YIT half year ‘not satisfactory’

The YIT group’s first half results were said to have improved since the first months of the year, but president and CEO Kari Kauniskangas said it was not satisfactory as the segments had performed unevenly.

The Finnish-based contractor said that cash flow and order backlog had strengthened. In the three months from April to June, operating cash flow after investments amounted to €129.9 million.

Order backlog was reported to have grown by 9% from the level at the end of March this year, and was €5.07 billion. A year earlier, this figure stood at €4.64 billion.

Revenue decreased by 8% to €908.8 million from €983.4 in 2017.

YIT merged with Lemminkäinen on February 1, 2018, and so it said that in its report for January to June 2018, comparison figures were pro forma figures.

For the first half of the year, revenue decreased by 10% to €1.51 billion, compared to €1.68 billion at the same point the year before.

Adjusted operating profit – including pro forma figures with Lemminkäinen’s financial statements for the accounting period of January 1 to 31, 2008 – amounted to €-18.9 million, compared with €12.4 million the year before, and adjusted operating profit margin was -1.2%, rather than the 0.7% last year.

YIT said that adjusting items of €21.1 million during the reporting period – in comparison to €32.2 million last time – were mainly related to merger-related fair value cost effects, integration costs, reorganisation of paving operations in Scandinavia, and a loss related to a capital release action in Russia.

The company said it estimated the total annual synergies related to the merger to have an impact of €40 to €50 million by the end of 2020. Of this, it claimed, €40 million would be achieved starting from the first quarter 2020.

Kauniskangas said, “In the second quarter, cash flow and order backlog developed strongly. The group’s result improved clearly from the first months of the year, but it is not satisfactory as the segments perform unevenly.

“The strong development of the Housing Finland and CEE (Central & Eastern Europe) segment continued. In April to June, the segment’s adjusted operating profit margin was nearly 10%.”

He said the group result had decreased from last year as a result of the infrastructure projects segment’s weak result. As expected, no projects were completed in Russia, he added, which he said was reflected in the low net sales and operating loss.

“We expect the remainder of the year to be strong, driven by the active paving season, the sales of business premises projects, and the increasing completion of residential projects.

“The positive development is further supported by the measures to complete the integration, as well as achieving the synergy benefits.”

Kauniskangas said integration through the merger of YIT’s and Lemminkäinen’s operations had been proceeding well and would continue in the near future.