Interim Report January – September 2017 Kari Kauniskangas, President and CEO
Contents 1 Group development in Q3/2017 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 | Interim Report January – September 2017 YIT | 2
1 Group development in Q3/2017 Asemanranta area development project Hämeenlinna, Finland
Key messages in Q3/2017 • Operating profit improved mainly due to strong consumer sales in Finland and CEE • In Housing Russia, revenue declined even though sales in units increased • Profitability improved in Business Premises and Infrastructure, several new projects booked in order backlog • The merger of YIT and Lemminkäinen approved by EGMs of both companies, competition authority process continues Kasarmikatu 21 office project Helsinki, Finland | Interim Report January – September 2017 YIT | 4
The merger of YIT and Lemminkäinen Next steps in the merger process INTEGRATION PLANNING IMPLEMENTATION OF INTEGRATION Starting from June 19 12.9. Most probably EGM’s of both Spring 2018 25.8. January 1, companies AGM 2018 Prospectus The Board of The Board of Directors elected Directors elected in Competition authority process in the EGM the AGM Day 1 readiness, organisational structure, Structural changes, targets, management, follow- management model, synergy evaluation... up, culture, synergies, ... | Interim Report January – September 2017 YIT | 5
Group Profitability improved • Revenue decreased y-o-y due to low revenue in Housing Russia and Business Premises and Infrastructure • Profitability improved in all segments Revenue and adjusted operating profit margin (EUR million, %) Order backlog (EUR million) 1 – 9/2017: EUR 1,354 million, 2016: EUR 1,784 million, 4.5% 4.9% -1% -6% 2,566 2,528 514 479 464 458 444 417 362 58% 59% 5.8% 5.6% 5.5% 4.3% 4.3% 3.5% 3.3% 42% 41% Q1 Q2 Q3 Q4 Q1 Q2 Q3 6/2017 9/2017 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 – September 2017 YIT | 6
EBIT-bridge Q3/2016 – Q3/2017 • Positive EBIT development in Housing Finland and CEE due to strong consumer sales • In Housing Russia, operating profit was positive due to improved gross margins • Adjustments include EUR 3.0 million costs related to the merger preparations Adjusted operating profit (EUR million), change Q3/2016 – Q3/2017: 27% 24.2 -1.0 2.4 -0.2 0.2 -0.8 3.3 19.0 1.3 YIT Group Volume Profitability Volume Profitability Volume Profitability Other items YIT Group Q3/2016 Q3/2017 Housing Finland and CEE Housing Russia Business Premises and Infrastructure | Interim Report January – September 2017 YIT | 7
2 Housing Finland and CEE Hämeenlinnan Origo residential project Hämeenlinna, Finland
Housing Finland and CEE Operating environment in Finland in Q3 • • • Consumer confidence was on a Consumer demand was on a good Mortgage interest rates stayed on record high level level, no signs of overheating, supply a low level and margins continued on a high level to decrease • Residential investors were more • • selective, demand focused on Demand for larger apartments The volume of new housing loans capital region, Turku and Tampere continued to improve in addition to increased the good demand for affordable apartments Prices of old apartments New drawdowns of mortgages and Consumer confidence ( index 2010=100) average interest rate ( EUR million, %) 30 120 2,000 5.0 1,800 25 115 1,600 4.0 20 1,400 1,200 3.0 110 15 1,000 10 800 2.0 105 600 5 400 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 – September 2017 YIT | 9
Housing Finland and CEE Operating environment in the CEE countries in Q3 • • • Residential demand was on a Prices of new apartments Interest rates of mortgages good level in Estonia, Lithuania, increased slightly on average remained on a low level Slovakia and the Czech Republic • • Consumers’ access to financing Shortage of resources caused cost pressure especially in the remained good Czech Republic and Slovakia 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 -30 100 1.0 -35 -40 80 0.0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Estonia Latvia Lithuania The Czech Republic Slovakia Poland Sources: European Commission, Eurostat and National Central Banks | Interim Report January – September 2017 YIT | 10
Housing Finland and CEE Revenue increased in Q3 • Revenue increased by 10% y-o-y due to good sales especially in CEE • In Finland, the change in sales mix from investors to consumers had an impact on revenue recognition • Order backlog was stable q-o-q Revenue (EUR million) Order backlog (EUR million) 1 – 9/2017: EUR 629 million 2016: EUR 728 million -2% 10% 909 245 890 210 200 185 184 166 167 Q1 Q2 Q3 Q4 Q1 Q2 Q3 6/2017 9/2017 2016 2017 All figures according to segment reporting (POC) | Interim Report January – September 2017 YIT | 11
Housing Finland and CEE Operating profit improved in Q3 • Operating profit and profitability improved due to strong consumer sales • ROCE continued to improve and was almost 18% Adjusted operating profit and adjusted operating profit margin Return on capital employed 1 (EUR million, %) (EUR million, %) 1 – 9/2017: EUR 56.6 million, 9.0% 2016: EUR 59.9 million, 8.2% 36% 500.0 453.5 25.0% 432.0 417.7 450.0 397.3 393.9 400.0 20.0% 17.7% 19.8 19.4 16.9% 18.4 350.0 15.8% 17.5 15.8 300.0 15.0% 13.4% 12.3% 12.9 12.9 250.0 200.0 10.0% 9.9% 9.5% 8.7% 8.5% 7.9% 7.7% 7.7% 150.0 75.0 70.4 66.4 59.9 54.8 100.0 5.0% 50.0 0.0 0.0% 9/2016 12/2016 3/2017 6/2017 9/2017 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 Capital employed Operating profit, 12 month rolling Adjusted operating profit Adjusted operating profit margin 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 – September 2017 YIT | 12
Housing Finland and CEE Sales and start-ups in Finland in Q3 • Sold apartments (units) Consumer sales increased by 63% 2016: 2,730 1-9/2017: 2,182 • Share of units sold to 858 826 consumers record-high: 789 705 612 84% (Q3/2016: 52%) 240 567 555 317 328 332 92 298 264 • 64 apartments sold in 618 509 475 461 373 314 291 bundles to investors (Q3/2016: 80 units) Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 • In October, estimated sales To consumers To investors (funds) to consumers are around Apartment start-ups (units) 160 units (10/2016: around 200 units) 2016: 2,877 1-9/2017: 2,451 1081 817 819 790 305 657 584 580 185 262 213 28 277 168 776 634 577 555 552 416 380 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 To consumers To investors (funds) | Interim Report January – September 2017 YIT | 13
Housing Finland and CEE Sales and start-ups in the CEE countries in Q3 • Sold apartments (units) Number of units sold to consumers grew by 7% 2016: 1,197 1-9/2017: 1,070 y-o-y 560 462 • Number of start-ups 240 356 increased by 50% 246 252 235 106 201 201 • Two apartment building 320 250 216 projects with total of 246 Q1 Q2 Q3 Q4 Q1 Q2 Q3 units was sold to YCE Housing I fund 2016 2017 Consumer sales Co-operative or housing fund • In October, estimated sales Apartment start-ups (units) to consumers are around 100 units (10/2016: around 2016: 1,300 1-9/2017: 1,181 100 units) 489 429 402 350 316 286 246 209 90 183 119 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 Consumer start-ups Co-operative or housing fund | Interim Report January – September 2017 YIT | 14
Housing Finland and CEE The production volume (units) continued to grow in Q3 • Number of unsold Apartment inventory (units) completed apartments on 6,814 6,811 a low level 6,432 238 262 6,237 6,152 5,971 282 6,573 5,863 6,552 352 335 • The share of CEE of the 6,150 352 381 5,885 5,817 sales portfolio (units) 42% 5,619 5,482 (9/2016: 47%) 63% 61% 60% 59% 59% 57% 52% Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017 Under construction Completed, unsold Sales rate, % | Interim Report January – September 2017 YIT | 15
3 Housing Russia Lytkarino residential project Moscow region, Russia
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