Yit Oyj · OMXHEX:YIT
Yit Oyj — Berenberg European Conference 2015
44 slides from Yit Oyj's conference presentation, Nov 30, 2015
Slide 1: YIT – solid foundation for future growth
YIT – solid foundation for future growth Berenberg European Conference November 30, 2015 Timo Lehtinen, CFO yitgroup.com
Slide 2: Contents
Contents 1 YIT in brief 2 Strategy and business model 3 Housing Finland and CEE 4 Housing Russia 5 Business Premises and Infrastructure 6 Key financials 7 Looking ahead and conclusions YIT | 2 | Investor presentation, November 2015
Slide 3: YIT in brief
1 YIT in brief Merenkulkijanranta residential area Helsinki, Finland
Slide 4: YIT – An innovative project developer and high-quality construction company
YIT – An innovative project developer and high-quality construction company Key investment propositions Operations in 8 countries, 5,800 employees • Strong market position and extensive experience in the main markets Finland Russia Share of Share of • Market leader in Finland, the largest foreign re
Slide 5: 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 and CEE International Construction Services Construction Services Finland CAGR Construction Services +7% 1,929 1,
Slide 6: YIT's competitive edges
YIT’s competitive edges • High-quality brand and reputation as a reliable company “Best developer in Finland”, • Innovative concepts and effective design Euromoney Real Estate Survey 2015 management • Strong plot reserve “Developer of the year 2014” • Own sales network in all operating countries in
Slide 7: Strategy and business model
2 Strategy and business model Konepaja residential area Helsinki, Finland
Slide 8: Strategic roadmap
Strategic roadmap Focus on Focus shifted Focus back cash flow towards profitability on growth Temporarily lower growth acceptable 2017 End of 2016 More balanced geographical footprint Partial Solid foundation demerger for future growth Higher share of End of 2013 projects with high Foundation for
Slide 9: Strategic focus areas
Strategic focus areas Improving profitability Growth initiatives Raising capital efficiency • Optimising the business mix • Secured major projects and • Completing the capital high value added projects release program • Cost adjustments in Russia • Accelerating growth in CEE, • Further increasing th
Slide 10: Financial targets as of September 16, 2015
Financial targets as of September 16, 2015 • Long-term ROI target revised Long-term targets Status 6/2015 to 15% from the earlier 20% LTM: -5.1% due to lower weight of Russia 5 - 10% annually Revenue growth (+0.8% on average at comp. fx) in invested capital and future capital allocation Return on 15
Slide 11: Clearly higher EBIT needed to reach the targeted ROI
Clearly higher EBIT needed to reach the targeted ROI Increasing volume and higher margin Stabilisation in the order Optimising the of real Cost backlog of business mix in residential adjustments Business housing prices in Premises and Russia Infrastructure Dependence on market development YIT | 11 |
Slide 12: Housing Finland and CEE
3 Housing Finland and CEE Koti Hyacint Prague, the Czech Republic
Slide 13: Housing Finland and CEE: Operating environment in Finland
Housing Finland and CEE: Operating environment in Finland • Consumer confidence weakened • Good demand for small, • Mortgage interest rates stayed on affordable apartments in the a low level and margins continued • Good investor demand continued growth centres to decrease • Price pressure in large •
Slide 14: Housing Finland and CEE: Operating environment in the CEE countries
Housing Finland and CEE: Operating environment in the CEE countries • Positive macro development • Prices of new apartments • Interest rates of mortgages have supported the residential market remained relatively stable in the remained on a low level CEE countries • The market in the Czech Republic •
Slide 15: Exploiting opportunities in Poland – local unit established
Exploiting opportunities in Poland – local unit established Large population Why Poland? Population in Poland’s largest cities A population of around 40 million and growing economy Need to improve living conditions Tri-City Opportunity to leverage YIT’s housing process 750,000 Utilising expe
Slide 16: Housing Finland and CEE: long-term development
Housing Finland and CEE: long-term development 2008 2009 2010 2011 2012 2013 2014 1-9/2015 • Weakening • Focus on • Focus turned • Focus on • Favourable • Soft consumer • Good • Strong market investor deals to consumer consumer residential demand in development residential in Finland sales in sales
Slide 17: Impact of the mix in Finnish housing
Impact of the mix in Finnish housing • Target to increase the share of consumer sales by improving affordability of the apartments Higher consumer sales would reduce the need to use bundle deals to manage the Consumer inventory of unsold apartments projects EBIT-% Investor • High invested capital pr
Slide 18: Housing Finland and CEE: Sales and start-ups in Finland
Housing Finland and CEE: Sales and start-ups in Finland Sold apartments (units) • In Q3, units sold to 2014: 2,515 1-9/2015: 2,533 consumers -19% y-o-y in line with the decrease in 1,100 apartments for sale 653 665 715 718 576 621 726 • In 1-9/2015, 398 339 332 232 297 444 441 apartments from projec
Slide 19: Housing Finland and CEE: Sales and start-ups in the CEE countries
Housing Finland and CEE: Sales and start-ups in the CEE countries Sold apartments (units) • Major area projects started 2014: 734 1-9/2015: 733 in 2015: 275 256 • Rokytka, Prague, the 207 189 83 202 Czech Republic nearly 180 158 900 apartments in total 192 • STEIN2, Bratislava, Slovakia more than Q1
Slide 20: Number of unsold completed apartments declined in Finland
Housing Finland and CEE: Number of unsold completed apartments declined in Finland • Number of unsold Apartment inventory (units) completed apartments in Finland down to 373 5,441 5,593 5,415 (9/2014: 533) 686 4,975 4,994 4,916 5,047 633 679 4,907 579 562 611 573 • 61% of units under 4,808 4,736 4,3
Slide 21: Housing Russia
4 Housing Russia Manevrovaya Baltym Park Yekaterinburg, Yekaterinburg, Russia Russia
Slide 22: Housing Russia: Operating environment
Housing Russia: Operating environment • The ruble was volatile during • Demand focused especially on • Mortgage interest rates for new the quarter small apartments and apartments at around 11-12% apartments close to completion due to government’s mortgage subsidy program launched in • Residential pr
Slide 23: Housing Russia: long-term development
Housing Russia: long-term development 2008 2009 2010 2011 2012 2013 2014 1-9/2015 • Prices • Housing prices • Slight • Prices • Prices • Stable • Increased • Profitability declined stabilising in increases in increased increasing and residential uncertainty and burdened by H2 residential (regional g
Slide 24: Reorganisation of YIT's Russian operations
Reorganisation of YIT´s Russian operations • Operations continue in all current Structure of YIT´s Russian operations as of January 1, 2016 locations • Reorganisation to increase flexibility and Housing Russia segment to ensure cost efficiency and competitiveness St. Moscow Russian Petersburg region
Slide 25: Housing Russia: Sales and start-ups
Housing Russia: Sales and start-ups Sold apartments (units) and share of sales financed with mortgages (%) • In Q3, units sold to 2014: 4,817 (41%*) 1-9/2015: 2,408 (48%) consumers -28% y-o-y 1,641 140% 120% • Share of sales financed 1,132 1,061 983 967 100% with mortgages increased 769 130 47 672 8
Slide 26: Housing Russia: Sales risk under control
Housing Russia: Sales risk under control • Number of completed Apartment inventory (units) unsold apartments 12,195 11,966 exceptionally low 10,808 257 354 10,014 9,350 9,718 9,619 346 11,938 11,612 403 311 243 10,462 378 9,611 9,407 9,376 • Sales rate exceptionally 8,972 high 40% 39% 43% 42% 43% 46
Slide 27: Defensive mode, maintaining ability to ramp up
Defensive mode, maintaining ability to ramp up “New normal” Significant deterioration in the operating environment Plot Carefully selected Stop plot acquisitions acquisitions plot acquisitions Maintain at least critical volume in all Start-ups High selectivity units Slowdown, however filling contrac
Slide 28: Business Premises and Infrastructure
5 Business Premises and Infrastructure Tripla Helsinki, Finland
Slide 29: Business Premises and Infrastructure: Operating environment
Business Premises and Infrastructure: Operating environment • Office and commercial premises • Slight increase in end-user • Positive macro outlook supported markets remained soft demand, but competition for the business premises market in tenants is intense the CEE countries • Opportunities in cont
Slide 30: Business Premises and Infrastructure, long-term development
Business Premises and Infrastructure, long-term development 2008 2009 2010 2011 2012 2013 2014 1-9/2015 • Good • Weakening • Signs of • Infra Services • Stable • Weak • Weak • Revenue development business improvement weak in H1, development business business decreased in Business premises in the bus
Slide 31: Strong order backlog – solid foundation for future growth
Strong order backlog – solid foundation for future growth Order backlog of Business Premises and Infrastructure, EUR million • Last years spent on investing into the future, relative share of fixed costs temporarily high Tampere light rail project • Major high value added projects secured: and Tripl
Slide 32: Solid execution of major projects
Solid execution of major projects E18 Hamina-Vaalimaa motorway PPP The Tripla project Tampere light rail alliance project project • EUR 260 million* • EUR ~1 billion • EUR ~100 million* • Construction started 6/2015 and • Zoning confirmed and permit • Development phase started in to be opened for tr
Slide 33: Key financials
6 Key financials
Slide 34: Strong cash flow during recent quarters
Strong cash flow during recent quarters Operating cash flow after investments(EUR million) Invested capital and ROI (EUR million, %) 1-9/2015: 2014: EUR 152 million EUR 140 million 309 280 1,604 1,554 1,563 179 1,403 1,344 152 1,308 1,196 88 10.2% 9.6% 9.1% 140 7.7% 7.5% 113 6.4% 15 5.1% 41 12 -12 -
Slide 35: Net debt decreased further
Net debt decreased further Interest-bearing debt (EUR million), IFRS • Strong liquidity buffer • Cash and cash equivalents of EUR 88.1 million 920 936 909 895 80 75 797 • Overdraft facilities of EUR 67.1 million of which EUR 91 199 716 64.8 million unused 119 663 129 88 • Undrawn committed revolving
Slide 36: Minor deterioration in financial key ratios
Minor deterioration in financial key ratios • Positive development from the decrease in net debt was offset by weakening of the ruble Gearing (%) Equity ratio (%) Net debt/EBITDA (Multiple, x) 132.1 130.4 127.2 129.9 9.1 117.3 36.4 106.1 35.8 35.2 36.0 35.5 7.5 35.0 6.9 98.7 6.6 32.4 108.4 103.2 5.7
Slide 37: Good financial flexibility
Good financial flexibility Housing start-ups 2000-2014 (units) • Good ability to manage cash flow • Start-ups adjusted according to demand 8,239 8,873 8,305 7,590 7,406 • Opportunity to adjust plot investments; 6,590 6,695 7,257 6,446 existing plot reserve provides a good base 5,164 for the coming y
Slide 38: Dividend payout target 40-60% of net profit for the period
Dividend payout target 40-60% of net profit for the period Dividend / share (EUR) Note: Historical figures prior to 2013 are YIT Group pre demerger 0.80 0.75 0.70 75% 73% 0.65 0.65 60% 0.55 0.50 56% 56% 55% 51% 48% 48% 44% 45% 0.40 43% 43% 0.38 40% 40% 40% 38% 0.35 0.30 29% 27% 0.22 0.23 0.19 0.18 0
Slide 39: Looking ahead and conclusions
7 Looking ahead and conclusions
Slide 40: Market outlook, expectations for 2015
Market outlook, expectations for 2015 Finland • Consumers cautious and investors active in the residential market, demand to focus on small apartments in growth centres • Price polarisation, especially between small and large apartments • Availability of mortgages good • Modest demand for business p
Slide 41: Guidance for 2015 specified
Guidance for 2015 specified (segment reporting, POC) •The The Grouprevenue revenue growth is estimated to be to in the The 2015 guidance is based on the following: Group growth is estimated be in range of -5 – 5% at comparable exchange rates • Demanding market outlook, especially in Russia the range
Slide 42: Concluding remarks
Concluding remarks • Strong market position and long track record in healthy profitability and solid execution through economic cycles • Good progress in improving capital efficiency and increasing financial operating space • Improving profitability, growth initiatives and raising the capital effici
Slide 43: 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 44: Together we can do it.
Together _ we can do it.