Russian success for YIT

Favourable residential sales and improved profitability in Russia are being reported by Finnish-based construction firm YIT in its interim report for the period January 1 to September 30, 2012.

The company, which operates in the Nordic countries, Central Europe, Russia and the Baltic states, said that in the July to September period, operating profit in its various segments increased by 57% compared to the previous year, amounting to €68.4 million (€ 43.6 million in 2011).

It added that it had booked a provision of €10 million related to an ammonia problem in residential units constructed in St Petersburg, Russia, in the third quarter of 2011.

It expects the costs of rectifying the problem to be lower than estimated a year ago, and the company cancelled €7 million of the provision in the third quarter of 2012, which improved the operating profit of International Construction Services for that period.

The revenue for the third quarter was on a par with the previous year, at €1,115.3 million (€1,096.5 million in 2011). Revenue grew in Construction Services Finland and International Construction Services. YIT said the growth in revenue was supported by the high volume of housing production, continued good residential sales and favourable development of the infrastructure business in Finland.

For the period from 1 January to 30 September, operating profit for the segments increased by 10% compared to the previous year, at €181.2 million (€164.3 million). Operating profit grew in Construction Services Finland and International Construction Services.

The Group said its revenue based on segment reporting would remain on a par with 2011, while its operating profit would increase compared to last year.

The company said the high uncertainty over the general macroeconomic development had a negative effect on decision-making by its customers, and therefore the development and performance of YIT's business operations.

Juhani Pitkäkoski, president and CEO, said, “Low interest rates and potential increase in capital transfer tax will support residential sales in Finland during the rest of the year.”

He said the group was satisfied with the good development in Construction Services during the third quarter.

“Our business operations in Russia are beginning to meet the high expectations placed on them. International Construction Services was the group’s best performing segment, in terms of operating profit margin, and Construction Services Finland also had good performance across a wide front.”

He added that YIT started up the construction of more than 2,000 residential units during the third quarter.

“In addition to low interest rates, the possible change in capital transfer tax taking effect at the beginning of next year in Finland will support residential sales for the rest of the year,” he said.

“We will continue our efforts to improve the profitability of Building Services. In addition to the efficiency improvement measures already under way, we will increasingly focus on service and maintenance operations in Building Services Northern Europe. We will improve the profitability of Building Services Central Europe through the restructuring of operations, which was already initiated during the first half of the year.”

Mr Pitkäkoski said, “The increase in the uncertainty of the real economy after the summer and weaker confidence are reflected in our operations in the form of prolonged decision-making time by our customers and projects being postponed.”