YIT Oyj · OMXHEX:YIT
YIT Oyj — Investor lunch Helsinki, Nordea (August 2016)
61 slides from YIT Oyj's conference presentation, Aug 16, 2016
Slide 1: Interim Report January–June 2016
Interim Report January–June 2016 Kari Kauniskangas, President and CEO
Slide 2: Contents
Contents 1 Group development in Q2/2016 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 YIT | 2 | Interim Report January–June 2016
Slide 3: Group development in Q2/2016
1 Group development in Q2/2016 Vapo head office Tikkurila, Finland
Slide 4: Highlights in Q2/2016
Highlights in Q2/2016 • Strong order backlog after the closing of the Mall of Tripla investor deals • Positive profitability development in Housing Finland and CEE as well as Business Premises and Infrastructure continued • High residential start-ups in CEE, first project started in Poland • Good sa
Slide 5: Group: Revenue grew and profitability started to improve
Group: Revenue grew and profitability started to improve • Revenue increased 15% y-o-y at comparable exchange rates • Profitability improved clearly in Housing Finland and CEE as well as Business Premises and Infrastructure • Order backlog strengthened following the closing of the Mall of Tripla dea
Slide 6: EBIT-bridge Q2/2015 – Q2/2016
EBIT-bridge Q2/2015 – Q2/2016 • Positive development in Business Premises and Infrastructure • Profitability was weak in Russia Adjusted operating profit (EUR million), change Q2/2015 – Q2/2016: 9% 20.2 18.6 -2.0 0.5 -1.8 0.1 6.9 1.4 -5.5 2.1 YIT Group Volume Profitability Volume Profitability Volum
Slide 7: Housing Finland and CEE
2 Housing Finland and CEE New Rivjera Vilnius, Lithuania
Slide 8: Housing Finland and CEE: Operating environment in Finland in Q2
Housing Finland and CEE: Operating environment in Finland in Q2 • Consumer confidence improved • Good demand especially for • Mortgage interest rates stayed on in Q2, visible also in housing small, affordable apartments in a low level and margins continued demand the growth centres to decrease • Goo
Slide 9: Housing Finland and CEE: Operating environment in the CEE countries in Q2
Housing Finland and CEE: Operating environment in the CEE countries in Q2 • Positive macro development • Prices of new apartments • Interest rates of mortgages have continued and residential demand remained relatively stable in the remained on a low level remained good CEE countries • Consumers’ acc
Slide 10: Housing Finland and CEE: Revenue decreased in Q2
Housing Finland and CEE: Revenue decreased in Q2 • Revenue decreased y-o-y due to less revenue from capital release actions in Finland • Order backlog remained stable Revenue (EUR million) Order backlog (EUR million) -11% 1% 221 208 857 866 184 185 166 166 Q1 Q2 Q3 Q4 Q1 Q2 3/2016 6/2016 2015 2016 A
Slide 11: Housing Finland and CEE: Profitability improved in Q2
Housing Finland and CEE: Profitability improved in Q2 • Profitability improved due to less capital release actions • ROI improved Adjusted operating profit and adjusted operating profit margin Return on operative invested capital (EUR million, %) (EUR million, %) -2% 16.2 15.8 490.6 457.9 437.1 442.
Slide 12: Housing Finland and CEE: Sales and start-ups in Finland in Q2
Housing Finland and CEE: Sales and start-ups in Finland in Q2 Sold apartments (units) • Consumer sales (units) on 2015: 3,192 1-6/2016: 1,317 a good level 1,100 • Share of units sold to 715 718 659 705 consumers up to 53% in 726 612 332 Q2/2016 (Q2/2015: 34%) 444 441 330 298 271 374 277 329 314 373
Slide 13: Housing Finland and CEE: Sales and start-ups in the CEE countries in Q2
Housing Finland and CEE: Sales and start-ups in the CEE countries in Q2 Sold apartments (units) • Consumer sales (units) still 2015: 1,023 1-6/2016: 436 modest in Q2/2016, higher sales expected in coming 275 290 256 235 quarters due to strong 83 202 201 start-ups 192 • Start-ups more than doubled Q1
Slide 14: Housing Finland and CEE: The production volume continued to grow in Q2
Housing Finland and CEE: The production volume (units) continued to grow in Q2 • Number of unsold Apartment inventory (units) completed apartments decreased to 237 in 5,863 5,971 Finland (6/2015: 473) 5,389 381 352 4,994 4,916 5,047 5,619 447 5,482 • 57% of units under 562 611 573 4,942 construction
Slide 15: Housing Russia
3 Housing Russia Noviy Noginsk Noginsk, Russia
Slide 16: Housing Russia: Operating environment in Q2
Housing Russia: Operating environment in Q2 • The ruble strengthened during • Demand focused especially on • Mortgage subsidy program the quarter small apartments extended until the end of 2016 • Residential prices remained • Mortgage interest rates for new stable, but decreased in real apartments a
Slide 17: Housing Russia: Revenue decreased in Q2
Housing Russia: Revenue decreased in Q2 • Revenue increased by 6% at comparable exchange rates • Despite the strengthening of the ruble, the order backlog decreased due to low start-ups Revenue (EUR million) Order backlog (EUR million) -16% -3% 71 509 496 70 64 62 59 49 Q1 Q2 Q3 Q4 Q1 Q2 3/2016 6/20
Slide 18: Housing Russia: Profitability weak in Q2
Housing Russia: Profitability weak in Q2 • Profitability burdened by lowered project margins in certain projects • Target to reduce the operative invested capital by continuing active sales • Target to have positive operating profit for H2/2016 Adjusted operating profit and adjusted operating profit
Slide 19: Housing Russia: Sales and start-ups in Q2
Housing Russia: Sales and start-ups in Q2 Sold apartments (units) and share of sales financed with a mortgage (%) • Sales (units) increased by 2015: 3,129 (50%) 1-6/2016: 1,718 (51%) 7% y-o-y 967 892 769 721 826 • Share of sales financed 672 with mortgages high 58% 56% 58% supported by the 54% 50% g
Slide 20: Housing Russia: Apartment inventory at the end of Q2
Housing Russia: Apartment inventory at the end of Q2 • Completed unsold apartments Apartment inventory (units) decreased q-o-q 9,350 9,718 9,619 8,584 8,895 9,030 • Low amount of completed 378 311 243 449 345 9,407 9,376 484 projects, several completions 8,972 8,446 8,685 8,100 planned in H2/2016 49
Slide 21: Business Premises and Infrastructure
4 Business Premises and Infrastructure Office building Lönnrotinkatu 11 Helsinki, Finland
Slide 22: Business Premises and Infrastructure: Operating environment in Q2
Business Premises and Infrastructure: Operating environment in Q2 • Investor demand stable on a good • The contracting market was active • Positive macro outlook supported level and several large projects were in the business premises market in tendering phase the CEE countries • Competition for ten
Slide 23: Business Premises and Infrastructure: Revenue and order backlog grew strongly in Q2
Business Premises and Infrastructure: Revenue and order backlog grew strongly in Q2 • Revenue increased as expected, both in Business Premises and in Infra Services • Revenue recognition started in the Mall of Tripla including work done before Q2/2016 of around EUR 30 million • Order backlog increas
Slide 24: Business Premises and Infrastructure: Profitability improved in Q2
Business Premises and Infrastructure: Profitability improved in Q2 • Profitability improved y-o-y following the closing of the Mall of Tripla investor deals and higher volume • Clear improvement in ROI Adjusted operating profit and adjusted operating profit margin Return on operative invested capita
Slide 25: Business Premises and Infrastructure: Good progress in Q2, closing of the Mall of Tripla
Business Premises and Infrastructure: Good progress in Q2, closing of the Mall of Tripla investor deals • Closing of the Mall of Tripla investor deals • YIT’s final share of the joint venture 38.75% • Valid building permits and required decisions from public authorities obtained • Financing package
Slide 26: Financial position and key ratios
5 Financial position and key ratios
Slide 27: Cash flow after investments positive in Q2
Cash flow after investments positive in Q2 • Cash flow of plot 2015: EUR 184 million 1-6/2016: EUR 1 million investments EUR -13.5 million 309 (Q2/2015: 280 EUR -29.7 million) 179 184 • Investments into joint 144 ventures EUR 41.2 million (mostly Mall of Tripla) 56 113 15 12 43 26 • Dividend of EUR
Slide 28: Invested capital and ROI in Q2
Invested capital and ROI in Q2 • Invested capital decreased • ROI stable Invested capital (EUR million) Return on investment (%), rolling 12 months 1,344 1,308 1,196 1,141 1,132 1,103 7.5% 6.4% 5.1% 5.3% 4.7% 5.0% Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2015 2016 All figures according to segme
Slide 29: Net debt remained stable in Q2
Net debt remained stable in Q2 Interest-bearing debt (EUR million), IFRS • Strong liquidity buffer • Cash and cash equivalents of 797 EUR 71.8 million 716 119 663 651 677 629 • Overdraft facilities of EUR 64.8 million of 129 88 122 122 72 which EUR 63.5 million undrawn • Undrawn committed revolving
Slide 30: Financial key ratios improved slightly
Financial key ratios improved slightly • Low number of residential project completions weakened the IFRS net debt / EBITDA ratio • Positive translation difference in equity of EUR 19.1 million q-o-q • Normalization of the cash position Gearing (%) Equity ratio (%) Net debt/EBITDA (Multiple, x) 8.1 1
Slide 31: Ruble strengthened in Q2
Ruble strengthened in Q2 Revenue split 1-6/2016 • The Russian ruble appreciated in Q2/2016 • Average EUR/RUB rate in 1-6/2016: 78.33 RUB (1-6/2015: 64.52) 13% • Quarter-end EUR/RUB rate: 71.52 (Q1/2016: 76.31) Other 2% Principles of managing currency risks: • Sales and project costs typically in sam
Slide 32: Almost 90% of the capital release program completed
Almost 90% of the capital release program completed Target for capital release Actions in Q2/2016 Cumulative progress since 9/2013 Reducing the inventory of unsold • Active sales covering a wide variety of completed apartments in Finland apartments, EUR ~20 million >EUR 50 million Selling self-devel
Slide 33: Outlook and guidance
6 Outlook and guidance
Slide 34: Market outlook, expectations for 2016
Market outlook, expectations for 2016 Finland • Consumer demand to improve slightly, but demand to focus on small and affordable apartments in growth centres • Investor activity to remain on a good level in the residential market, but even more focus will be paid on the location • Residential price
Slide 35: Market outlook, expectations for 2016
Market outlook, expectations for 2016 Russia • Weak visibility • Construction cost inflation to moderate • Residential prices stable in nominal terms • Residential demand to focus on small and affordable apartments CEE • The improved economic situation to support residential and business premises de
Slide 36: Guidance for 2016 (segment reporting, POC) specified
Guidance for 2016 (segment reporting, POC) specified The Group revenue growth is estimated to be in the range of 5-10% at comparable exchange rates. The adjusted operating profit* is estimated to grow from the level of 2015 (2015: EUR 76.0 million). Previously revenue growth was estimated to be in t
Slide 37: More information
More information Timo Lehtinen Chief Financial Officer (CFO) +358 45 670 0626 timo.lehtinen@yit.fi Sanna Kaje Vice President, Investor Relations and M&A +358 50 390 6750 sanna.kaje@yit.fi Capital Markets Day 2016 September 29, in Bratislava Follow YIT on Twitter @YITInvestors YIT | 37 | Interim Repo
Slide 38: Appendices
7 Appendices
Slide 39: Appendices
Appendices I. Key figures and additional information about financial position II. Ownership III. General economic indicators IV. Housing indicators V. Business premises and infrastructure indicators Parking facilities in Suviniitty Espoo, Finland YIT | 39 | Interim Report January–June 2016
Slide 40: Key figures and additional information about financial position
I Key figures and additional information about financial position
Slide 41: Key figures
Key figures EUR million 4-6/2016 4-6/2015 Change 1-6/2016 1-6/2015 Change 1-12/2015 Revenue 463.7 416.1 11% 826.1 791.0 4% 1,651.2 Operating profit 20.2 18.6 9% 32.2 39.1 -17% 65.7 Operating profit margin, % 4.3% 4.5% 3.9% 4.9% 4.0% Adjusted operating profit 20.2 18.6 9% 32.2 39.1 -17% 76.0 Adjusted
Slide 42: Balanced debt portfolio
Balanced debt portfolio Debt portfolio at the end of the period 6/2016, EUR 628 million Maturity structure at the end of the period 6/2016 Maturity profile (excluding construction stage financing) (EUR million) Bonds, 24% 450 Commercial papers 400 Commercial papers, 11% Pension loans 350 Constructio
Slide 43: Solid plot portfolio, a basis for growth and financial flexibility
Solid plot portfolio, a basis for growth and financial flexibility Plot reserves in the balance sheet 6/2016, EUR 525 million Use of plot reserves in 2015, EUR 109 million Housing Finland and CEE 64 Finland 55 210 240 134 107 The CEE countries 9 75 Housing Russia** 29 Business Premises and Infrastru
Slide 44: Ownership
II Ownership
Slide 45: YIT's major shareholders
YIT’s major shareholders June 30, 2016 Shareholder Shares % of share capital 1. Varma Mutual Pension Insurance Company 12,000,000 9.43 2. OP funds 6,079,489 4.78 3. Herlin Antti 4,710,180 3.70 4. Elo Mutual Pension Insurance Company 3,335,468 2.62 5. Danske Invest funds 3,017,786 2.37 6. The State P
Slide 46: More than 40,000 shareholders
More than 40,000 shareholders Number of shareholders and share of non-Finnish ownership, June 30, 2016 43,752 44,312 41,944 40,623 36,547 36,064 32,476 29,678 52.9% 25,515 45.9% 39.9% 38.7% 36.5% 37.9% 34.8% 33.8% 32.2% 27.9% 15,265 29.3% 14,364 26.3% 26.4% 24.8% 22.1% 9,368 7,456 4,928 3,271 12/200
Slide 47: General economic indicators
III General economic indicators
Slide 48: Strongest growth expected in the CEE countries
Strongest growth expected in the CEE countries GDP growth in YIT’s operating countries, % 4% 2% 0% -2% 2015 2016E 2017E -4% Finland Estonia Latvia Lithuania The Czech Slovakia Poland Russia St. Petersburg* Moscow Republic region* Unemployment rate in YIT’s operating countries, % 20% 18% 16% 14% 12%
Slide 49: Housing indicators
IV Housing indicators Finland The CEE countries Russia
Slide 50: Finland – Start-ups expected to decrease slightly in 2016
Finland – Start-ups expected to decreases slightly in 2016 Residential start-ups, units Consumer confidence - Views on economic situation in one year Balance 35,573 30 33,525 32,807 32,033 31,300 30,500 29,842 29,500 Own economy 27,778 20 26,273 6,200 16,531 12,477 11,614 6,300 23,361 23,385 6,600 1
Slide 51: Housing indicators have improved slightly in Finland
Housing indicators have improved slightly in Finland Unsold completed units (residential development projects) Residential building permits, start-ups and completions, million m3 Construction cost index (2005=100) Construction confidence 130 Balance 40 125 20 120 0 115 -20 110 -40 105 -60 100 95 -80
Slide 52: The Baltic countries – Residential construction is expected to level off
The Baltic countries – Residential construction is expected to level off Residential completions in Estonia, units Residential completions in Latvia, units 5,300 8,100 4,600 1,100 4,200 2,000 3,969 1,300 1,200 3,000 1,270 2,756 4,200 2,300 1,000 1,918 1,990 2,079 4,200 976 1,800 2,662 2,631 800 6,10
Slide 53: The Czech Republic, Slovakia and Poland – Start-ups
The Czech Republic, Slovakia and Poland – Start-ups forecasted to increase in The Czech Republic and Poland Residential start-ups in the Czech Republic, units Residential start-ups in Slovakia, units 43,500 28,400 37,300 25,100 28,200 27,500 28,800 30,000 13,800 20,300 19,600 26,400 18,000 17,300 20
Slide 54: Russia – Housing indicators
Russia – Housing indicators House prices in primary markets, thousand RUB per sq. m. (1/2009-6/2016) New residential construction volume, EUR billion* 110 220 55 100 200 50 90 180 45 80 160 70 140 40 60 120 35 50 100 40 80 30 30 60 25 20 40 20 2012 2013 2014 2015 2016E 2017E Yekaterinburg Rostov-on-
Slide 55: Business Premises and Infrastructure
V Business Premises Finland The Baltic countries Slovakia Infrastructure Finland
Slide 56: New non-residential construction forecasted to pick up slightly
New non-residential construction forecasted to pick up slightly in Finland, Estonia and Slovakia in 2016 New non-residential construction volumes, index New non-residential construction in Finland, EUR million 260 1,600 240 1,400 220 200 1,200 180 1,000 160 140 800 120 600 100 400 80 60 200 40 0 201
Slide 57: Finland – Prime yields expected to decrease slightly
Finland – Prime yields expected to decrease slightly Prime yields in Helsinki Metropolitan Area, % Vacancy rates in Helsinki Metropolitan Area, % Office yields in Helsinki Metropolitan Area, % Rental levels of office premises (excl. VAT), new agreements, EUR / sq. m. / year Source: Catella Finland M
Slide 58: The Baltic countries – Yields are expected to remain stable
The Baltic countries – Yields are expected to remain stable Prime office yields in the Baltic countries, % Prime office rents in the Baltic countries, % and EUR / sq. m. / year Prime retail yields in the Baltic countries, % Prime retail rents in the Baltic countries, % and EUR / sq. m. / year Source
Slide 59: Infrastructure construction in Finland – Market expected to remain stable in 2016
Infrastructure construction in Finland– Market expected to remain stable in 2016 Infrastructure market in Finland, EUR million Infrastructure sectors in Finland (2015) 7,000 Other 11% 6,000 5,000 Roads 36% 4,000 Energy & water works 3,000 26% 2,000 1,000 0 Telecom- Railways 2012 2013 2014 2015 2016E
Slide 60: Disclaimer
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 or event where this presentation is made, or by reading the presentation slides, you agree to be bound b
Slide 61: Together we can do it.
Together _ we can do it.