Yit Oyj Q4 2020 Earnings Call Transcript

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

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : It's Anssi Kiviniemi from SEB. I have a couple of them, so I will take them one by one, if that's okay. Firstly, one of the reasons you are now cutting dividend is increasing profitability focus and both acquisitions and the development business all together. Could you elaborate a bit on this side? What will happen in the next year so that you need more room in your balance sheet in large projects but also in the housing business? What are the kind of ambition levels to tie more capital?

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Okay. And kind of what should we expect from the housing business? How much you're going to increase your start-ups on that side? I mean the consumer market, especially in Finland, seems to be quite okay or even booming currently. So what are your ambitions there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 03, 2021 / 8:00AM, YIT.HE - Q4 2020 Yit Oyj Earnings Call

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Okay. Then on large projects, is there anything around the corner? I mean mostly Keilaniemen, Helsinki Garden, Maria Hospital. Are the projects looking attractive in the current market environment? And when will they go ahead with full speed?

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Okay. Is it a good assumption to assume that this will kick off this year? Or kind of what should we expect?

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Yes. Yes, the question was, is it a good assumption to assume that these projects will kick off this year? Or how should we look at the development ratio?

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Okay. Then on the guidance, you highlighted Business premises, you expect the performance to stabilize. So probably this means that there's no additional bookings from Tripla, right?

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Yes. In the CEO comments, you highlight that -- no, in the guidance section, you highlighted Business premises, you expect the performance to stabilize this year. So probably, this means no additional bookings from Tripla or from any other sources, right?

Question: Anssi Kiviniemi - SEB, Research Division - Analyst : Okay. Then the last one is, on Infra business, you highlighted that project management issues are expected deferred in earnings. Are we talking about tens of millions? Or are we talking about single millions of the kind of potential burden from project management in Infra?

Question: Svante Krokfors - Nordea Markets, Research Division - Analyst : I hope you can hear me.

Question: Svante Krokfors - Nordea Markets, Research Division - Analyst : Great. So yes, I have a few questions left after Anssi. I also wondered regarding the Infrastructure, if you could be a bit more specific on the sizes and what kind of issues it really is, because I couldn't -- or I didn't find what kind of magnitude it would be. I guess, it's significantly smaller than -- or the projects are smaller than in Business premises where the problems have been. But could you try to be a bit more specific on the size?

Question: Svante Krokfors - Nordea Markets, Research Division - Analyst : Okay. And then on Housing Finland, CEE, do you expect -- I mean, how you -- when the coronavirus broke out, you correctly estimated that there could be perhaps more need for larger apartments. Can you comment on what kind of mix changes have happened after that? And also keeping in mind that there appears to be an oversupply of smaller apartments for rental purposes. So could you elaborate a bit on the mix in your housing projects?

Question: Svante Krokfors - Nordea Markets, Research Division - Analyst : Okay. And then the last one on Mall of Tripla. If I remember correctly, you earlier said that the holding company or entity that holds, that there's roughly 50% debt and 50% equity. Has there been any equity calls from the lenders regarding this write-down? And how do you look at that going forward?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : A couple of questions. Firstly, could you elaborate more on the strong figures in Housing Finland and CEE during this Q4. Was there any effect from the sale of the housing fund in Partnership properties? Or was this just driven by the good sales?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : Sorry, could you repeat, what kind of apartments had good performance?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : Okay. All right. Then another question concerning housing business. So can you help me to understand the low level of housing start-ups that you have currently? And if I look correctly, the amount of units under construction is now on the lowest level that I can remember. And to me, at least, it seems that housing markets are performing well, even if not even booming. So are you held back by resources or some timing issues? Or is your increased leverage affecting your willingness to start? Or is it -- is it project financing, which is still burdening you? Can you help me to understand this?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : Okay. Okay. Next question concerning Partnership properties. So was there this SiltamSki development project included? Did you sell the project in Q4?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : It hasn't been closed. When do you expect it to be closed?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : Okay. But you have a binding agreement that (inaudible) hopefully it's to buy it when the conditions are right?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : Okay. Then about Infra markets, a little bit -- this slow phase in the Infra market, but some bigger projects in a bidding phase. So when do you expect this new development phase projects start to contribute in revenues?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : Okay. Am I correct that the one big one would be this Crown Bridges?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : Okay. All right. Then a question on your net debt position. So how do you expect net debt to develop in 2021? So you highlighted you want to invest in plots. And last year, cash flow was good. But how do you see it going forward?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : Okay. One question related to Russia. So do you see that these double-digit margins are sustainable now in Russia? At least if I look at your competitors, for example, they just reported 16% for the whole year last year. So -- and now you are also making double-digit margins. So would you see these to continue?

Question: Olli Koponen - Inderes Oy - Analyst : It's Olli Koponen from Inderes. I have a couple of questions left. First, on the Housing Finland and CEE you had a very good year-end there. But now we see that consumer completions are coming down this year compared to 2020. Should we expect this to materially affect your profitability in that segment? Or do you expect you can keep it on the same level as year 2020? Or how should we read this?

Question: Olli Koponen - Inderes Oy - Analyst : Yes. And just on the geographical mix there, is there any change to previous years? Or is it on the same?

Question: Olli Koponen - Inderes Oy - Analyst : Okay. Okay. And just on the guidance, to wrap up, how should we read this higher than in 2020 guidance in operating profit? You have previously given us a numerical guidance. And should -- what is the kind of range we should expect here? Is it like 5% to 10% higher? Or could it be -- also be like 50% higher? How should we read this?

Question: Olli Koponen - Inderes Oy - Analyst : Okay. And previously you have given us also a revenue guidance. Is that also -- or those reasons are also the reason you didn't give us any revenue guidance this year?

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : I have still one question remaining. So looking at Finland and CEE, the housing business, you provided some guidelines how to see the consumer business. But about this investor side, so could you help us understand what is now the -- how the revenue progressing and profitability in the investor? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 03, 2021 / 8:00AM, YIT.HE - Q4 2020 Yit Oyj Earnings Call

Question: Matias Rautionmaa - Danske Bank A/S, Research Division - Analyst : Okay. How about the revenue -- how about the revenue recognition there? Because I see that start-ups for investors were down last year. Do you expect the revenue from investor production to be stable this year compared to last year or to decline or to increase?