YIT Oyj Q1 2023 Earnings Call Transcript

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

Question: Olli Koponen - Inderes Oyj, Research Division - Analyst : Olli Koponen from Inderes. First, on the Housing segment, I have one question there. Is there any interest on investors or institutions to buy your apartments as a group deal? Should we expect some kind of deals happening in the near future, for example, those joint venture deals? Or are you just trying to wait for the market to pick up for the consumers?

Question: Olli Koponen - Inderes Oyj, Research Division - Analyst : Okay. Then to financials or on the balance sheet side. What ways you have to improve your cash flow other than selling a bunch of ready unsold apartments? Is there some quick fix we should take into account here?

Question: Olli Koponen - Inderes Oyj, Research Division - Analyst : Have you considered selling your other assets, for example, Tripla Mall?

Question: Olli Koponen - Inderes Oyj, Research Division - Analyst : Okay. I have one more question left, and it's on the guidance. Just a clarification, is your guidance dependent on the Business Premises to improve during the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 03, 2023 / 7:00AM, YIT.HE - Q1 2023 YIT Oyj Earnings Call

Question: Anssi Raussi - SEB, Research Division - Analyst : It's Anssi Raussi from SEB. And I have a couple of questions. And firstly, you state in your outlook that you expect the housing market to gradually recover in H2 this year. But could you remind, at least, me that where do you base this assumption on? And of course, how long you are willing to wait if you don't see any recovery? And what kind of impact this would have if the housing market remained as weak as it is now?

Question: Anssi Raussi - SEB, Research Division - Analyst : Okay. Thanks. And the next one is about Tripla. So you have this profit-sharing agreement between the shareholders of Tripla. But if we think about the current situation and fair value and valuation, do you see anything which could prevent you from selling your stake as soon as possible, of course, other than not finding a buyer if that's the case. But any other reasons?

Question: Anssi Raussi - SEB, Research Division - Analyst : Okay. I understand. And I think the last one from me is just a bit more of a broad question. So about your balance sheet, you exclude many items as so-called, less risky debt. But are you worried yourselves about the leverage and like how do you see the situation? Because to me, it seems like your net debt to EBITDA is 7.1. And even if we exclude IFRS 16, it's still about 5x. So the situation is a bit worrying to me at least. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 03, 2023 / 7:00AM, YIT.HE - Q1 2023 YIT Oyj Earnings Call

Question: Anssi Raussi - SEB, Research Division - Analyst : Okay. And -- but if I continue on that, so I think your operating cash flow after investments, it's something like EUR 450 million negative during the last 4 quarters. So what kind of cash flow we should expect in Q2? And do we see the same kind of trend to continue?

Question: Svante Krokfors - Nordea Markets, Research Division - Analyst : Svante Krokfors from Nordea. Actually, most of my questions have been already asked by Olli and answered, but a couple left and coming to Anssi's last question about balance sheet and net debt to EBITDA, which has been quite high for you in recent years. But is net debt to EBITDA, I guess it's not a covenant in any of your loan agreements. Could you confirm that it's only interest cover, equity ratio, and gearing, which are -- or how should we look at it?

Question: Svante Krokfors - Nordea Markets, Research Division - Analyst : And then on Housing side, you said that CEE demand improved during the quarter. Can you identify what the triggers there have been? And can we kind of make any sort of read across the Finland on -- is it just -- do you expect only a lag effect for Finland? Or are there other elements impacting that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 03, 2023 / 7:00AM, YIT.HE - Q1 2023 YIT Oyj Earnings Call

Question: Svante Krokfors - Nordea Markets, Research Division - Analyst : And then question about your land bank and plot reserve. Have you at any point of time had any thoughts about raising cash from that side?

Question: Simen Mortensen - DNB Markets, Research Division - Analyst : My questions goes in the line of what the other guys have been asking. But in terms of capital releases of the employed capital and reducing this, how are you looking, for instance, at price cuts, both when you do commercial sales of developments and residential homes? And what kind of guidance, for instance, could you perhaps indicate? Given the current market, what do you think about starts for new housing going forward for the rest of the year? And how much of that is depending in the guidance that you are able to start more projects?

Question: Simen Mortensen - DNB Markets, Research Division - Analyst : Can you give us a guidance somewhat? Like how much price discounts you're talking about in campaigns and such like that for now to have that data?

Question: Simen Mortensen - DNB Markets, Research Division - Analyst : Okay. In terms of higher interest rates, clearly, the net debt is increasing, but how is higher interest rate impacting your financial cost? What is your hedging like? Secondly, also the undrawn credit facility seemed to be well positioned to handle the bond maturing next year. But what kind of pricing effect change could we expect in this kind of refinancing in the new current market environment?

Question: Simen Mortensen - DNB Markets, Research Division - Analyst : Okay. And also just lastly on the guidance, you said you had like a negative, neutral and bullish view on the housing market in the guidance. Is the base case then assumed that it's a neutral guidance in your view with the recovery in second half?

Question: Simen Mortensen - DNB Markets, Research Division - Analyst : Okay. Just the last question in terms of the dividend payments. I think doesn't you have one more payment this year. How are you considering like the dividend? And is the Board even considering the dividend given the current debt level of the company? Do you think it's fair to still pay out all dividends as planned? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 03, 2023 / 7:00AM, YIT.HE - Q1 2023 YIT Oyj Earnings Call

Question: Mika Karppinen - Danske Bank A/S, Research Division - Analyst : It's Mika from Danske. Concerning the consumer housing sales in Finland, have you seen any weakening trends that the consumers would be willing to cancel the sort of already carried out transactions?

Question: Lasse Rimpi - SEB, Research Division - Analyst : It's Lasse from SEB. Still coming back to cash flow and liquidity. So could you provide us with an estimate on the remaining construction costs you have related to the unsold housing that you have in Finland and the CEE countries? And secondly, relating to that, how much did you say that you have as of remaining plot investments from the previous acquisitions? That would be the first one.

Question: Lasse Rimpi - SEB, Research Division - Analyst : Okay. Is there then a big difference comparing Finland and CEE in the construction cost between per unit cost in these regions?

Question: Lasse Rimpi - SEB, Research Division - Analyst : All right. And then the final one still on liquidity. On top of the items that you have listed previously, then is there a possibility for you to draw on the pension premium loss in -- or in any scenario for that one?

Question: Anssi Raussi - SEB, Research Division - Analyst : Just a quick follow-up on your campaigns. And I think that this campaign regarding up to 50 square meter apartments, it started in April, if I remember correctly. So have you seen this campaign to have a significant impact? So basically, is the market price sensitive or are the conditions just? So to be at the moment that there's actually no improvement in demand due to this campaign or how do you see the situation? And are you planning to intensify your campaigns like more aggressive steps in the near future?

Question: Anssi Raussi - SEB, Research Division - Analyst : Okay. So basically, I take this that -- so that you haven't seen any clear improvement due to this campaign yet? Or...