Yit Oyj Unsp/Adr

Good morning, everyone, and welcome to YIT's fourth quarter 2023 results webcast. My name is Essi Nikitin, and I'm the head of investor relations at YIT. Together with me here are our CEO, Heikki Vuorenmaa, and CFO, Tuomas Mäkipeska. At this point, I will hand over to Heikki. Please go ahead.

Thank you, Essi. Good morning, everyone, and welcome to fourth quarter and full year 23 result webcast. Since first quarter of the year, we experienced a notable positive trend in housing sales, especially in Central Eastern European countries, showcasing impact of our own actions and market resilience. Group operating cash flow continued to improve towards the end of the year, and our debt level declined during the last quarter. Both of our contracting segments continued to improve underlying performance, even though the fair valuation of assets impacted our fourth quarter results. Throughout the year, our diligent cost management initiatives have been implemented across the organization. As a result, we have streamlined and customer-focused operations at the moment. Additionally, strategic capital release actions have been successfully executed, contributing to a strengthening financial position and setting the stage for the coming years. I would like to thank all YIT employees for the overall solid closure of the year, given the market environment. If we then look at the full year 23 in brief, Our financial performance during the year was clearly impacted by the Finnish housing market demand. To respond effectively to the market challenges and also secure the long-term competitiveness, we launched a holistic transformation program at the beginning of the year. We decided to focus on our three segments, infra, business premises, and housing, and to ensure we have the right competencies and capabilities to serve our customers most efficient way. Our target is to improve our competitiveness and financial performance while reducing and reallocating capital employed between the segments. We have progressed faster than anticipated and by now we have achieved 25 million euros net recurring benefits and released significant amount of capital from the operation. Quarter 4 strong cash flow and reduced net debt level is a signal that we are on the right track. However, there is still a lot of work ahead during this year. If you then look at the full year in numbers, Our revenues stood at 2.2 billion, which is 10% less than in a comparison year. Adjusted EBIT decline is mainly connected to the Finland housing market and changes in fair valuation on fourth quarter in business premises. Let's break down the EBIT more closely to our segment level. On a housing segment, profitability is driven by all-time high performance in Central Eastern European countries. Market conditions in Finland continued muted throughout the year, which impacted the segment's full-year profit. Despite the decline profitability, our operations are in great shape on all operating countries, and we are well positioned to deliver again as the market turns in Finland. Our business premises profitability were impacted by the rising yields and high construction material prices in fixed price projects. As mentioned, our operative performance in that segment is improving, and throughout the year, we implemented significant amount of changes and control points to improve segment competitiveness on coming years. On the infrastructure segment, good performance in Finland operations continued, reaching 5.1% EBIT level, while the Sweden impacted our segment's full year results. Next, we go more into the details on each segment and start from housing. Main driver for the decline in EBIT was low apartment sales in Finland, as mentioned. During the year, we sold approximately 400 apartments in Finland. It is approximately one quarter normal sales for us in more favorable market conditions. Clearly positive highlight is the sales in the CEE countries, total of 767 units. Our demand and supply is in balance, as we started almost same amount of new units during 23. We also continue to have a good stock of apartments available, now more than 90% of those on the capital region or university towns in Finland and Central Eastern European countries. Our apartment sales on the fourth quarter increased close to 70% in the Central Eastern European countries. Quarter four was actually a third consecutive quarter of improved sales in the total housing segment. On the Central Eastern European countries, recovery started earlier and has continued positively, especially in Poland, Czech and Latvia. Actually, if you look at Q4 sales, the total sales in units exceeded already the comparison quarter volume. As I mentioned, we started to adapt our operations to the market situation strongly during last year. It is also visible now in our ongoing construction volume, where we have approximately 3,400 units under construction, vast majority of those in CEE countries. Our sales rate of apartments under construction is approximately 50%, which reflects the lower portion of investor sales. We will continue to accelerate the construction volumes on coming year, especially outside of Finland, and we'll return to the Finnish market as the market conditions are more favorable. When we looked from the completions perspective, also our capacity adjustment is visible here. During 23, we completed approximately 2,600 apartments, 50% in Finland and 50% in Central Eastern European countries. Year 24 will look different. We expect to complete approximately 1,800 units, of which almost 70% in the CEE market. And as mentioned, in Finland, we have a healthy inventory of apartments to sell to the market during 24 and early 25. Our total unsold portfolio of completed apartments in Finland was 890 at the year end. It is approximately 20% of the total Finnish market's unsold new housing units. So the share of unsold apartments in Finland is less than our market share has been during last year. Our portfolio of apartments locates on the growth cities and the prime locations. And then if you look on the city by city level, example in Tampere and Turku, our sales stock is approximately two months sales on the normal market conditions. When we then look the overall Finnish market, so here we have summarized all the completions from the players to the Finland market during 24 up to 25. And this is then illustrating the supply to the market. The total supply to the market on this year is approximately 3,700 units. 15% of completions comes from YIT. The supply will even further decline during the first half of 25 as the industry balancing is expected to continue. To summarize the segment situation, our segment is operatively in very good condition and is ready to deliver as the cycle starts to turn at scale. But let's move to the other segments and we start with the infra business. Our management and all the infra employees, they have really improved the profitability during the year 23. Our operating profit improved to 3.3% on the segment level, and as mentioned, in Finland, we reached over 5%, while our order book continued to increase. This is a very strong result from the team, and as we then gradually are exiting from Sweden, our segment profitability still continues to improve. Excellent progress, and we all have good reasons to expect a similar track to continue on the coming years as well. Then to the business premises. The year was overall challenging for the segment. Rising yields impacted assets fair valuation and material cost increased to fixed price contracts. During last quarter, we changed management of the segment and also reorganized ourselves to face the challenges that we have. Several improvements are already implemented to improve the operative performance and leverage the group best practices all the way from tendering to the final product delivery. I'm very confident that we can expect similar profit improvement and reach similar operating margin as we already see on the infrastructure segment in the next two years. We had success to release capital from the segment during last year in the form of selling our office premises, Maistratin Portti. And we need to continue on that path. Potential to reduce segment balance sheet is almost 400 million euros. And we are working on with that in full speed. But then look overall the market environment where we are operating in. The market environment continues similar as in the last quarter. Housing market in Finland and Baltic countries is expected to continue weak. Central Eastern European market continues on a normal level already. And real estate market on our operating countries are on normal level, and we see activity both in industrial and public sector to remain normal. InfraFinland, we see actually several potential projects under calculation this year, of which a construction would start early 2025. Overall, the market remains normal for us. But now it's time to hand over to you, Tuomas, to go through our financials more in detail.

Yes.