YIT Corporation Stock Exchange Release 13 November 2024 at 08.00 a.m.
YIT announces new strategy and financial targets for 2025-2029, introduces a new segment structure
With the new strategy announced today, YIT improves its resilience over the next five years and provides value creation to all its stakeholders.
YIT's strategic priorities for the strategy period 2025-2029 are:
- to deliver industry-leading productivity and financial performance
- to generate targeted growth and resilience, and
- to elevate customer and employee experience.
YIT will assess the success of its strategy with the following group financial targets to be reached by the end of 2029.
- Adjusted operating profit margin at least 7%
- Return on capital employed at least 15%
- Net sales growth of at least 5%, with the compound annual growth rate (CAGR) based on year 2024.
In addition, YIT will introduce a financial framework and non-financial targets for the strategy period.
Financial framework:
- Dividend payout ratio at least 50%, subject to fulfillment of certain conditions in current financial agreements
- Net debt to equity in the range of 30-70% over the cycle
Non-financial targets:
- Maintain high customer NPS level of over 50 across the operations
- Employee NPS at least 50
- Combined Lost Time Injury Frequency (cLTIF) below 5 in all operations
- SBTi commitment implemented by 2030 (scope 1 & 2 CO2 -90% and scope 3 -30%)
The targets set for the strategy period include an assumption of the Finnish residential market recovering to a historical average level during the period. YIT's view of 2010-2020 average self-developed multi-family residential starts in Finland is approximately 16,000 apartments per year.
"This strategy will enhance our resilience, enabling us to navigate the industry cycles successfully. We will focus on strengthening our core, improving productivity, and optimizing the capital allocation. While we aim for targeted growth, our priorities include capital efficiency and operational excellence.
Over the past two years, we've completed our transformation program ahead of schedule. Now, we have set new financial targets to drive progress. Initially, we will reinforce our core and achieve capital efficiency before accelerating growth with productivity gains. We also commit to four non-financial targets to enhance work safety and customer and employee experience. I look forward to achieving these ambitious goals with the entire YIT team," said President and CEO Heikki Vuorenmaa.
New segment structure
To ensure and support the targeted growth and resilience, YIT has decided to change its segment structure.
To enhance focus and transparency and to accelerate the speed of strategy execution in the residential operations, the Housing segment will be divided into two separate operating segments and renamed to Residential Finland and Residential CEE. Business Premises segment will be renamed to Building Construction to better illustrate the content of the operations.
From 1 January 2025 onwards, YIT will have four operating segments: Residential Finland, Residential CEE, Building Construction and Infrastructure. Antti Inkilä will continue as EVP, Residential Finland and act as an interim EVP, Residential CEE until a permanent EVP is nominated for the Residential CEE segment.
YIT will change its segment reporting to correspond to the new structure starting from the Interim Report 1-3/2025. Restated comparison figures for the new segment structure will be published before the release of the Interim Report 1-3/2025.
"We have been in the construction industry for over 110 years. Entrepreneurial spirit is written in our DNA, and we are known for our quality of work. Our greatest asset has always been our motivated and visionary team. While external factors may not always be within our control, we are well positioned to elevate the company's performance to new heights. We are getting it done together," concluded Heikki Vuorenmaa.
YIT hosts a Capital Markets Day for investors, analysts, and representatives from banks and media today at 1:00 p.m. - 4:00 p.m. EET. At the event, the company will present its updated strategy and new financial targets in more detail. The day will include presentations by Heikki Vuorenmaa, President and CEO, Tuomas Mäkipeska, CFO, and other Leadership team members.
Join us via live webcast at https://yit.videosync.fi/2024-cmd/. A recording of the event will be available at the same address shortly after the event. The presentations will be available on YIT's website at www.yitgroup.com/cmd in beginning of the event. A more detailed description of the company's new strategy and main priorities is available at https://www.yitgroup.com/en/about-yit/strategy.
Key recognized risks impacting company's ability to execute the strategy: Slower growth of the Finnish economy, the inflation rate and rising interest rates may weaken consumers' purchasing power and general trust, which would have a negative impact on the demand for homes in Finland. Increased political risks may influence demand or otherwise complicate business operations. Escalation of geopolitical risks that are reflected in general uncertainty, supply chain disruptions and customer demand may impact the company's operations. Complete descriptions of the risks recognized by the company, their impacts and the risk management practices are available in the Board of Directors' Report published on 19 February 2024.
Further information:
Heikki Vuorenmaa, President and CEO, YIT Corporation
tel. +358 20 433 111, heikki.vuorenmaa@yit.fi
Tuomas Mäkipeska, CFO, YIT Corporation
tel. +358 20 433 111, tuomas.makipeska@yit.fi
YIT Corporation
Board of Directors
Distribution: Nasdaq Helsinki, principal media, www.yitgroup.com
YIT is a leading construction and development company. Building on over 110 years of experience, we develop and build sustainable living environments: functional homes, future-proof public and commercial buildings, and infrastructure to support the green transition. We employ approximately 4,300 professionals in eight countries. Our revenue in 2023 was EUR 2.2 billion.?YIT Corporation's shares are listed on Nasdaq Helsinki.
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