1. Group CEO Reino Hanhinen Event for analysts and investors
YIT Group Interim Report January–June 2004
Group CEO Reino Hanhinen
Event for analysts and investors
August 5, 2004
August 5, 2004 |
YIT CORPORATION

2. Contents I. YIT Group, Interim Report January–June 2004
II. Future Outlook
Appendices
August 5, 2004 |
YIT CORPORATION

3. YIT Group, Interim Report
January–June 2004
August 5, 2004 |
YIT CORPORATION

4. Interim Report January–June 2004
Net sales growth was 61% amounting to EUR 1,504.4 million (932.1). The growth of net sales was affected by the acquisition of Building Systems operations from ABB and the growth of market-financed housing production in Finland.
The share of net sales accounted for by the Group’s international activities grew from 19% to 39%.
The share of net sales accounted for by the maintenance and servicing business was 32% (22%).
EBITA amounted to EUR 75.1 million (63.5) and EBIT to EUR 60.2 million (57.9). Exclusive of non-recurring items in the comparison period, EBIT growth was 79%.
Order backlog growth was 44% amounting to EUR 1,569.8 million (1,091.8).
Return on investment 16.5% (20.4%).
Earnings per share amounted to EUR 0.57 (0.61).
August 5, 2004 |
YIT CORPORATION

5. YIT’s corporate structure
YIT Corporation
Reino Hanhinen
Corporate Management, Corporate Services, Corporate Communications
Construction Services
Ilpo Jalasjoki
Services for Industry
Raimo Poutiainen
Building Systems
Juhani Pitkäkoski
Data Network Services
Hannu Leinonen
Building Systems
Automation and security
Facility Management
Housing
Business environments
Infrastructure
Piping and tanks
Maintenance
Fixed networks
Mobile networks
Net sales Jan-Jun/2004 MEUR 653 Personnel Jun/ ,310
Net sales Jan-Jun/2004 MEUR 726 Personnel Jun/ ,030
Net sales Jan-Jun/2004 MEUR 92 Personnel Jun/ ,925
Net sales Jan-Jun/2004 MEUR 55 Personnel Jun/ ,386
August 5, 2004 |
YIT CORPORATION

6. Strengthening the market position on strategic business areas
In terms of net sales, YIT is the market leader in all of its segments in Finland.
In Building Systems, YIT is the leading company in the Nordic countries.
Construction markets in the Baltic countries and Russia are YIT´s strategic expansion areas.
BUILDING SYSTEMS
YIT Building Systems (Sweden)
Net sales H1/2004 MEUR 239
Personnel 6/ ,152
Local offices
YIT Kiinteistötekniikka Oy (Finland) 1
Net sales H1/2004 MEUR Personnel 6/ ,111
Local offices
YIT Building Systems AS (Norway) Net sales H1/2004 MEUR 148
Personnel 6/ ,547
Local offices
YIT A/S (Denmark) Net sales H1/2004 MEUR 51
Personnel 6/ ,090
Local offices
CONSTRUCTION SERVICES DATA NETWORK SERVICES
Baltic States - AS FKSM, Tallinn
- AB YIT Kausta, Kaunas
- YIT Latvija SIA, Riga
Russia
- ZAO YIT Lentek, St. Petersburg
- ZAO YIT Ramenje, Moscow
Net sales H1/ about MEUR 130
- Personnel 1,582
1Includes the Baltic and Russian operations
August 5, 2004 |
YIT CORPORATION

7. Consolidated income statement
MEUR
Jan-Jun/
2004
2003
Change
Jan-Dec/
Net sales
1,504.4
932.1
61%
2,389.7
Net sales outside Finland
581.8
181.6 *)
672.5
Operating income and expenses
-1,421.0
-860.3
65%
-2,253.3
Depreciation and value adjustments
-8.3
-17.7
EBITA
75.1
63.5
18%
118.7
as percentage of net sales
5.0%
6.8%
Amortization of goodwill and goodwill on consolidation
-14.9
-5.6
-20.1
Operating profit (EBIT)
60.2
57.9 4%
98.6
4.0%
6.2%
4.1%
Financial income and expenses, net
-7.3
-6.4
14%
-14.2
Profit before extraordinary items
52.9
51.5 3%
84.4
Extraordinary income
Extraordinary expenses
Profit before taxes
Profit for the report period
35.0
35.5
-1%
48.4
*) Change over 100%
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YIT CORPORATION

8. Consolidated balance sheet
MEUR
Jun/
2004
2003
Change
Dec/
ASSETS
Intangible assets
Goodwill
159.7
0.5 *)
168.9
Other intangible assets
12.4
8.7
43%
11.8
Goodwill on consolidation
77.9
69.3
12%
78.0
Tangible assets
65.2
57.1
14%
66.8
Investments
Own shares
7.2
Other investments
8.5
7.4
15%
7.9
Inventories
402.3
396.5 1%
380.8
Receivables
824.8
599.0
38%
781.0
Marketable securities
0.9
10.7
-92%
11.9
Cash and cash equivalents
35.9
19.9
80%
48.4
Total assets
1,587.6
1,176.3
35%
1,555.5
*) Change over 100%
August 5, 2004 |
YIT CORPORATION

9. Consolidated balance sheet
MEUR
Jun/2004
Jun/2003
Change
Dec/2003
LIABILITIES
Share capital
61.2
59.6 3%
61.0
Other shareholders’ equity
346.2
323.3 7%
347.3
Minority interests
3.6
2.2
64%
3.4
Provisions
22.8
8.8 *)
27.3
Interest-bearing debt
279.8
170.1
264.7
Non-interest-bearing debt
874.0
612.3
43%
851.8
Total shareholders’ equity and liabilities
1,587.6
1,176.3
35%
1,555.5
*) Change over 100%
August 5, 2004 |
YIT CORPORATION

10. Strategic target level: growth 5–10% per year
Net sales
1994–Jan-Jun/2004
MEUR
2,389.7
Jan-Jun/ 2003
Jan-Jun/ 2004
Strategic target level: growth 5–10% per year
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YIT CORPORATION

11. Net sales by business segment Building Systems 652.9 156.5 1) *)
MEUR
Jan-Jun/
2004
2003
Change
Jan-Dec/
Building Systems
652.9 ) *)
681.02)
Construction Services
726.0
624.4
16%
1,398.5
Services for Industry
91.9 )
-11%
209.7
Data Network Services
55.2
56.4
-2%
130.0
Other items
-21.6
-9.0
-29.5
YIT Group total
1,504.4
932.1
61%
2,389.7
The figures for 2003 are pro forma calculations.
The acquired Building Systems operations are consolidated in the YIT Group from August 29 to December 31, 2003.
*) Change over 100%
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YIT CORPORATION

12. share of international activities MEUR 581.8
Net sales by country
Jan-Jun/2004
Finland 61%
MEUR 917.7
Russia 3%
MEUR 45.1
Baltic countries 5%
MEUR 75.2
Other Nordic countries 29%
MEUR 436.3
Total net sales MEUR 1,504.4
share of international activities MEUR 581.8
August 5, 2004 |
YIT CORPORATION

13. EBITA total MEUR 75.1 EBIT total MEUR 60.2
EBITA and EBIT by business segment Jan-Jun/2004
MEUR
Building
Systems
Construction
Services
Services for
Industry
Data Network
Services
Other items
EBITA total MEUR EBIT total MEUR 60.2
August 5, 2004 |
YIT CORPORATION

14. Operating profit (EBIT) by business segment
MEUR
Jan-Jun/
2004
2003
Change
Jan-Dec/
Building Systems
0.3
- 1)
-19.72)
Construction Services
56.9
57.33)
-1%
107.8
Services for Industry
2.3
8.8
Data Network Services
3.5
0.7 *)
10.7
(YIT Installation) -
5.51)
Other items
-2.8
-5.6
-50%
-9.0
YIT Group total
60.2
57.9 4%
98.6
The distribution of YIT Installation’s operating profit between the new business segments Building Systems and Services for Industry could not be calculated in detail after the fact.
Operating profit of Building Systems business segment is burdened by EUR 5.8 million integration costs and EUR 11.5 million restructuring expenses of the acquired Building Systems operations in Sweden.
Operating profit includes EUR 24.3 million non-recurring items.
*) Change over 100%
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YIT CORPORATION

15. Order backlog at end of period
MEUR
1,569.8
1,490.1
1,091.8
938.8
735.8
574.7
477.5
479.1
411.7
332.8
346.1
319.7
Jun/ 2003
Jun/ 2004
August 5, 2004 |
YIT CORPORATION

16. Order backlog by business segment
MEUR
Jun/2004
Jun/2003
Change
Dec/2003
Building Systems
566.5
145.61) *)
502.3
Construction Services
810.6
784.9 3%
817.7
Services for Industry
73.5
71.31)
67.2
Data Network Services
119.2
90.0
32%
102.9
YIT Group total
1,569.8
1,091.8
44%
1,490.1
The figures for 2003 are pro forma calculations.
*) Change over 100%
August 5, 2004 |
YIT CORPORATION

17. Return on investment 1994– June 2004 Strategic target level: 18% %
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YIT CORPORATION

18. Equity ratio 1994–June 2004 Strategic target level: 40% % Jun/ 2003
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YIT CORPORATION

19. Earnings Per Share 1994–June 2004
EUR
Jun/03 Jun/04
The number of YIT’s shares was doubled on March 26, 2004 when the nominal value of the share was changed from two euros to one euro (split). The figures for the comparison periods have been converted to correspond with the doubled number of shares.
August 5, 2004 |
YIT CORPORATION

20. Dividend payout, 1995–2003 Dividend/share*), EUR Dividend/earnings, %
* The number of YIT’s shares was doubled on March 26, 2004 when the nominal value of the share was changed from two euros to one euro (split). The figures have been converted to correspond with the doubled number of shares.
YIT´s dividend policy:
30–50% of net profit for the year after taxes and minority interests
August 5, 2004 |
YIT CORPORATION

21. Operative cash flow before taxes 1999–Jan-Jun/2004
MEUR 1) 2) 3)
Jan-Jun/ 2003
Jan-Jun/ 2004
Cash flow before EUR million transaction price of Building Systems acquisition, paid on August 29, 2003.
Cash flow includes EUR 30.0 million in capital gains from the sale of Makroflex.
YIT paid EUR 22 million as additional transaction price of Building Systems acquisition in January In June 2004, YIT paid EUR 11.9 million as residual taxes from the year 1997.
Operative cash flow before taxes = Cash flow from operating activities + Change in working capital + Cash flow from investing activities
August 5, 2004 |
YIT CORPORATION

22. Gross capital expenditures
MEUR
% of net sales
Major acquisitions: YIT Calor (2001), YIT Primatel (2002) and YIT Building Systems (2003).
August 5, 2004 |
YIT CORPORATION

23. YIT’s plot reserves 30 June, 2004
Building rights and zoning potential, 1,000 sq. m of floor area
Capital tied up in plot reserves, EUR million
Finland
Residential plots
1,362
224
Business premise plots
847 54
Total
2,209
278
Baltic countries and Russia
489 19
2,698
297
August 5, 2004 |
YIT CORPORATION

24. Expanding maintenance services
Net sales accounted for by maintenance and servicing operations and their share of the Group’s total net sales
MEUR
27%
32%
24%
24%
22%
20%
22%
Jan-Jun/ 2003
Jan-Jun/ 2004
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YIT CORPORATION

25. Maintenance and servicing operations total MEUR 481.6
Maintenance and servicing operations by business segment Jan-Jun/2004
Building Systems 77%
MEUR 384.2
Data Network Services 8%
MEUR 41.4
Services for Industry 12%
MEUR 59.3
Construction Services 3%
MEUR 12.4
Maintenance and servicing operations total MEUR 481.6
August 5, 2004 |
YIT CORPORATION

26. Personnel at end of period
Jun/ 2003
Jun/ 2004
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YIT CORPORATION

27. Total number of employees 21,952 persons
Personnel by business segment
June 30, 2004
Building Systems 56%
12,310 persons
Corporate Services 2%
301 persons
Data Network
Services 6%
1,386 persons
Services for
Industry 13%
2,925 persons
Construction Services 23%
5,030 persons
Total number of employees 21,952 persons
August 5, 2004 |
YIT CORPORATION

28. Principal shareholders July 30, 2004
No %
1. Sampo Life Insurance Company Ltd 5,335,
2. Suomi Mutual Life Assur. Company 5,164,
3. Varma Mutual Pension Ins. Company 3,880,
4. Tapiola Insurance Group 3,037,
5. Ilmarinen Mutual Pension Ins.Co 2,057,
6. Pohjola Insurance Group ,470,
7. Security Trading Ltd ,360,
8. State Pension Fund 1,000,
9. Etera Mutual Pension Ins. Company ,
10. OP-Delta Investment Fund ,
Nominee-registered ,105,
Other shareholders ,071,
Total ,159,
Total number of shareholders 6,716. Nominal value of the share EUR 1.00 (registered on March 26, 2004, whereby the number of shares was doubled). Share capital EUR 61,159,940.
August 5, 2004 |
YIT CORPORATION

29. Nominee-registered shareholders + other international ownership as percentage of equity
1999
2000
2001
2002
2003
2004
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YIT CORPORATION

30. Number of shareholders at end of period
6/ / /04
YIT Corporation was formed on September 2, YIT’s share has been quoted on Helsinki Exchanges since September 4, 1995.
August 5, 2004 |
YIT CORPORATION

31. Future Outlook
August 5, 2004 |
YIT CORPORATION

32. Construction Services
Number of start-ups in YIT’s housing production in Finland
No.
3,169
3,278
3,108
2,944
2,634
1,727
1,556
August 5, 2004 |
YIT CORPORATION

33. Construction Services Migration between municipalities in Finland
persons
1-6/2004:
127,473
1-6/2003:
122,800
Source: Statistics Finland, July 21, 2004
August 5, 2004 |
YIT CORPORATION

34. Construction Services Housing loans and interest rates in Finland%
MEUR
Source: Bank of Finland, July 30, 2004
August 5, 2004 |
YIT CORPORATION

35. Finland’s economic situation
Consumers’ confidence in their own household’s and Finland’s economy within next 12 months
Saldo (%-share of positive answers –
%-share of negative answers)
Own economy
Finland’s economic situation
Source: Statistics Finland´s Consumer Survey, July 27, 2004
August 5, 2004 |
YIT CORPORATION

36. Construction Services
YIT’s housing production in Russia and Baltic countries
No.
Jan-Jun/
2003
Jan-Jun/
2004
Jan-Dec/
2003
Jan-Jun/
2003
Jan-Jun/
2004
Jan-Dec/
2003
Jun/ 2003
Jun/ 2004
Dec/ 2003
August 5, 2004 |
YIT CORPORATION

37. Building Systems Market and trends
Total market for Building Systems about EUR 4–6 billion in each Nordic country.
Building systems will account for a growing share of construction costs and of the repair and maintenance works for existing properties.
Technology is evolving and systems are becoming increasingly complex. The entry of the ICT cluster (incl. Mobile technology). Requirements set on expertise are also rising in maintenance operations.
EU Directives guide technical solutions (incl. energy conservation).
The investment stage is only part of a Design & Build-type service model, where the service chain is extended to cover the entire life cycle.
Nationwide property owners and industry are outsourcing their building system services.
August 5, 2004 |
YIT CORPORATION

38. Services for Industry Major new projects and services
OL3 Finland’s fifth nuclear power plant
M-real Kaskinen, Finland, CTMP plant –to be started up Oct/04
Piping and cistern deliveries to chemical mechanical pulp mill
Fortum Diesel, Porvoo, Finland –to be started up Oct/04
Process furnaces and piping, electrification, automatization
Stora Enso Kvarnsveden, Sweden, PM 12 –to be performed Oct/04– Sept/05
Modernization of fibre line in Kvarnsveden mill
Stora Enso Skoghall Energy 2005, Sweden –to be performed Sept/04–Oct/05
Soda recovery plant of Skoghall mill
Extension of Scanraff cracking plant, Sweden –to be performed Oct/04–Sept/05
Ormen Lange, gas terminal, Norway
August 5, 2004 |
YIT CORPORATION

39. Data Network Services Views of development
Telecom
Development of broadband continues
The regulation opens the local networks for competition
The importance of Access and WLAN increases
3G from revolution to evolution
Intensifying competition of operators opens the installation market IT
In the near future companies and consumers will buy services instead of hardware
Specialized companies will form a service network in the market
A clear role for a company like YIT Data Network Services who provides technical support to end users (Fess)
The share of Fess is bigger than estimated previously
Updates and replacements of ”Millenium” investments
August 5, 2004 |
YIT CORPORATION

40. Market Outlook
The rate of GDP growth will accelerate to 2.5–3.0 per cent this year and the next in all of the Nordic countries.
In Russia and the Baltic countries, the growth rate of GDP and investments is twice as fast as in the Nordic countries.
Demand for residences is supported by low interest rate level, migration and positive trend in the disposable income of households.
It is estimated that exports and investments will pick up towards the end of the present year and the next year.
In the Nordic countries, numerous large traffic infrastructure projects will begin during the present year and the next year. Many large industrial investment projects and projects within petrochemical and energy sector will also be started up giving good market potential for both YIT Building Systems and YIT Services for Industry.
August 5, 2004 |
YIT CORPORATION

41. Outlook for 2004
YIT’s net sales will see substantial growth, as the Building Systems business segment will enlarge net sales during the entire year, the demand for residences will remain strong in both Finland and Russia, and the outlook for investments by industry in the Nordic countries will strenghten towards the end of the year.
Profit before extraordinary items and taxes is estimated to improve significantly compared with 2003.
It is expected that the Building Systems business segment will have a positive effect on YIT´s full-year earnings per share for 2004.
August 5, 2004 |
YIT CORPORATION

42. Corporate Communications
More information
on our site at
Veikko Myllyperkiö
Vice President,
Corporate Communications
tel
mobile
fax
Esko Mäkelä Executive Vice President
tel fax
Petra Thorén Manager, Investor Relations tel mobile fax
August 5, 2004 |
YIT CORPORATION

43. Appendices
August 5, 2004 |
YIT CORPORATION

44. Key figures Jun/2004 Jun/2003 Change Dec/2003 Return on investment
16.5%1)
20.4 %1)
16.8%
Equity ratio
28.1%
34.8 %
28.3%
Net interest-bearing debt, MEUR
243.1
139.5
74%
204.4
Gearing ratio
59.1%
36.9 %
49.6%
Earnings/share, EUR
0.57
0.612)
-7%
0.822)
Equity/share, EUR
6.66
6.432) 4%
6.692)
Average share price, EUR
15.68
8.012)
96%
10.352)
Share price at end of period, EUR
16.74
8.502)
97%
13.452)
Gross capital expenditures, MEUR
17.0
14.2
20%
232.9
Order backlog, MEUR
1,568.9
1,091.8
44%
1,490.1
Average personnel
21,700
12,606
72%
16,212
Calculated for the last 12 months.
The number of YIT’s shares was doubled on March 26, 2004 when the nominal value of the share was changed from two euros to one euro (split). The figures for the comparison periods have been converted to correspond with the doubled number of shares.
August 5, 2004 |
YIT CORPORATION

45. share of international activities MEUR 581.8
Net sales by business segment
Jan-Jun/2004
Building Systems 43%
MEUR 652.9
Data Network
Services 4%
MEUR 55.2
Services for
Industry 6%
MEUR 91.9
Construction
Services 47%
MEUR 726.0
Total net sales MEUR 1,504.4
share of international activities MEUR 581.8
August 5, 2004 |
YIT CORPORATION

46. Building Systems Breakdown of net sales Jan-Jun/2004
YIT Building Systems
Sweden 36%
MEUR 239.0
YIT A/S
Denmark 8%
MEUR 51.3
YIT Building Systems AS
Norway 23%
MEUR 148.4
YIT Kiinteistötekniikka Oy Finland 1) 33%
MEUR 215.1
Total net sales MEUR 652.9
1) Includes the Russian and Baltic operations.
August 5, 2004 |
YIT CORPORATION

47. Construction Services
Breakdown of net sales Jan-Jun/2004
International operations 17%
MEUR 123.4
Operations in Finland 83%
MEUR 602.6
Total net sales MEUR 726.0
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YIT CORPORATION

48. Breakdown of net sales Jan-Jun/2004
Services for Industry
Breakdown of net sales Jan-Jun/2004
Investments 35%
MEUR 32.6
Maintenance and upkeep services 65%
MEUR 59.3
Total net sales MEUR 91.9
August 5, 2004 |
YIT CORPORATION

49. Breakdown of net sales Jan-Jun/2004
Data Network Services
Breakdown of net sales Jan-Jun/2004
Maintenance, repairs and subscriber deliveries 75%
MEUR 41.4
Project operations 25%
MEUR 13.8
Total net sales MEUR 55.2
August 5, 2004 |
YIT CORPORATION

50. Net sales 1994–Jan-Jun/2004 MEUR 2,398.7 1,763.0 1,623.1 1,504.4
1,235.4
1,167.7
1,222.1
941.4
876.3
932.1
660.0
545.6
Jan-Jun/ 2003
Jan-Jun/ 2004
August 5, 2004 |
YIT CORPORATION

51. Net sales by quarter MEUR *)
*) Includes net sales of acquired Building Systems operations from August 29 to December 31, 2003.
August 5, 2004 |
YIT CORPORATION

52. Operating profit (EBIT) 1994–Jan-Jun/2004
MEUR *)
Jan-Jun/ 2003
Jan-Jun/ 2004
*) Operating profit includes EUR 24.3 million non-recurring items.
August 5, 2004 |
YIT CORPORATION

53. Total operating profit (EBIT) MEUR 60.2
Operating profit (EBIT) by business segment Jan-Jun/2004
MEUR
Building
Systems
Construction
Services
Services for
Industry
Data Network
Services
Other items
Total operating profit (EBIT) MEUR 60.2
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YIT CORPORATION

54. Operating profit (EBIT) by quarter
MEUR
August 5, 2004 |
YIT CORPORATION

55. Order backlog by business segment
June 30, 2004
Building Systems 36%
MEUR 566.5
Data Network
Services 7%
MEUR 119.2
Services for
Industry 5%
MEUR 73.5
Construction
Services 52%
MEUR 810.6
Order backlog total MEUR 1,569.8
share of international orders MEUR 626.6
August 5, 2004 |
YIT CORPORATION

56. Order backlog by quarter 2000–Jun/2004, MEUR at end of period
August 5, 2004 |
YIT CORPORATION

57. YIT’s main strategy and strategic focus
YIT’s main strategy is profitable growth.
Strategic focus in the near future is cash flow generation and cost efficiency.
August 5, 2004 |
YIT CORPORATION

58. YIT’s strategic target levels
Average annual growth in net sales 5–10%
Return on investment 18%
Equity ratio 40%
Dividend payout 30–50% of net profit for the year after taxes and minority interests
August 5, 2004 |
YIT CORPORATION

59. Total number of employees 21,952 persons
Personnel by country
June 30, 2004
Finland 55%
12,171 persons
Russia 4% 804 persons
Baltic countries 5% 1,177 persons
Denmark 5%
1,090 persons
Norway 12%
2,547 persons
Sweden 19%
4,163 persons
Total number of employees 21,952 persons
August 5, 2004 |
YIT CORPORATION

60. Housing prices in Finland by quarter 1980 = 100
Housing price index 1980 = 100
Housing price index, deflated with income level index
Source: RT, Statistics Finland, June 15, 2004
August 5, 2004 |
YIT CORPORATION

61. Consumers’ confidence indicator%
Source: European Commission/Bank of Finland, July 30, 2004
August 5, 2004 |
YIT CORPORATION

62. YIT share´s average daily turnover 1 January 2003 – 30 July 2004
1-7/2004
Average
1-7/2003
80 757
August 5, 2004 |
YIT CORPORATION

63. Market capitalization development
MEUR
3/03
3/04
Jun/03
Jun/04
Jul/04
August 5, 2004 |
YIT CORPORATION