Yit Oyj · OMXHEX:YIT
Yit Oyj — Investor Day (June 2014)
56 slides from Yit Oyj's investor day presentation, Jun 4, 2014
Slide 1: Invitation to YIT's Analyst Day
Program 09.00 Meeting point: By bus from Kiasma (address: Mannerheiminaukio 2, Helsinki) 09.30 – 10.30 Site visit at MotorCenter Suomenoja Invitation 12.00 Lunch (with business update) 13.00 – 15.00 Presentations: Tom Sandvik: The Baltic countries and CEE We are pleased to invite you to the Hättö Vi
Slide 2: Information of Hättö
Information of Hättö Hättö story Hättö belongs to the Hättö nature conservation area, which was first founded in 1946 by Ragnar Krϋger, who was the founder of Yleinen Insinööritoimisto, a predecessor of today’s YIT. The 500 hectare area includes waters and eight major and ten minor islands. The tota
Slide 3: YIT – Analyst Day 2014: Baltic countries and CEE
Reding Tower Bratislava, Slovakia YIT – Analyst Day 2014 Operations in the Baltic countries and Central Eastern Europe Tom Sandvik, Head of the Baltic countries and CEE -division
Slide 4: Contents
Contents 1. YIT in the Baltic countries and CEE 2. Operating environment and market position 3. Strategy and progress 4. Operating countries in brief 5. Summary Tarjanne Dúbravka Bratislava, Slovakia YIT | 4 | Analyst day, June 2014
Slide 5: YIT in the Baltic countries and CEE
1 YIT in the Baltic countries and CEE Uus Kalamaja area Tallinn, Estonia
Slide 6: YIT in the Baltic countries and CEE
YIT in the Baltic countries and CEE • Operations in Estonia, Latvia, Lithuania, the Czech Republic and Slovakia • Business areas • Housing: focus on self-developed projects, selective contracting • Business Premises: Offices, shopping centres, public premises, renovation of existing premises • Targe
Slide 7: Timeline of operations in the Baltic countries and CEE
Timeline of operations in the Baltic countries and CEE • YIT entered the Baltic market with focus on contracting • The focus was shifted towards own development which was then interrupted by the financial crisis • Entry into Slovakian and Czech markets was part of a strategy to expand the constructi
Slide 8: Operating environment and market position
2 Operating environment and market position Barsauskas Kaunas, Lithuania
Slide 9: YIT is the biggest residential developer in the Baltics
YIT is the biggest residential developer in the Baltics YIT’s market position in the housing market • Estonia – Number 1 • Latvia – Number 1 • Lithuania – Among top 3 • Bratislava, Slovakia – Among top 3 • Prague, The Czech Republic – Among top 5 Population in the capital cities, millions 1.3 0.7 0.
Slide 10: Local competitors in every market
Local competitors in every market • Residential market in the Baltic Number of apartments sold in the Baltics, 2013 countries, Slovakia and the Czech 521 Republic is very fragmented 263 176 • Different companies in every country, very few big players YIT MERKO NCC Country Main competitors in housing
Slide 11: Key market drivers for Housing
Key market drivers for Housing Consumer confidence • Low living space and demand for 115 high-quality, modern apartments • Average living space per 110 105 100 capita below 30 sq. m. 95 90 85 • Improving macro outlook 80 2010 2011 2012 2013 2014 Estonia Latvia Lithuania The Czech Republic Slovakia •
Slide 12: Mortgage market in the Baltic countries and CEE
Mortgage market in the Baltic countries and CEE • The Baltic countries, Slovakia and Average interest rate of mortgages (%) 7.0 the Czech Republic have well- 6.0 functioning mortgage markets 5.0 4.0 • Low interest rates 3.0 2.0 1.0 • YIT’s good relations with local banks 0.0 improve customers’ acces
Slide 13: Key market drivers for Business Premises
Key market drivers for Business Premises • Improving macro outlook Retail trade confidence in the Baltic countries and Slovakia 40 • Company balance sheets more 30 robust 20 10 • The impact of the Ukrainian crisis 0 limited -10 -20 -30 • Low business premises stock per -40 2010 2011 2012 2013 2014 c
Slide 14: Strategy and progress
3 Strategy and progress
Slide 15: The role of the Baltic countries and CEE in YIT's strategy
The role of the Baltic countries and CEE in YIT’s strategy • Geographical diversification evens out economic fluctuations • Solid growth drivers, target to increase the market share in housing in all markets • Focus has been shifted towards own development Kivikko Bratislava, Slovakia • Potential fo
Slide 16: YIT's competitive edges in the Baltic countries and CEE
YIT’s competitive edges in the Baltic countries and CEE • Finnish design and construction quality highly valued in Eastern Europe • According to brand studies, YIT is perceived as a reliable, high-quality brand • Strong design management and project expertise • YIT among the first operators to intro
Slide 17: YIT considered as a reliable, high-quality brand
YIT considered as a reliable, high-quality brand • In brand awareness study* YIT was Prompted awareness of YIT in the Baltics and CEE*, % described as Estonia 63% • Reliable • High-quality Latvia 23% • Innovative solutions • Good customer service Lithuania 57% • YIT was well recognized in Estonia Sl
Slide 18: Recovering housing sales after the financial crisis
Recovering housing sales after the financial crisis Start-ups and sold apartments, pcs • During the financial 887 crisis, strong focus 697 733 723 on inventory 541 526 530 reduction through 521 482 384 significant discounts 372 364 256 73 • Sales have 0 0 recovered since but 2006 2007 2008 2009 2010
Slide 19: Operating countries in brief
4 Operating countries in brief Villinki Bratislava, Slovakia
Slide 20: Estonia - YIT has a solid reputation in the market
Estonia - YIT has a solid reputation in the market • Estonia is a fast-paced market that is dependent on Finnish and Swedish economies • Future potential in both housing and business premises development New non-residential construction, GDP growth, % Residential completions, units EUR million 8,000
Slide 21: Latvia - Investment environment improving
Latvia - Investment environment improving • During the financial crisis, banks had to repossess residential projects still continues to impact the housing market • Unpredictable permit process, however legislation under way to improve the investment environment • Potential in housing and business
Slide 22: Lithuania - YIT's brand well-known and highly valued
Lithuania - YIT’s brand well-known and highly valued • Potential in both housing and business premises development • Business premises stock per capita very low • YIT considered as the most respected and reliable contractor in the market New non-residential construction, GDP growth, % Residential co
Slide 23: Slovakia - YIT has achieved a solid market position
Slovakia - YIT has achieved a solid market position • Fragmented housing market • Construction industry has suffered from tight fiscal policy but the situation is expected to improve • Potential especially in housing • YIT Reding recognized as Developer and Construction Company of the year 2014 in S
Slide 24: The Czech Republic - The biggest market with most potential
The Czech Republic - The biggest market with most potential • The political situation has normalized, unemployment rate is low • Few big players in the construction market, otherwise very fragmented • Potential especially in residential development Residential start-ups in the Czech GDP growth, % Re
Slide 25: Summary
4 Summary Koti Hajek Prague, the Czech Republic
Slide 26: Summary
Summary • The Baltic countries and CEE have a significant role in YIT’s strategy • Focus shifted towards own development, potential for improved profitability • YIT’s brand highly valued in the region • Solid market drivers provide growth opportunities • Clear plan for improving capital efficiency K
Slide 27: YIT – Analyst day 2014: Tripla – The centre of new Pasila
Novo Orlovsky St. Petersburg, Russia YIT – Analyst day 2014 Tripla – The centre of new Pasila Tapio Salo, SVP Tripla Jukka Kalliomäki, Group Treasurer
Slide 28: Contents
Contents 1 Pasila – prime location 2 The Tripla project 3 Project finance 4 Summary YIT | 28 | Analyst day, June 2014
Slide 29: Pasila – prime location
Staadioni residential area Tallinn, Estonia 1 Pasila – prime location
Slide 30: The development of Central Pasila
The development of Central Pasila • City of Helsinki has designated Central Pasila as one of the key development areas for the next decades • As fully developed new Central Pasila will accommodate more than 5,000 residents and offer jobs for 15,000 people. Daily people flow through Pasila railway st
Slide 31: Pasila now
Pasila now YIT | 31 | Analyst day, June 2014
Slide 32: Pasila in the future
Pasila in the future YIT | 32 | Analyst day, June 2014
Slide 33: Pasila to become part of downtown
Pasila to become part of downtown ONE PASILA = Central Pasila connects East and West 500,000 persons within the reach of 30 TOWER AREA min by public transportation TRIPLA RESIDENTIAL AREA YIT | 33 | Analyst day, June 2014
Slide 34: Excellent location
Excellent location • Connection point for all rail traffic in the Helsinki Metropolitan Area • Also investments in other public transport in connection to the train station • Enlarged bus hub • Tram extension • Metro (City Rail Loop) in the future • Plans to develop the road network around the Pasil
Slide 35: Location is the key element of suitability for office tenants
Location is the key element of suitability for office tenants Most suitable area in HMA for office buildings, % of answers* • Northern downtown is tenants’ most preferred location for office buildings in 18 the Helsinki Metropolitan Area 12 12 10 10 • In Northern downtown Pasila is clearly the most
Slide 36: The Tripla project
2 The Tripla project
Slide 37: Tripla - Centre of new Pasila
Tripla - Centre of new Pasila • A complex of three blocks in Central Pasila • Shopping centre, residential buildings, headquarter-level offices, business park, hotel and city suites, multi-purpose arena • Permitted building volume 183,000 floor sq. m., totalling 350,000 gross sq. m. • Construction s
Slide 38: Ecological starting point for the design
Ecological starting point for the design • Capability for sustainable and ecological design had a significant role in the competition • In YIT´s entry • Buildings will be A-class in energy efficiency constructed using sustainable materials • Park areas and green roofs cover one third of the roof are
Slide 39: YIT is capable of executing the project
YIT is capable of executing the project • YIT has the wide professional skills required by the project • Housing, Business Premises and Infrastructure part of YIT Group • Experience from hybrid projects • Experience from different types of business premises projects; office, retail, public buildings
Slide 40: Risk management is a key element in the project's success
Risk management is a key element in the project´s success • Sales risk • Flexible schedule • Experienced sales team • Zoning • Plot payments subject to zoning • Good cooperation with all involved parties • YIT representation in all decision making bodies • Active and proactive communications • Techn
Slide 41: Solid project team
Solid project team Steering commitee Chair: Deputy CEO Tero Kiviniemi Tapio Salo Project director Assistant Jarkko Pakkala Kari Alavillamo Tapio Salo Construction director Production director Work safty coordinator Work safety engineer Administrative manager HR • Life-cycle coordinator Site managers
Slide 42: Tripla in numbers
Tripla in numbers • Pasila railway station will become the busiest station in Finland, daily: • 1,000 trains • 450 trams • 800 buses • It is estimated that almost 80,000 passengers will pass through Pasila daily • Tripla’s size, approx. 1,160,000 cubic meters or 333,000 sq. m., equals roughly • 10 F
Slide 43: Comparison of Nordic shopping centres
Comparison of Nordic shopping centres Gross leasable Gross leasable Finland Location area sq. m. Sweden Location area sq. m. Itis Helsinki 114,071 Nordstans Affärscentrum Gothenburg 73,109 Sello Espoo 97,900 Frölunda Torg Gothenburg 51,963 Jumbo Shopping Center Vantaa 85,000 Bergvik Köpcenter Karlst
Slide 44: Overview of estimated investment cost
Overview of estimated investment cost Indicative split of total investment Estimated timing of the investment costs during the project Residential 10% 5% Hotel 10% Business park & medical centre 35% Shopping centre & leisure Train station and HQ office 15% Parking & metro station 10% Land areas 15%
Slide 45: Cumulative timing of construction
Cumulative timing of construction • First infrastructure investments • Work tunnel construction starts in 2014 • Pasila bridge construction starts in 2014 • Earth moving beneath the railway station starts in 2015 • Significant infrastructure investments by the City of Helsinki 2014-2025 Estimated ti
Slide 46: Project finance
3 Project finance
Slide 47: Overview of financing of the project
Overview of financing of the project Financing of different phases of the project Own development financed by selling receivables Project financing when investor(s) secured – off balance sheet Public sections – progress payments from customer Development costs - Debt/equity H2/2013 2014 2015 2016 20
Slide 48: Project finance in brief
Project finance in brief • The role of project finance is increasing in large Lenders’ perspective projects Project finance essentially means that lenders • Tightness of government and municipal budgets look to the project’s assets and revenue stream • Benefits from efficient project execution excee
Slide 49: Why project finance?
Why project finance? Risk-return relationship in construction business from YIT’s point of view • Traditional forms to operate construction Own business have been low- development risk-low-profitability contracting and high-risk- Project finance high-profitability development • Project finance has c
Slide 50: Benefits and downsides of project finance in the Tripla project
Benefits and downsides of project finance in the Tripla project Benefits • Reduces balance sheet burden improves ROI • Limited capital requirement enables other simultaneous projects growth • Risk sharing attractive risk-return profile • Close co-operation competitive advantage from combinin
Slide 51: Indicative project finance process in Tripla project
Indicative project finance process in Tripla project • Design and implementation tender -2013 • Structuring • Selection of structure according to strategic goals 2014 • Sponsor negotiations 2014- • Discussion and tenders among sponsor candidates 2015 • Debt financing 2015- • Presentation of project
Slide 52: YIT's current project finance portfolio
YIT’s current project finance portfolio The total revenue potential in YIT’s current project finance pipeline exceeds EUR 2 billion Central Pasila / Tripla E18 Highway PPPs Wind power development • YIT selected as the • Kotka-Koskenkylä under • YIT has three disclosed developer construction by a win
Slide 53: Summary
4 Summary
Slide 54: Summary
Summary • Central Pasila is Helsinki's most significant area development project • Tripla is located in the centre of all rail traffic in Helsinki • A unique mix of urban-, ecological and user friendly design in the best location • The project is a great opportunity and YIT is well positioned and ha
Slide 55: 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 56: Together we can do it.
Together we can do it.