Yit Oyj Unsp/Adr

Good morning and welcome to YIT's third quarter earnings webcast. My name is Tommi Järvenpää. I'm the head of YIT's investor relations. Our third quarter was highlighted by strong sales in the housing segments. However, our profitability was negatively impacted by bookings in the business premises. Next, our chairman of the board, Harri-Pekka Kaukonen, interim CEO Antti Inkilä, and CFO Ilkka Salonen will go through Q3 results and other main topics. After the presentation, we will be taking questions from the conference call lines. At this point, I would like to hand over to our chairman, Harri-Pekka Kaukonen, please go ahead.

Yes, thank you, Tommy, for the opening words. Yes, my name is Harri-Pekka Kaukonen. I'm chairman of the YIT board. And I'd like to, on my behalf, also welcome everybody on the line, over the phone or in the net. I'd like to start with a key message that the YIT strategy and strategic targets remain the same. So this change in leadership that we announced last week had more to do with accelerating and and improving the quality of implementation in the strategy, in improving operational performance, and also speeding up the cultural transformation towards a more customer-focused and open culture. I thought it would be appropriate to then recap the strategy as it has been communicated earlier. Our vision is more life in sustainable cities. What does that mean? Residents want safe and comfortable living environments, and they want to live in places where services are accessible. So we talk about 15-minute cities. where you can either walk or cycle or take public transportation. So sustainable, very comfortable living environments in total. For cities, it's important to create attractive living environments for residents, but also equally to companies and to attract economic activity. And we believe today YIT is an excellent partner for that, and we want to become an even better partner for cities and companies in the future. Naturally then, if we then go more in depth into the strategy, it evolves and the main sort of unifying theme is sustainable urban development. Therefore, clearly the main activities evolve around aligning the business mix and our activities around this unifying theme. The first element is really to strengthen our development pipeline, which mind you is very strong already today. It consists of a substantial plot reserve, which in Euro terms is way above half a billion Euro. And we have today about 4 million square meters of residential housing plot reserve. It also evolves around partnerships and then the fundamental project development capability with partners. And as we have communicated earlier, we have validated a pipeline of bigger hybrid urban development projects in excess of 2 billion euro today and growing. The second element is in construction and that we want to focus and concentrate much more on self-developed and design project. And that's a natural consequence. We want to develop and design and then focus our capabilities on the construction side in executing and implementing these well. The third element, and this is something that we have started a few years back, is to increase our role in actually real estate investment. And it is really around partnerships and co-investments mainly. And there are two key elements there. It's around housing portfolio and then large urban development project, as mentioned. And during the last two years alone, we have announced several hundred million worth of housing projects, and we expect that trend to continue. And we have very interesting initiatives in the pipeline. And already mentioned the size of this urban development portfolio. The other focus area where we will invest more is in services. And here it is really to enrich our offering towards real estate owners and residents. And the main focus is to increase the lifecycle value of the assets underneath. And in that context, we have also established a venturing unit who's looking for smaller startups, but it is also around our lifecycle services, which we have been doing already for a long, long time and a growing business for us. So this is really the core of the strategic direction. To support the implementation and also to improve the underlying financial performance, we have launched four group-wide programs or broad initiatives. The first deals with improving performance. And this is really obviously short term. We have had the challenge in project cost overruns and the key priority of the management team is to improve our performance in project management and project performance. The other important thing is around releasing capital from our balance sheet and improving the capital productivity. Examples of that are the announcement of plot sales in the Moscow region, for example, and then also the development in Norway in the infrastructure side, as an example. The third area is then to improve productivity overall in the company through digitalization. And this is an area that goes all the way through the supply chain and obviously all the way to customers and digital marketing. The second broad bucket involves customers and partners. And that is something where we continuously want to work with strengthening our brand, improving our customer experience, but it also deals with improving still our ability to develop commercial concepts together with partners and increase overall the level of activity in the company towards customers and partners. Thirdly, our company, people in our company and also the society of course at large is very excited about the opportunities to improve and also frankly the need to improve sustainability in the construction sector. The first one deals with emissions and energy efficiency, huge untapped potential where we're working very hard and that involves very concretely improving the sustainability in our operations and products. but also then taking clear measurable steps in reducing CO2 emissions. The second clear theme is in safety. We have reached a certain level, around 10 in the incident frequency, but during the last few years that level has been, the incident rate has remained on the same level, and we're not satisfied with that level. We need to find ways to get a step change and improvement in safety. Finally, we call it happy people. It's around really fundamentally about the cultural transformation. We want to increase the transparency in the culture. We have to also look at clarifying the roles of people, but also One thing that we want to really encourage people is to go for more openness in order to understand if we make mistakes that these are communicated and in that sense in the future we will have fewer surprises. Mistakes happen but we need to know when and where and why. This also, another theme around people is we have a very well-defined operational procedures, common ways of working. We have excellent examples. We have one the best site nominations in Finland for many years. So we have excellent capabilities. We just need to make sure that common ways of working and best practices are adopted in a better way across the company. Leadership is a common development theme for us. And one of the key focus areas, as mentioned, is around the project management capabilities. So I hope that sheds a little bit light on the development programs and as such, there's nothing new in them. Perhaps some focus and tweaking in the priorities in these boxes. Finally, just to recap on our financial targets, they are unchanged. We have three targets. So the first is the return on capital employed, where our target is to reach a level of above 12%. Our gearing target communicated to market is between 30 and 50 percent and then we aim for a sustainably increasing growing dividend payout as dividend per share as the key measure. So in conclusion, yes, change in leadership for the reasons I mentioned, but strategy and targets unchanged. With that, I would like to conclude my opening remarks and I would like to introduce Antti Inkilä, Antti is a long-timer in YIT with responsibility of the housing segment in Finland and CEE. Antti has an excellent track record. And as you can see from the numbers, for example, in our Q3 report, even under very difficult COVID circumstances, the segment has performed very well. So I'm very happy that Antti accepted the nomination as our interim CEO, and I think he's the right guy to lead us for the next future until the new CEO is appointed. So please, Antti, over to you.

Thank you, Harri-Pekka, for your kind words. I am very honored to take this position as interim CEO. And I am also very committed to work with board of directors, our management team and all our people across the business. But now I would go through our quarter three results. I'm very satisfied with the results of housing segments. We were able to increase our sales more than 15% if we compare that to last year. That amounted to in Q3 to 16 million euros adjusted operating profit. And this, however, is below last year's below last year's, because some challenges in the business premises segment. We have analyzed those reasons and addressed the issues. Regarding our strategy execution, we took two actions to improve capital efficiency. We started to prepare closing down our business in Norway, and we sold significant plots in Russia. Both of these actions will improve our financial position over the coming quarters. Finally, the corona, a big issue for everyone. I'm really proud of how our organization has responded to this challenge. In the offices, on the sites, there has been excellent work done and all our sites have been able to continue as planned. So health and safety are in the heart of our business more than ever right now. And like Harri-Pekka told, safety is absolutely priority for the management and it is visible in our daily life. And we have to continue our work to improve safety performance also in the future. Now, I would like to hand over to Ilkka, who will go through those final speakers.