YIT Oyj · OMXHEX:YIT
YIT Oyj — Q1 2016 Earnings Presentation
61 slides from YIT Oyj's earnings presentation, 2016
Slide 1: Interim Report January–March 2016
Interim Report January–March 2016 Kari Kauniskangas, President and CEO
Slide 2: Contents
Contents 1 Group development in Q1/2016 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 Naantali CHP power plant Naantali, FInland YIT | 2 | Interim Report January–March 2016
Slide 3: Group development in Q1/2016
1 Group development in Q1/2016 Merenkulkijanranta Helsinki, Finland
Slide 4: Highlights in Q1/2016
Highlights in Q1/2016 • Improving results in Business Premises and Infrastructure • Housing start-ups for consumers increased in Finland, strong sales from started projects • Housing start-ups increased in CEE, first plot acquired in Warsaw, Poland • Strong sales (units) in Russia but margin pressur
Slide 5: Group: Q1 results modest as expected
Group: Q1 results modest as expected • Revenue decreased 1% y-o-y at comparable exchange rates • Profitability under pressure especially due to margin pressure in Russia • Order backlog increased slightly, impact of the ruble EUR 28 million in Q1 Revenue and adjusted operating profit margin (EUR mil
Slide 6: EBIT-bridge Q1/2015 – Q1/2016
EBIT-bridge Q1/2015 – Q1/2016 • Margin pressure persists in Russia • Positive development in Business Premises and Infrastructure Adjusted operating profit (EUR million), change Q1/2015 – Q1/2016: -41% 20.5 -1.4 0.1 -2.7 -7.0 12.1 2.2 -0.7 0.4 0.7 YIT Group Volume Profitability Volume Profitability
Slide 7: Housing Finland and CEE
2 Housing Finland and CEE STEIN Bratislava, Slovakia
Slide 8: Housing Finland and CEE: Operating environment in Finland in Q1
Housing Finland and CEE: Operating environment in Finland in Q1 • Consumer confidence improved • Good demand especially for • Mortgage interest rates stayed on in Q1, 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 Q1
Housing Finland and CEE: Operating environment in the CEE countries in Q1 • 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: Order backlog increased in Q1
Housing Finland and CEE: Order backlog increased in Q1 • Revenue decreased due to y-o-y lower completion rate of sold apartments in Finland • Order backlog grew due to high start-ups Revenue (EUR million) Order backlog (EUR million) -10% 7% 221 208 857 184 803 166 166 Q1 Q2 Q3 Q4 Q1 12/2015 3/2016 2
Slide 11: Housing Finland and CEE: Profitability improved in Q1
Housing Finland and CEE: Profitability improved in Q1 • Profitability improved from previous quarters and was stable y-o-y despite lower revenue • ROI remained stable Adjusted operating profit and adjusted operating profit margin Return on operative invested capital (EUR million, %) (EUR million, %)
Slide 12: Housing Finland and CEE: Sales and start-ups in Finland in Q1
Housing Finland and CEE: Sales and start-ups in Finland in Q1 Sold apartments (units) • Consumer sales and start- 2015: 3,192 ups (units) increased 1,100 • 49% of units sold to 715 718 659 investors in Q1/2016 726 612 (Q1/2015: 62%) 444 441 330 298 271 374 277 329 314 • 36 apartments from Q1 Q2 Q3 Q
Slide 13: Housing Finland and CEE: Sales and start-ups in the CEE countries in Q1
Housing Finland and CEE: Sales and start-ups in the CEE countries in Q1 Sold apartments (units) • Consumer sales (units) 2015: 1,023 grew by 5% in Q1/2016 275 290 256 83 202 201 • High number of start-ups, especially in the Czech Republic and Slovakia 192 Q1 Q2 Q3 Q4 Q1 • First plot acquired in 2015
Slide 14: Housing Finland and CEE: Production volume continued to grow in Q1
Housing Finland and CEE: The production volume (units) continued to grow in Q1 • Number of unsold Apartment inventory (units) completed apartments 5,863 decreased to 280 in 5,389 381 Finland (3/2015: 432) 4,994 5,047 4,916 447 5,482 562 573 • 60% of units under 611 4,942 construction already sold 4,
Slide 15: Housing Russia
3 Housing Russia Baltym Park Yekaterinburg, Russia
Slide 16: Housing Russia: Operating environment in Q1
Housing Russia: Operating environment in Q1 • 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 clearly in Q1
Housing Russia: Revenue decreased clearly in Q1 • Revenue decreased due to lower construction volume and sales in units as well as the ruble weakening • Revenue decreased by 20% at comparable exchange rates • Order backlog stable q-o-q, positive impact of the strengthening of the ruble EUR 28 millio
Slide 18: Housing Russia: Profitability weakened in Q1
Housing Russia: Profitability weakened in Q1 • Profitability burdened by lower revenue and changes in pricing in certain projects • Target to reduce the operative invested capital by continuing active sales • Target to have positive operating profit for the full year Adjusted operating profit and ad
Slide 19: Housing Russia: Sales and start-ups in Q1
Housing Russia: Sales and start-ups in Q1 Sold apartments (units) and share of sales financed with a mortgage (%) • Sales (units) decreased by 2015: 3,129 (50%) 8% y-o-y • Strong comparison 967 period 892 769 672 721 • Clear growth compared to previous quarters 58% 56% 58% 54% 34% • Share of sales f
Slide 20: Housing Russia: Apartment inventory in the end of Q1
Housing Russia: Apartment inventory in the end of Q1 • Completed unsold Apartment inventory (units) apartments decreased slightly q-o-q 9,350 9,718 9,619 311 243 8,584 8,895 378 449 9,407 9,376 484 8,972 8,446 8,100 42% 43% 46% 43% 40% • Sales rate increased moderating the sales risk Q1 Q2 Q3 Q4 Q1
Slide 21: Business Premises and Infrastructure
4 Business Premises and Infrastructure Office building Kasarmikatu 21 Helsinki, Finland
Slide 22: Business Premises and Infrastructure: Operating environment in Q1
Business Premises and Infrastructure: Operating environment in Q1 • 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 increased in Q1
Business Premises and Infrastructure: Revenue increased in Q1 • Revenue increased as expected, both in Business Premises and in Infra Services • Order backlog stable at a good level, several projects in the pipeline • Over EUR 500 million is expected to be added to the backlog from the Tripla projec
Slide 24: Business Premises and Infrastructure: Profitability improved in Q1
Business Premises and Infrastructure: Profitability improved in Q1 • Profitability improved y-o-y due to higher volume and improved margin content of the order backlog • Invested capital increased, ROI continued however to improve Adjusted operating profit and adjusted operating profit margin Return
Slide 25: Business Premises and Infrastructure: Good progress in Q1
Business Premises and Infrastructure: Good progress in Q1 • The Tripla project is progressing • Purchase agreement for the land areas signed and Pasila railway station bought • Already one third of the business premises at the Mall of Tripla rented • Signing and closing of the final project agreemen
Slide 26: Financial position and key ratios
5 Financial position and key ratios Duetto office Vilnius, Lithuania
Slide 27: Cash flow after investments negative in Q1
Cash flow after investments negative in Q1 • Cash flow of plot 2015: EUR 184 million investments EUR -52.9 million 309 (Q1/2015: EUR -38.4 280 million) • Value of Pasila railway 179 184 station EUR 13.2 million 144 • Groundworks of the Tripla project constructed to own balance sheet 113 15 12 43 • D
Slide 28: Invested capital and ROI in Q1
Invested capital and ROI in Q1 • Invested capital remained stable • ROI weakened slightly Invested capital (EUR million) Return on investment (%), rolling 12 months 1,344 1,308 1,196 1,141 1,132 7.5% 6.4% 5.1% 5.3% 4.7% Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 2015 2016 2015 2016 All figures according to segme
Slide 29: A new bond issued to refinance 2016 maturities
A new bond issued to refinance 2016 maturities and to strengthen the maturity profile Interest-bearing debt (EUR million), IFRS • Strong liquidity buffer • Cash and cash equivalents of 797 EUR 122.4 million 716 119 663 651 677 • Overdraft facilities of EUR 64.5 million of 129 88 122 122 which EUR 63
Slide 30: Financial key ratios weakened
Financial key ratios weakened • Excess cash weakened the equity ratio by around 1.5 pp Gearing (%) Equity ratio (%) Net debt/EBITDA (Multiple, x) 117.3 106.1 108.6 35.2 36.0 35.5 35.5 98.7 101.1 34.1 6.6 6.9 5.9 5.0 5.2 96.2 33.8 33.1 32.9 91.5 89.6 32.1 31.5 6.1 85.9 84.0 5.2 4.6 4.6 3.9 Q1 Q2 Q3 Q
Slide 31: Ruble strengthened in Q1
Ruble strengthened in Q1 Revenue split Q1/2016 • The Russian ruble appreciated in Q1/2016 • Average EUR/RUB rate in Q1/2016: 82.37 RUB (Q1/2015: 71.02) 14% • Quarter-end EUR/RUB rate: 76.31 (Q4/2015: 80.67) Other 2% Principles of managing currency risks: • Sales and project costs typically in same E
Slide 32: Over 80% of the capital release program completed
Over 80% of the capital release program completed Target for capital release Actions in Q1/2016 Cumulative progress since 9/2013 Reducing the inventory of unsold • Active sales to investors covering a wide completed apartments in Finland • EUR ~30 million variety of apartments >EUR 50 million Sellin
Slide 33: Outlook and guidance
6 Outlook and guidance Albertinpiha Jyväskylä, Finland
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 apartments CEE • The improved economic situation to support residential and business premises demand • Access t
Slide 36: Guidance for 2016 (segment reporting, POC) unchanged
Guidance for 2016 (segment reporting, POC) unchanged The Group revenue growth is estimated to be in the range of 0-10% at comparable exchange rates. The adjusted operating profit* is estimated to grow from the level of 2015 (2015: EUR 76.0 million). • Over half of Q2-Q4/2016 revenue from sold projec
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 Follow YIT on Twitter @YITInvestors YIT | 37 | Interim Report January–March 2016
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 YIT | 39 | Interim Report January–March 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 1-3/2016 1-3/2015 Change 1-12/2015 Revenue 362.4 374.9 -3% 1,651.2 Operating profit 12.1 20.5 -41% 65.7 Operating profit margin, % 3.3% 5.5% 4.0% Adjusted operating profit 12.1 20.5 -41% 76.0 Adjusted operating profit margin, % 3.3% 5.5% 4.6% Order backlog 2,246.8 2,169.8 4%
Slide 42: Balanced debt portfolio
Balanced debt portfolio Debt portfolio at the end of the period 3/2016, EUR 677 million Maturity structure at the end of the period 3/2016 Maturity profile (excluding construction stage financing) (EUR million) Bonds, 37% 500 450 Commercial papers Commercial papers, 1% Pension loans 400 Construction
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 3/2016, EUR 520 million Use of plot reserves in 2015, EUR 109 million Housing Finland and CEE 64 Finland 55 194 247 134 113 The CEE countries 9 79 Housing Russia** 29 Business Premises and Infrastru
Slide 44: Ownership
II Ownership
Slide 45: YIT's major shareholders
YIT’s major shareholders March 31, 2016 Shareholder Shares % of share capital 1. Varma Mutual Pension Insurance Company 12,000,000 9.43 2. Herlin Antti 4,710,180 3.70 3. Mandatum Life Insurance Company Ltd. 4,286,675 3.37 4. OP funds 3,693,350 2.90 5. Elo Mutual Pension Insurance Company 3,335,468 2
Slide 46: Almost 42,000 shareholders
Almost 42,000 shareholders Number of shareholders and share of non-Finnish ownership, March 31, 2016 43,752 44,312 41,944 41,929 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% 24.8% 25.1% 22.1% 9,368 7,456 4,928 3,271 12/2002
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% 3% 2% 1% 0% Finland Estonia Latvia Lithuania The Czech Slovakia Poland Russia St. Petersburg* Moscow -1% Republic region* -2% -3% 2015 2016E 2017E -4% Unemployment rate in YIT’s operating countries, % 20% 18
Slide 49: Housing indicators
IV Housing indicators Finland The CEE countries Russia
Slide 50: Finland – Start-ups expected to increase in 2016
Finland – Start-ups expected to increase 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 29,842 30,500 31,500 30,000 Own economy 27,778 20 26,273 6,300 16,531 12,477 11,614 6,300 6,800 23,361 23,385 9,772 15,33
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 1,100 2,000 3,400 3,500 3,500 3,000 2,756 4,200 1,100 1,000 1,000 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 Slovakia Residential start-ups in the Czech Republic, units Residential start-ups in Slovakia, units 43,500 28,400 37,300 28,200 27,500 20,300 25,100 26,700 27,700 13,800 20,700 23,800 24,400 25,400
Slide 54: Russia – Housing indicators
Russia – Housing indicators House prices in primary markets, thousand RUB per sq. m. (1/2009-3/2016) New residential construction volume, EUR billion* 110 220 65 100 200 90 180 60 80 160 70 140 55 60 120 50 50 100 40 80 45 30 60 20 40 40 2010 2011 2012 2013 2014 2015E 2016E 2017E Yekaterinburg Rosto
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 and Estonia in 2016 New non-residential construction volumes, index New non-residential construction in Finland, EUR million 220 1,600 200 1,400 180 1,200 160 1,000 140 800 120 100 600 80 400 60 200 40 0 2010 2011 2012 2013 2
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 decrease slightly in 2016
Infrastructure construction in Finland– Market expected to decrease slightly in 2016 Infrastructure market in Finland, EUR million Infrastructure sectors in Finland (2015E) 7,000 Other 12% 6,000 5,000 Roads 36% 4,000 Energy & water works 3,000 25% 2,000 1,000 0 Telecom- Railways munications Other tr
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.