margins in certain projects in the CEE countries and seasonality of infra Adjusted operating profit (EUR million), change Q1/2016 – Q1/2017: 38% 1.2 -2.5 1.1 0.3 0.4 16.7 -1.9 -0.1 6.1 12.1 YIT Group Volume Profitability Volume Profitability Volume Profitability Other items FX-impact YIT Group Q1/2016 Q1/2017 Housing Finland and CEE Housing Russia Business Premises and Infrastructure | Interim Report January – March 2017 YIT | 6
2 Housing Finland and CEE Agronomi residential project Helsinki, Finland
Housing Finland and CEE Operating environment in Finland in Q1 • • • Consumer confidence on a record Good demand especially for Mortgage interest rates stayed on high level affordable apartments in the a low level and margins continued growth centres to decrease • Residential investors more • • selective, demand focused on Demand for larger apartments The volume of new housing loans capital region continued to improve continued to increase y-o-y Prices of old apartments New drawdowns of mortgages and Consumer confidence ( index 2010=100) average interest rate ( EUR million, %) 25 120 2,000 5.0 1,800 20 115 1,600 4.0 1,400 15 1,200 3.0 110 10 1,000 105 800 2.0 5 600 400 1.0 100 0 200 0 0.0 -5 95 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 New drawdowns of mortgages, left axis Consumer confidence Finland Capital region Average interest rate of new loans, right axis Long-term average Rest of Finland Sources: Statistics Finland and Bank of Finland | Interim Report January – March 2017 YIT | 8
Housing Finland and CEE Operating environment in the CEE countries in Q1 • • • Residential demand on a good Prices of new apartments Interest rates of mortgages on a level especially in Slovakia and increased slightly low level the Czech Republic • • Consumers’ access to financing Competitive situation was reflected as cost pressure remained good Consumer confidence House price index, new dwellings (2010=100) Average interest rate of mortgages (%) 10 220 7.0 5 200 6.0 0 -5 180 5.0 -10 160 4.0 -15 140 3.0 -20 -25 120 2.0 -30 1.0 100 -35 -40 80 0.0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 Estonia Latvia Lithuania The Czech Republic Slovakia Poland Sources: European Commission, Eurostat and National Central Banks | Interim Report January – March 2017 YIT | 9
Housing Finland and CEE Revenue increased clearly in Q1 due to brisk housing sales • Revenue increased by 47% y-o-y, boosted by strong residential sales as well as capital efficiency measures • The plot sales of around EUR 25 million had no profit impact • Order backlog remained stable q-o-q Revenue (EUR million) Order backlog (EUR million) 2016: EUR 728 million 47% 1% 245 843 833 210 185 166 167 Q1 Q2 Q3 Q4 Q1 12/2016 3/2017 2016 2017 All figures according to segment reporting (POC) | Interim Report January – March 2017 YIT | 10
Housing Finland and CEE Operating profit improved strongly in Q1 • Operating profit improved clearly due to strong residential sales • Limited profitability improvement due to capital efficiency measures, such as plot sales • ROCE continued to improve and was over 15% (strategic Group ROI target level 15%) Adjusted operating profit and adjusted operating profit margin Return on capital employed 1 (EUR million, %) (EUR million, %) 2016: EUR 59.9 million, 8.2% 51% 500.0 453.5 25.0% 442.0 441.4 432.0 450.0 397.3 400.0 20.0% 19.4 18.4 350.0 15.8 300.0 15.0% 13.4% 12.9 12.9 12.3% 15.8% 10.8% 11.6% 250.0 8.7% 200.0 8.5% 10.0% 7.9% 7.7% 7.7% 150.0 66.4 59.9 54.7 54.8 100.0 54.3 5.0% 50.0 0.0 0.0% 3/2016 6/2016 9/2016 12/2016 3/2017 Q1 Q2 Q3 Q4 Q1 2016 2017 Capital employed Adjusted operating profit Adjusted operating profit margin Operating profit, 12 month rolling Return on capital employed All figures according to segment reporting (POC). 1 As of the beginning of 2017, in order to clarify its financial figures terminology, YIT starts to use the terms Capital Employed and Return on Capital Employed (ROCE) for segment reporting instead of previously used Operative Invested Capital and Return on Operative Invested Capital (ROI). The formulas for these financial figures remain untouched. | Interim Report January – March 2017 YIT | 11
Housing Finland and CEE Sales and start-ups in Finland in Q1 • Sold apartments (units) Strong consumer sales, +76% y-o-y 2016: 2,730 • Share of units sold to 858 826 consumers: 62% 705 612 (Q1/2016: 51%) 240 555 317 332 298 264 • 104 apartments sold in 618 509 373 314 291 bundles to investors (Q1/2016: 36 units) Q1 Q2 Q3 Q4 Q1 2016 2017 • Agreements signed to To consumers To investors (funds) construct 8 projects to Apartment start-ups (units) investors of which over half was started in Q1 2016: 2,877 • In April, estimated sales to consumers around 130 units 817 819 790 657 (4/2016: around 130 units) 584 185 262 213 277 168 634 577 555 416 380 Q1 Q2 Q3 Q4 Q1 2016 2017 To consumers To investors (funds) | Interim Report January – March 2017 YIT | 12
Housing Finland and CEE Sales and start-ups in the CEE countries in Q1 • Sold apartments (units) Number of units sold to consumers grew by 24% 2016: 1,197 y-o-y 560 • An apartment building 240 356 project in Bratislava, 235 106 201 201 Slovakia with a total of 106 320 250 units was sold to YCE Housing fund I Q1 Q2 Q3 Q4 Q1 • 2016 2017 A plot for an area Consumer sales Co-operative or housing fund development project of ~350-400 apartments Apartment start-ups (units) acquired in Prague, the 2016: 1,300 Czech Republic 489 • In April, estimated sales to 402 consumers around 80 units 316 286 (4/2016: around 80 units) 209 402 90 119 Q1 Q2 Q3 Q4 Q1 2016 2017 Consumer start-ups Co-operative | Interim Report January – March 2017 YIT | 13
Housing Finland and CEE The production volume (units) continued to grow in Q1 • Number of unsold Apartment inventory (units) completed apartments on 6,432 6,237 a low level 6,152 5,971 282 5,863 352 335 6,150 352 381 5,885 • Sales rate of the inventory 5,817 5,619 5,482 increased due to higher sales rate in CEE • The share of CEE of the 63% 61% 60% sales portfolio (units) 46% 57% 52% (3/2016: 43%) Q1 Q2 Q3 Q4 Q1 2016 2017 Under construction Completed, unsold Sales rate, % | Interim Report January – March 2017 YIT | 14
3 Housing Russia Inkeri residential project St. Petersburg, Russia
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