Yit Oyj Q1 2018 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ari JSrvinen - Danske Bank A/S, Research Division - Analyst : It's Ari from Danske. Is the line fine? Kari Kauniskangas No, we can't hear you.

Question: Ari JSrvinen - Danske Bank A/S, Research Division - Analyst : Okay, that's great. So first starting on this Paving unit. I know it's coming from the LemminkSinen side, but we have really seen before this kind of troubles in profitability. I assume it's mainly Norway and Sweden. So this time, what are the actions? And when should we expect some positive impact, because these actions, I assume, were initiated already like last autumn? So what's really happening there? Kari Kauniskangas I'm very satisfied on the proceeding with those actions during the winter. So we have, as said earlier, closed 6 plants, which are somehow located so that we don't see the opportunities to make positive profits. We have also reorganized that the companies make some changes in management, changed some management practices. Also in tendering processes, we have shared information and people across countries. And of course, now the season has started at the beginning of April. So we will see now the impact, already starting from Q2. I'm quite positive on what we have done. I'm sure that the units will not be still in the highest possible position during this year, but I'm quite confident that there will be clear improvement during this year anyway, in both Norway and Sweden.

Question: Ari JSrvinen - Danske Bank A/S, Research Division - Analyst : Okay. So then to Russia basically, you had as a -- YIT as a stand-alone basis had a fairly good like improvement last year in the second half, and now a very big dip. So how big this project write-down has been? And have you been like playing with the prices to get the volumes -- sales volumes up? So these 2 questions only. Kari Kauniskangas If you look at the housing business stand-alone, the result was quite close to what was the result a year ago. As I said, there is more sales coming from Moscow region, where the project profitability level is lower than it has been in other units throughout the segment. So the -- let's say housing stand-alone profitability was a bit weaker than a year ago at the same time. Even the volumes in units was higher than year ago.

Question: Ari JSrvinen - Danske Bank A/S, Research Division - Analyst : Okay. And then you already mentioned about this labor market, labor union actions. So have you had some material impact on your concrete availability? For example, at the Tripla project? Or how good visibility do you have on this one? Kari Kauniskangas So far, we have been able to continue works in Tripla as planned. Also, we have been able to get concrete also in those strike days.

Question: Ari JSrvinen - Danske Bank A/S, Research Division - Analyst : Okay. And then finally from me, could you elaborate a bit more on the dynamics of the guidance? You have been talking about planning to provide a numerical guidance for this year, but we are already in May almost. So what's the dynamics? Why aren't you able to disclose any guidance? Or are you planning to do such? Kari Kauniskangas It's actually quite easy. So we have the whole structure in place 1st of May. Today is 27th or 26th of May -- of April. So we can finalize the targets according to current organization after 1st of May. Then as said earlier, Board of Directors will consider do we give a numerical guidance or not.

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : It's Anssi from SEB. Overall, you highlighted that there has been projects review and there is some dozen of projects you have been doing write-downs. Could you a little bit elaborate on what has been the effect in Q1 result? So that we could get a little bit better feeling of the underlying performance that you have in the segments that you make the write-downs. Kari Kauniskangas If you look difference between Q1 last year and then this year in adjusted operating profit, then you can estimate also the impact of those project changes.

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Okay. Great. Then question on housing completions. Now you indicated there's going to be 5,000 to 5,500 completions in Housing Finland and CEE, and then also around 3,000 in Housing Russia. That's indication that sales will come down in housing business in 2018. Is this correct? Kari Kauniskangas It's not indication on that. It's the only indication on completion of the apartment. It's not the sales estimate. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 26, 2018 / 11:00AM, YIT.HE - Q1 2018 Yit Oyj Earnings Call

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Could you elaborate on that a little bit more? Kari Kauniskangas Of course, all apartments will be sold. It will be sold in a certain time, but the sales and the completions are not maybe connected with the same year. So big part of the apartments which will be completed this year can be sold already during the previous years.

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Okay. Then my last question relating to the potential strikes in Finland. We have seen the announcement, we have seen the days, and we have seen the potential impact. As we know it now, how -- is there going to be a large impact from the announced measures? Are we talking about single million euros in -- on operating profit? Or have you tried to estimate what is the magnitude of the impact for your operations? Kari Kauniskangas To be honest, we have had no time to consider what is the impact. We really hope that we are able to negotiate or [RT] is able to negotiate the agreement with the employees organization within coming 2 weeks. So far, we have been able to survive quite well on those strikes, which have been in some companies, in the construction material industry.