Yit Oyj Unsp/Adr

Hi everyone. Welcome to YIT's Half Year 2026 results webcast. My name is Essi Nikitin and I'm heading the investor relations at YIT. Together with me here are our CEO Heikki Vuorenmaa and Interim CFO Markus Pietikainen. We will first hear Heikki to go through the second quarter developments in the company. Following that, Markus will walk you through the latest financial development. Last but not least, Heikki will wrap up the presentation with a short update on our strategy progress. After the presentation, the participants will have an opportunity to ask questions from Heikki and Markus. But now, Without further ado, I will hand over the floor to Heikki.

Thank you very much, Essi, and welcome to this second quarter 26 webcast also from my behalf. And let's start the webcast with some key highlights from the quarter. We made positive progress during the second quarter as our revenue and profitability continued to improve. The residential operation in CEE continued strong. Revenue increased by over 30%, and the project pipeline improved as we launched a new project worth of 160 million during the quarter. Infrastructure revenue increased by over 20% compared to last year, and the market continues favorable. Additionally, our focus to continuous improvement and efficiency gains progressed well. We recorded a total of 15 million euros worth of annual cost saving actions by end of Q2. And as we have discussed earlier, our target is to achieve 18 million total cost efficiency savings. When we look at our group level numbers, the revenue grew by 3.5% and stood at 472 million euros during the quarter. Our adjusted operating profit increased to 19 million and was 3.9% of the revenue. Maturity of the operating profit improvement came from the residential CEE segment. reporting adjusted operating profit of 40 million euros compared to the muted Q2 last year. And as the revenue grew to 87 million, adjusted operating profit margin was at 16.5% for a single quarter. That is exceeding the strategic target of 15% that we have set for this specific segment. Building construction revenue stood flat on 186 million and the adjusted operating profit increased to 7 million euros with 3.5% operating profit margin. The improvement is supported by good project execution and improved internal efficiencies. Infrastructure segment recorded 154 million in revenue, which is over 20% increase to previous year, as I mentioned in the start. Adjusted operating profit increased to 6 million, which is 4.2% of the revenue on the single quarter. The challenging market continued in residential Finland, recorded only 52 million in revenue, which declined 40% compared to last year, and the losses were 6 million for the quarter. Investor volumes for the quarter were almost non-existent, and the poor sales mix impacted the overall performance of the segment. But let's get more into the segment level details, and we are starting from the residents of Finland. As I mentioned, behind the revenue decline in the Finnish residential business was declining investor sales volume during the quarter. We do not expect the investor demand to pick up in numbers during 2026 due to the weak rent level development, especially in the capital area. Our operations continue to adjust for the declining revenue. However, the losses during the first half of the year is still reflecting the segment cost base prior to the latest efficiency improvement program. We continue to seek internal efficiencies and adjust the operations with the prevailing market conditions. Apartment sales was 90 units during the quarter, which is reflecting the market conditions. Market conditions have not improved during the quarter and some indicators were flagging even softening secondary market during the first half of the year. We sold apartments mostly from the old inventory and our unsold inventory continued to decline and is now below 400 units, which is actually 60% lower than the highest peak level observed in a few years ago. Selling from the inventory is actually reflecting the consumer decision making, as many are postponing the decision to purchase a new home closer to the completion. Our starts continued below the sales, which broadly speaking gives a good picture how the overall market is. So there is less of a still supply to the market compared to the demand. And by this way, Finland is heading gradually towards a structural deficit of housing, similar that we are observing in many other European countries as well. First thing is, you can already observe by lack of student housing in some university cities. There were also no completions or starts during the quarter, as mentioned, so the apartments under construction remained at 602 units. Sales rate increased modestly to 31%, reflecting the before-mentioned behavior of postponing purchase decision closer to the completion. But let's move on to our main residential business, which takes place in the Baltics, Poland, Czechia and Slovakia, and we are calling that residential CEE. The rolling 12 months revenue is now at 382 million, which is up by 20% from the comparison period. On a rolling basis, profitability is now at 13.5%, approaching gradually the strategic target of 15%, we've set for the segment. Despite the growth and the boost and the new product launches, what we have been communicating, the operating capital remains almost flat, approximately in 300 million euros. The pipeline of the apartments increased to 15,000 new homes and we continue to build the pipeline in such a way that we can secure also the future growth of the business. Apartment sales for the quarter was 511 units. It's 30% higher than in the comparison period. So what we can say now is that the Middle East crisis and war in Iran had no negative impact on the market conditions or sales during the second quarter. We continue to launch new projects while maintaining the prudent risk management on our start decisions. Apartments under construction in the residential CEE increased to 3,700 units. The volume has now increased by over 70% since we announced our strategy to double the volume in the residential CEE by 2029. Sales rate continued stable, 47%. It's reflecting the good market conditions across the operating countries. But now we leave our residential segments and we're moving to the contracting side, starting from the building construction. On the rolling 12 months basis, our revenue has remained stable, about 662 million euros. However, the content of the revenue has shifted from offices and self-developed projects to design and build and collaborative contracts with our customers. In addition, we see the data center demand across all operating countries, especially in Finland, to start in meaningful terms. Improved project management and internal efficiencies are supporting the profitability development of this segment. On the rolling basis, it is now at 2.5% and for the single quarter, Q2 26, we recorded 3.5%. We are continuing to work with the internal efficiencies lead times to get above our strategy target of 6% for the segment. Odebook is strong. It's above 1 billion euros. A few highlights from the quarter. So we recorded the campus in Tikkurila worth of 77 million and also in Lithuania, commencing several road construction projects, approximately worth of 30 million euros. So good progress in the building construction and same we can say also about infra segment. The second quarter of 26 was now the sixth consecutive quarter of growth for our infra. Now the rolling 12 months revenue is at 548 million, which is a 20% increase from the comparison period. Operating profit margin has remained good, over 4% on the rolling 12-month basis. Obviously, we are working on with the internal efficiencies in order to exceed the 6% target, what we have set for ourselves. But I can say that again, very strong performance from our infra team during the second quarter. Order book also increased 20% compared to the comparison period last year and remained above 900 million euros. In Q2, we recorded first orders from the Helsinki Light Rail project, 62 million in value, and additionally communicated that our collaboration continues in Kajaani, where we are building third data center to XTX market. Then let's look on the market environment. There's one change on this picture. We're actually upgrading our view on the building construction market in Finland. While the traditional office construction market is muted, we see the data center activity and overall industry construction potential to compensate and boost the market in the next 12 months window. Same opportunity could be also in the renovation market. There has been soft recovery over the past six months and we do see that there is an opportunity for that to continue also going forward. Currently the cities and municipalities are investing on the normal level what comes to the social infrastructure buildings across Finland. So there are no other changes on our view in our market environment. Infra-market continues good in Finland. On the other side of the spectrum is still the residential market, which remains weak for now. The residential market conditions in CEE are good and we expect that to remain the same. But now it's my time actually to hand over Markus to you and to cover the key finances for the quarter. Thank you, Heikki.

Let's start with the summary of our Q2 financial development. Operating cash flow after investments was 12 million euros negative for the second quarter, which is though an improvement of 15 million euros year on year. Gearing increased and was at 91% at the end of the quarter. Net debt was at 618 million euros, decreasing by 52 million euros from Q2 2025. Return on capital employed improved and was at 6.1% at the end of the quarter, up from 5.4% a year ago. Next, let's look at our capital efficiency. Our operative capital employed amounted to 981 million at the end of the quarter, which is 53 million less than a year ago. On a segment level, there were no significant changes during the quarter. Operative capital employed in residential CE has remained stable despite a significant increase in production, and both contracting segments continue to operate with negative operative capital employed. Consequently, return on capital employed improved and was at 6.1% at end of Q2. It is good to note that these figures are excluding our non-strategic items, which we intend to dispose of during the strategy period ending in 2029. Non-strategic items amounted to 298 million euros at the end of the period. Operating cash flow after investment was at 12 million negative for the quarter, which is typical considering the cyclicality of our cash flow profile. However, it is good to note that this cash flow increased by some 15 million euros from the comparison period and during the past 12 months we have generated close to 120 million euros of positive operating cash flow. We'll continue our work to further improve cash generation across our businesses. Gearing increased by seven percentage points year on year and was a nine to one percent at the end of the quarter. Gearing has been impacted by the redemption of our outstanding 2021 issued hybrid bond of 46 million euros during Q1, which had a 12 percentage point effect on the gearing ratio. Net interest bearing debt was at 618 million euros, which is a decrease of 52 million from a year ago. The net interest-bearing debt included IFRS 16 lease liabilities of €256 million as well as housing company loans of €123 million. Next, our balance sheet. We have €709 million worth of plots enabling a pipeline of some 30,000 apartments across our operating countries. Our production increased by almost 80 million euros from the previous quarter as we continue to scale up our production in the favorable residential markets of the CE countries. During the quarter we successfully issued a new green bond of 150 million euros maturing in 2030 and redeem our green bond of 100 million euros which was due in 2027. The excess 50 million euros capital will be allocated to support the growth in residential CE. This transaction is a final step of the multi-step refinancing program that we initiated in 2024. The price of the redeemed green bond was based on the 2024 position of the company and the improved pricing of the new green bond reflects the current more normalized market conditions. After this transaction, we have now only limited loan repayment scheduled for this and next year. Our average maturity for interest-bearing debt was three years at the end of the quarter. Guidance remains unchanged. We expect the group adjusted operating profit for continuing operations to be between 70 and 100 million euros in 2026. Thank you. And next, back to you, Heikki.