Yit Oyj Unsp/Adr

and welcome to YIT's second quarter 2021 earnings webcast. My name is Tommi Järventä. I'm the head of YIT's investor relations. With me here today are also our CEO Markku Moivanen and CFO Ilkka Salonen. We will first go through the presentation, followed by Q&A. At this point, I would like to hand over to our CEO. Markku, please go ahead.

Thank you, Tommi. and welcome on my behalf as well to this webcast. So let's start from health and safety. And that's our focus in everything that we are doing. And during the last quarter, our focus has been on preventive actions on safety. fighting against the COVID-19 pandemic. And we are satisfied with the successful actions that we have had. Our sites have been opened and the infections have been low. However, we have clearly now the fourth wave coming in several countries, in Finland, in Russia, to mention a few. So, we are continuing our vigorous actions in that area. If we are looking at our safety development, the number of accidents and the injury frequency of the LTIF, it's been stagnant for a while. And for that reason, we had our safety week, our annual safety week in May, where we really had a focus on proactive and preventive actions. actions on safety observation and management safety walks and talks as well. So, we'll continue the focus, because this is highly important for us. Looking at our results during the second quarter, as we have reported, that was a satisfactory quarter. I would say that this is another solid quarter, driven by good results in housing. Our adjusted operating profit ended up to be 30 million euros, compared to 5 million during the same period last year as well. And the good result is driven by good results in housing segments in all of the geographies that we are working. However, we had a loss in infrastructure due to margin reduction in some projects. On the other hand, our business premises segment continued to stabilize, like it did during the last quarter as well. As a result of strong sales, our operating cash flow was solid during the quarter as well. And after investment, our operating cash flow was 109 million compared to 247 during the same period last year. We have to bear in mind that last year during this period, we had cash flow from the sale of our Nordic paving and mineral aggregates businesses. So, operationally clear improvement compared to last year. As a result, our balance sheet strengthened further, and our gearing improved further. We are using our strong balance sheet to answer our customer needs, especially in the housing market. And we have actually accelerated our housing startups significantly during this year compared to last year. So the annual growth is around 40% compared to last year. And with this, we are not only answering our customer needs, but ensuring for the company a solid market for next year. Like we reported during or after last quarter, we have three management priorities. The first one is project management, where the work started already during autumn 2020. And that's progressing on a fast pace and very well. We are implementing common practices and processes and reports in our project management. For example, new project portfolio forecasting and reporting tools, new criteria for suppliers, new production reporting practices, to mention a few. So this is really the backbone of our business and backbone of being able to deliver predictable results in the quarters to come as well. Secondly, our work on our operating model is progressing well, and we will give you more info during the coming months. Thirdly, we started our strategy work from our infra strategy. We were not satisfied with the performance of our infra segment, and therefore we started the strategy work from there. The most notable finding that we already have now before doing the full group strategy is that We see that infrastructure business will continue to have a strategic role in the YIT group also in the future. We already see that in large urban development projects, having our own infrastructure business enables us to achieve clear synergies and synergy benefits and financial opportunities. In the future, we will be focusing on our core capabilities in infrastructure, such as rock tunneling, foundation engineering, rail and tram, and urban bridges, and marine to mention a few. However, we will also trim our offering to become more competitive and efficient, so we will be more selective in projects. So therefore, as a conclusion, our future infrastructure business will be somewhat smaller than today, but clearly more predictable and profitable. We have, during the second quarter, done the analysis of our project portfolio that led to these write-offs, and we will have a new director for the segment to start late August, so this is a good basis for Pasi Tolppanen to continue to draw infrastructure business further. So, let's go to the Q2 results and the numbers through a bit more in detail. So, I have Ilkka Salonen, our CFO here. Please, Ilkka, the floor is yours.

Thank you, Markku. Good morning, everyone. If we look at Q2, starting from the revenue side, we had growth over there, driven by the housing business, and slight decrease in business premises, going more for the annual volatility, but then also slight decline in infrastructure, net sales partly driven by the fact that we are exiting from Norway, as well as from Estonia. In order book, there we see a clear drop, about 200 million, but it's good to divide it into a couple of items that requires a little bit of explanation. First of all, in the housing side, housing Finland and CEE, roughly about 100 million lower than we had last year after Q2. And it's just from the fact that we had roughly about 330 apartments less under construction. That will be fixed as we are speeding up our startups later this year. In Russia, it will be the same story, and on the other hand, as we are closing down operations in some cities over there. That has an impact for that one as well. In business premises, a clear increase, about 130 million. There are several projects. One of the biggest ones is Tammisaaraala, or the hospital in Helsinki area, which we won this year. And then the major drop in infrastructure, 200 million. And actually, that's coming from different sources. One is that, yes, we are exiting from Estonia as well as from Norway, that is having impact for the order book. We have in Finland big projects in the end of their life cycle, meaning that the amount in the order book is lower than last year. And when it comes to the new big projects, just like Tram Alliance in Helsinki area. It is still in the design mode, so there is not too much in the order book. The third one is that, yes, we have been more selective for the new orders, new deals, and that has had an impact to the order book as well. In the profit side, Our adjusted operating profit was 30 million compared to last year, 5 million. So, clear improvement over there. And of course, in the absolute levels, what we see on the right-hand side, housing, Finland and CE, as well as housing in Rasto, made a good result for the Q2. Business premises stabilized, infrastructure, Minus 12, and there we are stabilising that one at the moment. And then partnership properties three months, like last year. And then the deviations segment by segment compared to the last year. There you can see the very good performance in the housing side. 22 million in Finland and CEE, and 4 million in housing, RAS. And then business premises, even the absolute result is not satisfactory level yet. But it is clear, and so the stabilisation over there has performed quite nicely during the last one year. And infrastructure is in the stabilising mode at the moment. And the negative deviation compared to last year, it is driven by the margin reductions in some projects. Cash flow, 109 million. That is, once again, a good performance from the businesses. Last year, we had 247 million. It's good to remind that 283 million was driven by the divestment of the Nordic paving and mineral aggregates business, so the improvement and performance in the businesses themselves has been clearly from the negative side up to 109 million. And then, yes, we have continued to invest for the plots. And we are eager to buy plots in the future as well. And especially when we are increasing our startups, it also requires new plots. And net interest bearing debt, 350 million. If we take... Comparing the Q2 last year, that's about 350 million. And in that 750 million, the paving deal is already in. So, in the beginning of the second quarter of 2020, where the net debt was 950 million. So the gas generation has been quite nice. And of course, there is also impacting the 100 million euro hybrid, which we took in Q2, in Q1. We have made major refinancing programs during the first half year this year, actually on the big items have been refinanced, two bonds, one hybrid, and also the revolving credit facility has been renewed, so the finance portfolio, if we look at the maturity and the diversity, it's very good and will be solid for a number of quarters forward. That was And then, yes, of course, equity ratio and gearing ratio. We are at the moment in 35 over there, but already at this stage, it's good to highlight that we are increasing our startups, which will tide capital more than we have had in East Petroleum Housing Finland and CEE. And then, of course, when the gas flow is working and the profit is improving, the other metrics are also getting to the better level. That was shortly, and now I pass that to Mark, please. Thank you, Ilkka.