100-year-old YIT seeks profitable growth in Russia
YIT meets its shareholders and investors on a road show in early December in New York, Boston and Montreal, and it will ring the opening bell at the Nasdaq Stock Exchange on December 4, 2012 at 9:15 a.m. local time (4:15 p.m. Finnish time).
YIT has grown strongly in the 2000s: the company’s revenue has more than tripled and operating profit more than doubled. The development and potential of Russia is one of the key themes at the meetings with investors.
YIT has expanded its operations into eight new cities in the Moscow region
Housing construction in Russia offers YIT significant growth and profitability potential in the long term. The company has operated in Russia for over 50 years and seen both upturns and downturns. During the last year, YIT has expanded into eight new cities in the Moscow region.
“Our business operations in Russia are beginning to meet the high objectives set for them. International Construction Services was the most profitable segment of our group in terms of operating profit margin during the third quarter. A foundation for even better development has been created,” CFO Timo Lehtinen says.
”The number of residential units under construction has increased by approximately 40% in a year, but invested capital by under 20%. The use of capital has become significantly more efficient, and the segment aims to reach the Group’s objective of a 20% return on capital employed during the next three to five years,” Lehtinen concludes.
Individualism matters for Russian customers
YIT is one of the largest Western construction companies in Russia. ”The growth in the volume of housing construction is supported by the growing middle class’s great need for improved quality of housing, the favourable development of the mortgage market and the increase in the number of households,” says Hanna-Maria Heikkinen, Vice President, Investor Relations.
In Russia, customers have traditionally purchased their homes unfinished and finished them themselves.
“Even though individualism is still very important to Russians, our customers increasingly want to buy finished residential units,” Heikkinen comments.
YIT’s reputation as a reliable construction company in Russia improved significantly during the financial crisis, with the company continuing the construction of all of its projects as planned. As proof of good development, the company has won several quality awards in construction in Russia.
Order backlog of EUR 1.5 billion in Construction Services Finland gives visibility for 2013 as well
In Construction Services Finland, the market situation in housing construction continues to be good. Population growth and increase in the number of households, low interest rates and migration to cities will support the demand for housing in the coming years as well. The strong order backlog of Construction Services Finland lays the foundation for success also in 2013.
Focus of Building Services is on improving profitability
The market situation of Building Services is challenging, especially in the project business: decision-making by the customers has been postponed due to macroeconomic uncertainty. The focus of YIT’s operations is on improving profitability: Building Services Northern Europe aim for cost-savings of EUR 40 million from 2013 onwards. The aim of the Building Services Central Europe segment is to improve its operating profit margin at a rate of one percentage point per year. In the long term, opportunities for business growth are supported by the increasing amount of technology in buildings and customer’s needs for ensuring the functioning of increasingly complicated systems.
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