Lemminkäinen in Russian project

Finnish construction group Lemminkäinen is to build a residential project of 2000 units in St Petersburg, Russia.

The total value of the project is about € 400 million. The construction work is estimated to start in early 2012, with the first phase to be completed in 2014 at the latest. The completion date of the whole project is expected to be in 2017.

Lemminkäinen has signed an agreement with developer Lipsanen & Co Group for the project on Vasily Island, in downtown St Petersburg.

As well as building around 2000 residential units, there will be business and office premises on a 5,6 ha lot. Lemminkäinen will be responsible for construction, marketing and sales for the project.

Currently, the area of land targeted for the project houses industrial buildings. The plan is to start demolition in the summer of 2011. The construction project will be implemented in phases. The site is said already to have the first-level approvals in the city district plan, and municipal engineering services have been provided for the site.

Timo Kohtamäki, president and CEO of Lemminkäinen Corporation, said, "In accordance with our strategy, we seek growth in the St Petersburg residential construction market. With this agreement, we have three construction sites in excellent locations in St Petersburg. In total, some 2700 residences will be built there."

Lemminkäinen has reported weak earnings in 2010, but claimed that the outlook for the future was "significantly better".

It said its order book grew by 15% to € 1226,4 million for 2010 over the 2009 figure of € 1064,5 million. It reported that consolidated net sales were down 4% and amounted to € 1892,5 million. Operating profit was € 29 million, compared to € 23,2 million for the previous 12 months.

Kohtamäki said, ""Last year, we still felt the effects of the deep recession that hit the construction industry in 2008. Business operations were hindered by the long and harsh winter, which had an impact on paving works in Norway and the Baltic countries in particular. I believe that the market has now bottomed out. The outlook for 2011 is more upbeat than last year."

Lemminkäinen expected that the moderate growth seen in the volume of construction in Finland would continue in 2011. It said residential construction was still boosted by low interest rates and consumers' confidence in their own finances.

In 2010, Lemminkäinen more than trebled its own housing production compared to the previous year, starting up the construction of a total of 1191 new residential units. It estimated that if the housing market remained favourable, the number of start-ups would be at the same level in the year ahead. Though the annual number of business premises start-ups has most likely bottomed out, great growth cannot be expected yet, it said.