YIT fourth quarter recovery
05 February 2019
Last year, Finnish contractor YIT Corp’s revenue fell 3% to €3.76 billion from 2017’s €3.86 billion, although the fourth quarter had one of YIT’s best financial performances yet.
Fourth quarter revenue grew by 13%, totalling some €1.27 billion with an adjusted operating profit of €99.6 million which is a new record for the company.
The profit is adjusted to reflect the ordinary course of business and to improve comparisons. The fourth quarter results are connected to the sale of two significant properties in December, particularly the sale of offices in Helsinki’s Pasila district. This was the single largest office property transaction in YIT’s history.
Despite the overall fall in revenue, the adjusted operating profit margin remained at 3.6%, at a total of €134.5 million.
YIT and fellow Finnish contractor Lemminkäinen merged at the beginning of February 2018. Significant resources were focused on the integration of the companies and creating the foundation for a new YIT by establishing what it termed a common company culture.
Throughout the year, YIT claimed, self-developed projects and its successful sales in Housing Finland and CEE (Civil and Evironmental Engineering), Business Premises and Partnership Properties segments brought in the lion’s share of both the segments’ revenue and profit, as well as the entire group’s profit.
YIT announced its plans for its 2019 to 2021 strategy which sets out to improve profitability and to strengthen financial stability. The core of the strategy is urban development and is built on YIT’s key strength – development and implementation of self-developed projects.
YIT Corp’s 2019 revenue is estimated to be in between +5% and -5% compared to 2018 pro forma income of €3.76 billion. The fourth quarter is again expected to be the strongest from a financial point of view. The yearly adjusted operating profit is estimated to be between €170 million and €230 million, indicating a predicted minimum increase of €35.5 million on 2018’s €134.5 million profits.
YIT believes it can answer the market demand with its sales and pricing strategies, project risk management and product development measures. This will be managed to lower production costs and improve cost management, which it said in turn would make YIT more capital efficient.
YIT’s order backlog has also grown by 5% year-on-year and stands at €4.43 billion. With this figure and measures that have been put in place to improve financial performance over the course of 2018’s performance in the infrastructure and paving segments, YIT considers itself to have solid foundations for the coming year.