YIT Oyj · OMXHEX:YIT
YIT Oyj — Berenberg European Conference December 2014
37 slides from YIT Oyj's conference presentation, December 2014
Slide 1: YIT – Focus on creating solid foundation for future growth
Tripla Helsinki, Finland YIT – Focus on creating solid foundation for future growth Berenberg European Conference | December 2014 Timo Lehtinen, CFO
Slide 2: Contents
Contents 1 YIT in brief 3 2 Strategy 6 3 Housing Finland, the Baltic countries and CEE 11 4 Housing Russia 17 5 Business Premises and Infrastructure 24 6 Key financials 28 7 Concluding remarks 34 YIT | 2 | Berenberg European Conference, December 2014
Slide 3: YIT in brief
1 YIT in brief Grand Office Vilnius, Lithuania
Slide 4: YIT Group in brief
YIT Group in brief • Residential development, business premises and Revenue by geographical area 2013 infrastructure • Focus on self-developed projects Russia, 27% • Operations in 7 countries • Revenue EUR 1.9 billion in 2013 Finland, 66% • Operating profit EUR 153 million in 2013 The Baltic countri
Slide 5: Strong market position in all markets in Housing
Strong market position in all markets in Housing Market leader in Finland, largest foreign residential developer in Russia Construction companies on YIT’s markets YIT’s markets and market sizes 2013 Number of apartments sold in 2013 Number of apartments*** 11,858 Russia* 10,415 5,478 4,480 Finland R
Slide 6: Strategy
2 Strategy Tähystäjä Espoo, Finland
Slide 7: Strategy for 2015-2017: Solid foundation for future growth
Strategy for 2015-2017: Solid foundation for future growth Wider financial operating space • Releasing capital by normalizing inventory and improving capital turnover • Increasing utilization of partnerships Ensuring competitiveness and differentiation • Affordable and attractive product • Excellent
Slide 8: Strategic roadmap
Strategic roadmap Focus back on growth Focus on capital and cost efficiency, temporarily lower growth acceptable 2017 2016 Partial demerger More balanced End of geographical footprint 2013 Solid foundation for Higher share of future growth projects with high Foundation for value added new YIT laid
Slide 9: Financial targets
Financial targets Long term targets Status in 2013 • In the short term, the focus will be on Revenue 5 - 10% annually improving capital efficiency and cost- -5.1% growth on average effectiveness rather than growth Return on 20% 10.3% investment • The setting of the short-term targets Operating cash
Slide 10: Capital release and the new competitiveness program support reaching the targets
Capital release and the new competitiveness program support reaching the targets ROI: 10%, ROI: 15% ROI: 20% Net debt: EUR 860 million Net debt: < EUR 600 million Fixed Market Lower cost normalisation Pricing variable control EBIT costs 6/2014 2016 Invested capital Off-balance Higher sheet capital p
Slide 11: Housing Finland, the Baltic countries and CEE
3 Housing Finland, the Baltic countries and CEE Tähystäjä Espoo, Finland Uus Kalamaja area Tallinn, Estonia
Slide 12: Market trends and drivers in Housing Finland, the Baltic countries and CEE
Market trends and drivers in Housing Finland, the Baltic countries and CEE Demographic changes Consumerism Urbanisation Share of 65y+ people in the population, Finland Finland 10-15 percentage points behind Sweden 12% 26% 1980 2030E Number of households, Finland Green thinking 1.8 m 2.6 m 1980 2013
Slide 13: Housing Finland, the Baltic countries and CEE
Housing Finland, the Baltic countries and CEE 2008 2009 2010 2011 2012 2013 1-9/2014 • Weakening • Focus on investor • Focus turned to • Focus on • Favourable • Soft consumer • Good market deals in Finland consumer sales in consumer sales in residential sales demand in development in Finland Finland
Slide 14: Housing: Operating environment in Finland in Q3/2014
Housing: Operating environment in Finland in Q3/2014 • Consumers continued to be • Polarisation of residential • Mortgage interest rates cautious, but investors prices between the capital stayed on a low level and remained active region and other parts of margins continued to Finland continued decre
Slide 15: Housing: Operating environment in the Baltic countries and CEE in Q3/2014
Housing: Operating environment in the Baltic countries and Central Eastern Europe (CEE) in Q3/2014 • Positive development in • Geopolitical tensions • Interest rates of the macro economy has have weakened the mortgages have supported the residential consumer confidence remained on a low level market
Slide 16: Start-ups increased in the Baltic countries and CEE
Start-ups increased in the Baltic countries and CEE • In Finland, start-ups in Consumer start-ups and sales in Finland*, units balance with sales 2,541 2,550 2,349 2,232 • Increase in number of 1,890 1,893 1,968 1,869 investor financed projects 1,528 1,567 1,761 1,555 1,462 in Finland starting 2013
Slide 17: Housing Russia
4 Housing Russia Forest residential area Yekaterinburg, Russia
Slide 18: Market trends and drivers in Housing Russia
Market trends and drivers in Housing Russia Developing mortgage Larger middle class market Political support for housing Migration development Growing number of households Low living space per person Number of households in Russia by household size, index Availability of housing per capita, sq. m. i
Slide 19: Housing Russia
Housing Russia 2008 2009 2010 2011 2012 2013 1-9/2014 • Prices declined • Housing prices • Slight increases • Prices increased • Prices increasing • Stable residential • Increased stabilising in H2 in residential (regional and good prices uncertainty and • Profitability hit prices differences) resid
Slide 20: Housing: Operating environment in Russia in Q3/2014
Housing: Operating environment in Russia in Q3/2014 • The ruble weakened • Residential prices • The mortgage stock has again sharply remained stable on continued to grow average • Mortgage interest rates have increased slightly Prices of new apartments, Mortgage stock and average interest rate, EUR/
Slide 21: Strict regional allocation and maintaining critical mass
Strict regional allocation and maintaining critical mass • Start-ups are balanced with sales Start-ups and sold apartments, units Sales CAGR +32% 5,487 5,099 4,441 4,492 4,480 4,209 3,699 3,622 3,683 3,561 3,173 3,073 2,790 2,615 3,193 3,088 3,328 3,176 2,263 2,168 1,950 1,535 722 672 40 206 2003 20
Slide 22: Portfolio is geographically balanced
Portfolio is geographically balanced Apartment inventory at the end of the period, units 11,966 11,196 354 9,550 416 11,612 8,654 10,780 7,774 888 247 409 8,662 8,407 5,419 5,262 7,365 43% 1,245 805 37% 4,457 36% 37% 39% 4,174 35% 24% 2008 2009 2010 2011 2012 2013 9/2014 Under construction Completed
Slide 23: Plans for alternate scenarios in Russia
Plans for alternate scenarios in Russia Normalized Continuing Escalation Large-scale situation uncertainty of crisis conflict Plot Increase plot acquisitions Continue strategic plot Only critical plot Stop plot acquisitions acquisitions acquisitions acquisitions Increase start-ups Continue strategic
Slide 24: Business Premises and Infrastructure
5 Business Premises and Infrastructure Commercial centre Dixi Vantaa, Finland
Slide 25: Business Premises and Infrastructure
Business Premises and Infrastructure 2008 2009 2010 2011 2012 2013 1-9/2014 • Good • Weakening • Signs of • Infra Services • Stable • Weak business • Weak business development in business improvement in weak in H1, development in premises market premises market Business premises market the business
Slide 26: Business Premises and Infrastructure: Operating environment in Q3/2014
Business Premises and Infrastructure: Operating environment in Q3/2014 • Office and commercial markets • End-users cautious in the office • Positive macro outlook remained weak, opportunities in and retail sectors continues to support the care and industrial sectors • Investor interest on a good lev
Slide 27: Opportunities for YIT
Opportunities for YIT • Need to adapt to changing operating environment • Traditional segments suffering from weak macro in Finland, keep position in office, retail, logistics • More co-operation models (PPP’s and alliances) Growth opportunities Hybrids Care Energy and Renovation Road The Baltic fac
Slide 28: Key financials
6 Key financials Mini apartment Helsinki, Finland
Slide 29: Revenue growth and healthy profitability through economic cycles
Revenue growth and healthy profitability through economic cycles Revenue development (EUR million) by business segment Business Premises and Infrastructure Housing Russia Housing Finland, the Baltic countries and CEE International Construction Services Construction Services Finland CAGR +7% 1,929 1,
Slide 30: Cash flow after investments and dividends targeted to be positive in 2014
Cash flow after investments and dividends targeted to be positive in 2014 Cash flow, EUR million Invested capital and ROI 1-9/2014: EUR 2013: EUR -88 million Short term target by the end of 2016: ROI 15% 12 million 1,593 1,604 1,559 1,554 1,563 1,493 1,443 88 59 76 15.0% 41 13.9% -5 -12 -16 12.3% -7
Slide 31: Gearing has decreased slightly
Gearing has decreased slightly Gearing (%) Equity ratio (%) Net debt/EBITDA (Multiple, x) 132.1%130.4% 9.1 123.7% 127.2% 40.7% 112.0% 38.5% 109.8% 37.0% 37.8% 7.5 35.0% 36.4% 35.8% 6.9 94.0% 108.4% 37.3% 5.8 101.1% 103.2%101.5% 34.9% 33.6% 34.3% 91.2% 91.3% 31.6% 32.2% 31.9% 4.8 76.4% 3.6 5.1 5.0 3.
Slide 32: Positive progress in capital release
Positive progress in capital release • The Ukrainian crisis has increased cautiousness of Western investors in Russia which has slowed down the sales of slow-moving assets Target for capital release Actions in Q3/2014 Cumulative progress since 9/2013 Reducing the inventory of unsold • Active sales t
Slide 33: A solid dividend payout
A solid dividend payout Payout ratio (%) Dividend / share (EUR) Note: Historical figures are YIT Group pre demerger Note: Historical figures are YIT Group pre demerger 75 73 0.80 0.75 0.70 60 0.65 0.65 56 56 55 51 48 48 0.55 44 45 0.50 43 43 40 40 38 0.40 0.38 0.35 29 27 0.30 0.22 0.23 0.19 0.15 0.1
Slide 34: Concluding remarks
7 Concluding remarks Pushkin St. Petersburg, Russia
Slide 35: Concluding remarks
Concluding remarks Current focus on cash flow and capital efficiency Strong market position and long experience from Finland and Russia Solid track record in profitability and execution through economic cycles Opportunities for future growth through unique market position Growth from self-developed
Slide 36: 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 where this presentation is made, or by reading the presentation slides, you agree to be bound by the fol
Slide 37: Together we can do it.
Together we can do it.