More profitable growth by longer value chain YIT Capital Markets Day | September 22, 2011 St. Petersburg, Russia Tero Kiviniemi, Head of Construction Services Finland business segment YIT | 1 | *
![Why some companies make the leap… and others don’t? [Competitors Me] 1 -6/2011 Net](https://present5.com/presentation/280cb72cbb0e2ea72172dc1c99ac9157/image-2.jpg "Why some companies make the leap… and others don’t? [Competitors Me] 1 -6/2011 Net")
Why some companies make the leap… and others don’t? [Competitors Me] 1 -6/2011 Net Change % EBIT sales EBIT Order Change % backlog % YIT CSF 622 18 % 58, 4 9, 4 % (9, 4 %) 1 240 7% Skanska Finland* 488 21 % 10, 1 2, 1 % (2, 4 %) 595 -6 % Lemminkäinen Building Construction 394 24 % -0, 9 -0, 2 % (1, 5 %) 775 9% NCC Construction Finland** 291 8% -0, 9 -0, 3 % (1, 6 %) 509 -3 % SRV Operations in Finland 255 24 % 7, 7 3, 0% (5, 9 %) 565 -2 % Destia 198 -7 % -13, 9 -7, 0 % (-2, 0 %) 753 -17 % 49 -27 % n. a 279 20 % 1, 4 0, 5% (---) 619 -2 % EBIT % | Development 2006 - 2011 VR-Track Average competitors*** Trend = 4 quarter MA, Competitors Skanska Finland, NCC Construction Finland, SRV Operations in Finland, Lemminkainen Building Construction * Construction Finland Residential Development Finland (incl. Estonia) ** NCC Housing Finland not included *** Competitors average figures which are weighted according to net sales - Skanska, Lemminkäinen, NCC and SRV according to IFRIC 15, YIT and Destia according to POC method YIT | 2 | *
Confront the Brutal Facts (yet never lose faith) Housing Macro economy supports the idea of having a relatively positive development and total production volume at a high level. • Need of housing at a high level > 35, 000 pcs/y • Growing population, migration, immigration, smaller households, high rents and aging housing stock keep up the demand • Demographics and development of city structure are controlling content and location • Consumers have relatively good possibilities to buy flats (employment, interest rates) • Temporary turbulence in consumer confidence caused by macroeconomics • In long term moderate increase in flat prices • Plot prices remaining high and payment terms tight, temporary turbulence creating opportunities • Increasing demand for services and concepts; trends (time management, easiness, wealth, environment, welfare, safety, change of needs) YIT | 3 | * | Confidential Merenkulkijanranta Helsinki, Finland
Confront the Brutal Facts (yet never lose faith) Business and office premises construction booming moderately in 2011, top of cycle in ~2014 • Growth of business premises construction continuing in 2011, 1 st driven by capital area • Private investments increasing - financial turmoil delays decisions • Public sector budget deficit - investment prioritization • Investors more interested in real estates, yields will not decrease significantly • Construction regulations increase demand of down town construction including business premises, housing and infra (eg. Pasila One, Tapiola) • Opportunities in commercial and logistics construction, offices construction increasing gradually, part of vacant offices not returning to initial purpose • Environment and energy certificates a must YIT | 4 | * Avia Line II offices (Green Building status) Vantaa, Finland
Confront the Brutal Facts (yet never lose faith) Infraservices Slight growth in the total volume by the end of 2011. • Positive turn of total volume 2011 -2012 (E 18, Hamina, Vaasa and Seinäjoki bypasses, Tampere rantaväylä) • Rock engineering at high level until 2014, new mega projects possibly starting 2015 (Pisara, East metro) • Raw material prices increasing - boosting mining industry • Rail road construction and maintenance increasing - competition unhealthy • New project models (PPP, Alliance) • Demand for energy solutions (wind power, geo thermal energy) • City centre construction • Building construction foundation works increasing • New solutions shall be found due to the financial status of municipalities • Maintenance volume increasing throughout the whole strategy period • Government traffic policy under preparation YIT | 5 | * Ring Road I, widest road tunnel in Finland Espoo, Finland
Long-term strategy carries YIT through short-term turbulence Vision 2015 Business and office premises Infraservices Contracting YIT | 6 | * Own based rvi om st on cti u od Cu Housing er Pr Profitability od uc ta nd se Br an d ce Improve total profitability by increasing value added processing in the business operations and by boosting the whole value chain Pr re d an nel on tu cul rs Pe Solutions and concepts
Main goals 2014 (1/2) Housing Business and Office premises Infraservices Forerunner of the business National market share grower The most profitable, customer oriented specialist Own development % Contracting % • > 30 % market share • Focus on own development but keeping touch with other modes of contracting • Management of building rights (balanced plot reserve vs. planned use, off-balance-sheet holding) • Area development projects are of crucial importance Contracting % • Market attack continues in whole country • Focus on business premises and development, competition volume according to available resource • Business opportunity creation based on customer relationship management Contracting % • Improvement of profitability by own development business and specializing • New energy solutions (wind, geo thermal) YIT synergies exploitation • Rock engineering and mining • Municipal services and maintenance New solutions for more efficient urban structure Customer and business environment understanding products, concepts and services YIT | 7 | *
Main goals 2014 (2/2) Personnel Production Customer Product and service Get the right people on the bus - secure sufficient resources Young professionals, 70% External recruitment, 30% Superior quality Systematic usage of customer understanding Energy solution pioneer Most wanted employer and motivated personnel Students top 10* Turnover <8 % Excellent project management • Cost changes • Well renewed business control system Networks and international purchasing Systematic management of business customers at CSF level Excellent satisfaction Most satisfied customers Economic survey: #1 Product and service development in all business ideas Coherent design management Working ability, occupational safety and productivity H-factor <10 Sick leaves <4 % Productivity +10 % Strong YIT corporate culture in all actions Management by results, agility, innovativeness, humbleness * Universum Graduate Survey YIT | 8 | * | Confidential
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