YIT Oyj (YIT) Earnings Call Transcript & Summary

[Presentation] Good afternoon, ladies and gentlemen. My name is Essi Nikitin, and I'm heading the investor relations at YIT. It's my great pleasure to welcome you all to YIT's Capital Markets Day 2024. It's especially great to be here in Aleksanterisali, as this whole historical building is one of YIT's recent flagship renovation projects. It's also an internationally known example of a successful circular economy project. As we say at YIT, safety first. Please note that the nearest exits are located in the back of the venue and behind this screen. If we take a look at today's agenda, next -- no. Thank you. We will first hear a presentation from our Group President and CEO, Heikki Vuorenmaa, regarding the group's strategy; followed by a deep dive in financials by CFO Tuomas Makipeska. After the break, we will hear all the segments presenting their new strategies. We will have 2 Q&A sessions in the event: first one, after CEO's and CFO's presentation; and the second one, after all the presentations have been held. We have a really interesting afternoon ahead of us. Next, let me introduce to you our speakers of the day. President and CEO Heikki Vuorenmaa?

Yes. Good afternoon. And thank you, Essi, for the welcomes. And welcome all to the YIT Capital Markets Day 2024. I'm not here alone. Let me introduce the whole team that we are going to have presenting you today our renewed strategy: first, our CFO, Tuomas. And -- so the man who successfully refinanced the company beginning of the year. Welcome. Then we go to invite our residential guru, Antti -- and if I'm not too bad on my mathematics, I think, during the past 30 years, you have constructed approximately more than 100,000 homes for happy customers within the YIT.

Good afternoon.

Yes. So the humble afternoon there, but it's a remarkable achievement. So welcome, Antti. Then Peter, our segment head for our Building Construction segment. And it took almost 25 years to get Peter from abroad to Finland to take over the segment and start to put that in shape, so I'm also personally looking forward to hear the new direction where we are heading there.

Good afternoon.

And then last but not least, our head of Infrastructure segment, Aleksi -- and let me be the first one to congratulate you. We read interesting and very inspiring news today about the upcoming alliance project here in Helsinki, so I'm guessing that you will a little bit talk more about that, what it means for us at YIT.

Yes, I will. And good afternoon.

Thank you, gentlemen.

Thanks...

All right, thank you also from my behalf. And...

Without further ado, the floor is yours, Heikki.

Well, thank you. Thank you, Essi. Thank you, team. So like I said, we are here excited to share our renewed strategy and financial targets with you. I have met most of you here at the room, but for the ones that I haven't met before, let me provide a short info, intro about myself. So I joined the company as a CEO 2 years ago. And my role was then to really accelerate the execution phase of the former strategy. And since then, we have been focusing to transform our operations, as we have navigated through the recent perfect storm that hit the construction industry just a few years ago. My personal background on the industry [ reaches ] different companies, across the different companies. I was part of Nokia, Microsoft, McKinsey and many other companies before I actually spent -- or joined, rejoined back to YIT -- and spending most of my time on the [ career ] to -- leading through -- the companies through this type of change situations, but enough about me. And let's go to our renewed strategy. I want to start with our key message while I still have your full attention with me. So our strategy is to increase the company resilience over the next 5 years. We are aiming to achieve industry-leading profitability and capital efficiency. We will continue to invest our capabilities to win the hearts and minds of our consumers, customers and employees. And as a result, we are building a YIT which is better positioned to navigate through the different industry cycles, as we are operating on a cyclical industry. YIT today. We are a European-based developer and contractor. If you look our revenue, which is about EUR 2.2 billion, 60% from that revenue comes from our contracting businesses. The contracting business, we are operating under the Building Construction and Infrastructure segments. 40% of our revenue stream are connected to self-developed homes which we are doing both in Finland as well as in the Central Eastern European countries. We operate today in 8 countries and directly employ more than 4,000 employees. So for the past 2 years as we have progressed through the transformation program, we have put our foundations in place. We have rightsized the company and built the necessary capabilities to succeed. We have been taking out permanently our cost base by EUR 40 million compared to our baseline '22. Our renewed procurement is working nowadays based on categories. And we have established a strong partnership among the industry-leading players such a way that we always have the best talent working with us as we are making the final products to our customers. Our project management has improved significantly. The proof point there is that we have a significant reduction of the project margin deviations already. And we have improved our productivity. 15% of the lead times have been taken out from our residential construction in Finland in past few years. And as a result of this transformation program, also our organization's speed of execution and the capabilities have increased. That gives us a good platform and the foundations to launch this new strategy, but actually, before we go there: It would be wrong for me not to address the current market conditions in the residential market in Finland head on. If we look the industry. The whole industry started many, even too many, apartments to the market years '20 to '22; and that created oversupply to the marketplace. Since then, the kind of number of new starts has reduced up to 90%, if you look the years '23 and '24. The market oversupply has also directly impacted our business results and short-term profitability. However, the oversupply will fade away; and the market is expected to return to modest growth during next year. And we believe that we will achieve the long-term average during our strategy period. On our Finland residential operations, we have the machine up and running and we are well positioned on the market as it returns back towards normal level. You will hear more about that on Antti's presentation in the -- later today. The Finnish residential market, however, is not the only source of our revenue streams. If we look the megatrends, we can clearly identify 4 reasons why customers will need more from YIT on the coming years. First of all, we see that the share of the urban population in Europe is still to increase on the coming years. So the cities are growing and more people are moving into the cities. They are upgrading their life standards and looking for a better living for themselves. Europe also has to accelerate the investments to the global security on coming years, and investments on this sector is estimated to grow. Also Europe continues to implement its strategy to create renewable energy sources and to tackle the climate change. And the fourth component there is digitalization and AI. If we look the megatrend of digitalization and AI, it requires actually large investments to data center projects across Europe. We have capabilities in house to create a compelling and competitive solutions to our customers on all of these different sectors and megatrends. We have listed here a couple of examples already of the projects that we have done or are ongoing, but let's switch gears. Let's move from the megatrends and discuss about our strategy. We will start from the group financial targets. What we announced today is that we are looking growth. It's a clear signal that we are operating in the healthy markets where we see that there is opportunity for us to grow. And we see that the 5% growth rate for the coming years is something that as a group level we are targeting. We are measuring our operative performance through adjusted EBIT, and there we are targeting to exceed 7% level as a group. We are taking back to our metrics a capital efficiency. And to measure the efficient use of capital, we are reintroducing return on capital employed as a metric. And on that, we are targeting over 15% level for the group performance overall. Additionally, we are guiding ourselves through financial framework where we target to operate between 30% and 70% gearing in all market conditions. The dividend policy is to distribute half of the net profit to our shareholders and therefore reward them as well. These are the group financial targets for the strategy period. Those are realistic, and I would like to share a plan how we are actually going to reach those. So the -- for the company to be successful on our industry, you need to have key ingredients in place. You need to have continuous and daily focus on your productivity. You need to have your lean cost structure and tight use of capital. You need to have a growth from the market as well as resilient business model in place. And then you need to have the motivated best teams that are capable to create added value to the customers -- that they appreciate. We are following those good principles as well, and we have packaged into the 3 different areas. I will say a couple of examples there. And our segment heads will then share more in details what it means individually for different segments as we go forward. So let's start with our industry-leading productivity and financial performance. Fixed costs: Like I said, we have been taking already EUR 40 million out compared to our baseline '22. We will continue a strong cost discipline across our operations also during the strategy period. We see that the level we have reached is sustainable. And it's permanent also as we are progressing forward. Then to the productivity. I mentioned there already that our Residential Finland has received 15% improvement. And we target to reduce over 20% of the construction and process lead times what we are having. It's good to note here that, when we talk about our lead times, it's not only the work that happens on the site, but it's also the design phase, what takes place before actually the construction starts. I believe we have there a lot of opportunities still to take out in the terms of waste, what is typically in the processes, but secondly, it also support us when we talk about efficient use of capital. And to put a number on this. If we take our medium-size work site and we calculate what would be the costs of extra month running that site in terms of overheads and fixed type of cost by nature, we can be up to EUR 500,000 level, so there is a lot of potential that we can provide added value to our financial performance but also to our customers. Quite often actually, our capability to deliver the project ahead of schedule are benefiting our industrial customers since they start off their own production. Or completion of the final product is actually only a start for their own manufacturing and production cycles, so that, we are focusing on. And as a result of the business model change where we have decision not to play anymore in the property investment space, we are carrying nonoperative capital on our balance sheet. And that, we are going to release in order to improve our capital efficiency. Tuomas is sharing that in more detail just in a few minutes. Then a few points on the growth and the resilient business model. As a consequent of these recent crises in Finland, or the market turmoil, residential market is actually less crowded today. There are less players, and we see that we have opportunity to increase our residential market share in Finland. We're also targeting 15% annual revenue growth on our Residential CEE business on the coming years. Effectively that would double the size of the business during our strategy period. If we look the contracting segment's project portfolio. For us, it's key that we have balanced portfolio between the public and the private projects. That provides us resilience. It provides us different type of revenue streams and pools. And we are capable to balance also our internal know-how and competencies between the projects and provide, that way, stability to the business as such. And then the third element. We continue to invest in our in-house capabilities. The purpose here is to capture the larger share of profit pools through selected investments to in-house capabilities. So there are still some kind of verticals that we are not playing in, but we believe that it would -- beneficial for our customers for us to have those capabilities in house. And that's also a part what we are going to execute during the strategy period. And the third point I was making, about the winning teams. Let me start with safety, like Essi started today this event. We have been progressing safety very nicely over the past 12 months. If -- we are measuring our safety through this lost time injury frequency, where we have been now reaching a level of 9. We were came -- coming down from level of 12 to the level of 9, yet our ambition is to reach below 5 on this metric. We're actually reaching this level already on many of our own operations with our own YIT workforce. Now the challenge is to reach the same with our subcontractors. And that will require discipline approach from us and potentially some changes on our supply chain also that we are getting industry to work with us towards this goal. Like I mentioned, we continue to invest, our employees. We have had this YIT path for numerous years. And we see that we want to be the most attractive employer for the experts on the industry; and with our competencies and capabilities, to maintain our high customer NPS level of over 50 across our operations. So these are just a couple of examples on the group level how are we going to reach the financial targets. You will hear much more in details breakdown of all segments right after the first break, how the segments have designed their road maps. A few words about sustainability as well. Industry has changed. Sustainability starts to be a strong requirement from our customers today. We are seeing investors to -- demand more sustainable solutions. Construction material industry is developing new products to meet those requirements. For us, sustainability is already part of our DNA. We're the first construction company in Finland who has validated and confirmed science-based targets. We have reduced already our emissions by 60%. And this is a great example, Essi, you pointed out already, the venue that we are today. One thing just to focus your attention here in the audience is that the floor that is underneath your feet is actually recycled. So it has been taking from another project, refurbished and again installed here; and it looks as good as new. This is a future also for construction industry. We are not doing it yet at a scale, but there is some potential that, in coming years, that could be done at scale. And we could leverage much more material from already existing building stock, but here we continue to invest in sustainability, as it is and continues to be competitive advantage for us. Such will be the time for me to repeat the key takeaways from my opening before handing over to Tuomas. So our strategy is to strengthen the company resilience over the next 5 years. We will drive the targeted growth through balanced revenue streams across the segments, customers and geographies. We are aiming to achieve industry-leading profitability and capital efficiency. Additionally, we will continue to invest, our capabilities, to win the hearts and minds of consumers, customers and employees. And as I started, we have established execution-focused corporate culture during the past 2 years to get things done. Thank you. It's time to hand over to Tuomas. Welcome.

Thank you very much, Heikki. And good afternoon, on my behalf, as well. I'm Tuomas Makipeska, CFO of YIT having responsibilities across finance, IT and some other major functions in the group as well. I joined YIT 3 years ago. And prior to that, I've been active as a CFO, interim CEO, segment head and also as a strategy and development head in a stock-listed company in Finland; and earlier in my career also, been active in the strategy consulting. And during my time at YIT, I have been focusing on, of course, executing the transformation program that we have been running in the company for 1.5 years; and there particularly the capital release stream and also, of course, the refinancing of the company during the last year. And now going forward, my focus will be also in the execution of the strategy; and there, especially, the capital allocation, to maximize and optimize the return on capital employed and maximizing the shareholder value. Here in this part of the presentation, I will cover just a brief recap on the last couple of years' achievements and then review the current financial position of the company but, most importantly, cover the financial targets and overall plans how to reach them. If we start with a recap of the last couple of years. We have navigated through a storm, and we have taken decisive actions to stabilize the financial position of the company. We have been divesting some of the noncore operations and businesses from the balance sheet. For example, we exited the Russian operations already back in 2022 springtime, allowing us to focus on the core businesses going forward. Also we have been releasing capital and generating cash flow by selling the renewables portfolio and the equipment business from the infra segment to really focus the segment into the core and also generating cash flows to improve liquidity. Also, we have been working on the refinancing of the company and reached a stable position in that by executing the transactions during the springtime and also continuing with the issuance of the bond during the summertime this year. And then as already mentioned. So we have been focusing on the transformation program, where we actually reached the targeted EUR 40 million run rate cost savings well ahead of schedule and at the same time improving the competitiveness of the company, so in -- from that perspective, we are well positioned to execute on the new strategy going forward. Then also if we look at the current financial position of the company. We have very asset-rich balance sheet. We have almost EUR 1.8 billion of assets on our balance sheet. Particularly, there are over EUR 800 million of plot portfolio that we have to support future growth and profits both in Finland and CEE countries. And if we compare to -- that to the net debt and adjusted net debt which is only a bit over EUR 300 million -- so we'd argue that from that perspective also the balance sheet is very strong. And adding to that, if we look at the maturity structure of our debt, having only minor amortizations coming up this and next year allows us to focus on the strategy execution and improving the competitiveness of the company while at the same time plan for refinancing and repayments, some of the items in the 2026 upcoming maturities. So also from that perspective, we see that our balance sheet is really supporting us now in the new strategy execution. Then if we move on to the strategy and the financial targets. We had a very thorough process of going through the financials with the segments. And we took a prudent approach also from a group perspective; and taking into account the balance sheet management, also the cash flow generation perspective, in the new targets. With the over 5% growth target, we want to demonstrate that we are really operating in healthy markets with the -- competitive businesses. And we want to target growth in all of the segments, and I'll come back to that a bit later. Then the operative performance. We are targeting above 70% (sic) [ above 7% ] EBIT margin, which comes mainly from the productivity improvements across the segments. And then to add on top of that, more efficient use of capital and higher capital turnover will support us then reaching the goal of over 15% return on capital employed. And already, Heikki mentioned that, on top of that, we want to operate within 30% to 70% net debt to EBIT -- net debt-to-equity range to, of course, ensure resilience but also give us flexibility for growth when the market supports. And by that, by reaching these targets, we will be able to pay dividends and reward our shareholders also. If we then have a look at how the different segments will support us in reaching these group targets; first of all, starting with the residential businesses. Our residential businesses are segments that are driving profits and deploying capital efficiently. And they actually also possess a strong growth potential both in Finland, as the market recovers, but already now in the cities in CEE countries where we operate already. In both of the segments, we are targeting growth. And especially, in CEE countries, over 15% annual growth is the target; the adjusted EBIT perspective, in Finland over 10% and in CEE countries over 15%, which are actually levels that we have already reached in history; and by those profitability targets, combined with the more efficient use of capital, over 20% return on capital employed in Finland and 25%, respectively, in CEE countries. So that's about the residential businesses but then supported by the contracting segments. In contracting segments, we are generating solid profits going forward, also cash flow, with a negative capital employed. These segments are therefore funding the residential businesses in the profitable growth. In both of the contracting segments, we operate in healthy markets. And in both of them, we are targeting growth, over 2% in business -- in Building Construction and over 5% in Infrastructure. And in both of the segments, we are targeting above 6% EBIT margin. Actually, in Infrastructure, we are already quite near to the targeted profitability level. And we see that it is realistic to achieve a similar kind of profitability level also in Building Construction segment. So we have 4 distinctive segments and clear roles for each of them to support us to reach the group-level targets. If we then double click on EBIT development, it is clear that, the Residential Finland and the Building Construction segments, they are the segments having the most powerful levers for profit improvement going forward but supported by the profit improvement also in CEE countries and then infra, as already mentioned, already operating quite close to the targeted profitability level. Also it's good to note that, by completing the transformation program, some of the EBIT margin improvement is already in our pocket. In Residential Finland, it is crucial that we rightsize the operations to the market and then capture the volume growth as the market recovers; in Building Construction, improving the profitability, mainly on on-site project control and enhancing the internal efficiencies further. Then in the CEE countries, we are operating already on a quite a good profitability level, but still improving on that and capturing the volume growth there in the market is the key. And as mentioned, to maintain in infra segment the already good profitability level by managing the project portfolio and its mix. Then if we have a look at the balance sheet perspective of the financials. We are targeting to use capital a lot more efficiently, and that comes mainly to 2 -- from 2 sources. First of all, we are committed to release capital from our balance sheet from the noncore assets from -- by divesting the investment properties and ownerships in the associated companies. Those are kind of assets that we are not needing anymore to execute the new strategy, so we are committed to release the capital from those assets. What is even more important is the overall operations and the more efficient use of capital in them. And of course, it's obvious that we are targeting to lower the inventory level of completed apartments but, on top of that, also increase significantly the plot conversion, using also project financing models and reducing the net working capital, so overall, our businesses will be needing less capital going forward. Then if we have a look at the same thing from the net debt-to-equity ratio point of view. So also here the proceeds from the capital release mentioned already will be used to deleverage the company, for sure, but also driving the profitability and improved operational cash flow from the segments will support us to deleverage the company but also rewarding our shareholders. And by these, we are then reaching the financial framework to operate within 30% to 70% net debt-to-equity. If we then have a look at the -- a bit of the execution of the strategy and actually the phasing of the execution. We are executing the strategy in 2 phases, having a bit of different priorities phase by phase. Starting with the first phase, it's still continuing on the reinforcing the core of the company. That means that we are returning, first of all, on the growth track, but also we are reinforcing our financial stability, as I already mentioned, committed to continue on the capital release measures and, by those measures also, ability to pay out dividends. In the second phase of the strategy execution, where we actually are already in the infra segment and the CEE residential business, we want to accelerate the growth. We want to accelerate the growth already also in the residential Finnish business and Building Construction segment, as we have completed the turnaround and the market supports the growth, but also we are targeting to operate with clearly less capital going forward in each of the segments, supporting them to deleverage the company further and then paying out dividends to our shareholders. To recap the financial part of the presentation. YIT as an investment, through the execution of the new strategy, is financially resilient. We have already track record in executing the transformation program and we have the balance sheet to support the profitable growth going forward. Our business portfolio is synergistic by geographical diversification but also being present in different construction sectors. And our contracting segments are generating cash flows without tying any capital to support then funding of the residential segments going forward. And that's the third point: We have quite a big improvement potential in the residential business both in Finland and CEE countries, mainly in Finland as the market recovers but also now -- already now continue the growth, the profitable growth, in the CEE countries already in a healthy market situation. So all in all, we are targeting to grow without tying more capital, deleveraging the company and rewarding our shareholders by paying dividends of more than 50% of the net profit. That covers my part of the presentation, so I guess it's now time for the new Q&A session.

That's correct. Thank you both, Heikki and Tuomas. It is indeed time for the first Q&A session. We will take questions both from the audience and also from the webcast. Please raise your hand if you have a question, and you will be delivered the microphone. Before the question, please say your name and organization.

Anssi Raussi from SEB. You mentioned that the first step to strengthen your balance sheet is to release capital. Could you maybe give us some timetable and what kind of assets you're looking to divest first?

Yes. Thank you, Anssi, for the question. Hopefully, you can hear my voice. In the first part of -- or in the execution of the strategy -- so we are targeting to release that capital from -- mainly from the investments that are on our balance sheet, [ EUR 270 million ] altogether, including the Mall of Tripla; and then our ownerships in the associated companies, as mentioned. And that's -- those are the kind of assets that are not crucial or needed for the strategy execution anymore. The timetable or schedule for divesting or selling specific assets: So it, of course, needs a buyer and, let's say, optimal, optimum timing; and we are looking into that. And now as we have secured the financing of the company, we are kind of in the position where we can optimize the timing of certain sales of the assets. Yes?

If I add there. So of course, in addition, if you look the kind of the short 1-, 2-year period there. So today, we carry -- based on the third quarter report, we carry some EUR 400 million on the finished apartments; as well as, as we have said -- so the sales space -- with the sales space. So that part is also going to be sizably smaller during that period of time.

And the second one is about your JVs. And this is, of course, an essential part of your strategy going forward, but what kind of structures you are using. Is it so that it's typically 50% of the invested capital is coming from you and also you're entitled to 50% of the profits? Or what kind of structures you are using here.

Yes. Can -- I can take this one. Yes, you're right. So we are using operationally joint venture structures, mainly in the CEE countries. And that supports us really, as mentioned before, to accelerate on growth without tying too much capital in the larger-area projects. Typically we have a structure where we have 50-50 ownerships. There are different as well, but that's a typical one. And then by that, we are -- or recognizing half of the profits from the JV in our P&L.

Olli Koponen from Inderes. I have a few questions. And first one is on the return on capital employed target you have now. It is good to know that you have that target now, but YIT hasn't reached that kind of a level since like forever. And I was just wondering. What is the kind of one key development that you have to make to make it possible in the near future?

Yes. I'll start. And maybe, Tuomas, you continue with more details, but Olli, you're right there. And there are 2 elements. We need to simply reduce the amount of the capital the business employs and improve the profitability that the business is capable to turn. And those are the kind of -- it's a simple answer to your question, but if we looked at -- we have had areas in the segments that have been quite close to and -- or already achieving even these targets that we announced today in terms of profitability, but on those days, we haven't reached the return on capital efficiency, so there is more focus then on the how do we use effectively the capital. And then there is the whole kind of shift on the business logic when it comes to our Building Construction business that is carrying today a substantial amount of capital, whereas we communicated that in the future we would like -- or we are targeting to operate with a negative capital employed, which is then contributing to this overall target as well.

No, I think you covered it well. Thanks.

Yes.

And to continue on the financial targets, on the margin side, in Housing, 10% and 15% EBIT levels; and in constructing -- contracting segments, 6%, over. And I was just wondering here. You have reached those levels in Housing in history, but that has been like more like a peak level for you. And I was just wondering. Are these targets like a peak level for you, or are these kind of sustainable over-the-cycle numbers?

Yes. So if I think the -- if we go back to history and what we have done on top of that level. So we have been taking out a lot of costs, what I discussed about the fixed costs that we have been carrying over those years. EUR 40 million out of '22 figures is more than a 1% profitability across the -- all the operations. Then additionally, when -- what we have been communicating is that how are we capable to shorten our lead times, but then thirdly, I would say that there is also costs that are coming from your balance sheet. So you tend to actually carry not only the capital but cost associated to that balance sheet that is then coming through your P&L. So those are the kind of ingredients. Is it that level? That's the target level that we are putting to our segments, and we feel that, that is realistic.

Emil Immonen from Carnegie. Continuing on the joint ventures, what is your long-term thinking with joint ventures in CEE? Do you look to kind -- maybe divest your ownership in those? Or how are you thinking about them overall in the longer term?

I can start. And then you can then continue, Heikki, if you will. What we see especially now in this kind of a situation: So we see the joint venture structures for us very good way forward since we can kind of maintain or keep up with the good volumes without tying too much capital into the operations. And in this way or by using the joint ventures, we are able to do that. Going forward in the longer term, we are, of course, evaluating our options. I would say that the joint ventures are feasible in some of the cases where we have very large-area projects would -- which would tie a lot of capital for longer time periods. So in those kind of cases, in the long term also, the JVs might be a feasible solution, but we are looking other options as well.

If we think about your return on capital employed targets, how should we think about that target in relation to then the capital tied within the joint ventures? Do you have a separate target maybe there which we don't see? Or how do you think about that?

Maybe to kind of -- yes. We target -- of course, the IRR is one of the key metrics when we then internally guide that, but it's not something that would kind of put -- we -- something that we would lift up on the overall group level. And like Tuomas mentioned there: So it's one tool in the toolbox. We are very pleased to have that tool. We have great partnerships. Especially, we've just announced with RSJ the most [ recent entering to the ] Brno, but it is tool available for us, which we are grateful. And we need to see the -- what are the tools we are using going forward. It doesn't impact then group level that what we are targeting on our return on capital employed wouldn't change that.

And maybe one final question. How should investors maybe think about the risks associated with joint ventures? Because it's something we don't have very good visibility maybe in, and they might run into trouble. How do you see that?

Yes. We are disclosing our commitments as a part of our reporting, how much we have there -- and that we have been transparent with our financial reporting.

Yes. And just to continue on that. So it's actually using the JV models is actually kind of a managing risk as well, risk associated with the capital employed. With a large amount of capital employed from that perspective, it's actually risk management also to use these kind of structures.

Maybe, if we take one question from the webcast in this point. This is regarding the Finnish residential. "How is your land bank sized versus the normalized 16,000 housing starts market?"

So I think the -- firstly, we are -- our land bank is very strong and is located in the growth cities. We will actually talk much more about that on the -- Antti's presentation, so why don't we actually return back to this question on the second Q&A a bit more after we have had the Residential Finland-specific presentation? If that's okay.

Sounds good.

Svante Krokfors from Nordea. I have 2 questions; first one, relating to your EBIT margin targets for the Housing -- or sorry, Residential Finland and CEE, 2 separate units. What should we assume about the self-developed part? And how much about contracting part in -- as a normal level when looking at that going forward?

So that, if you compare our different target settings for different parts, in Finland, we do also contracting as well as products for investors which are not part of our portfolio -- business kind of product portfolio outside of Finland. And I think that is reflecting blended target setting, why there is difference between these 2 units. It varies, of course, time to time and over the different cycles, that what is the average product mix under the production, but that is the overall target for the Finland that -- what we have said.

And the second question is regarding your -- if you compare the group-level EBIT target of more than 7% and compare it to 6% for the contracting and 10% to 15% for Housing. It sounds, appears to be a bit low, the 7%. Your overall costs are not that big, so could you elaborate a bit on that?

I can take this one. And as mentioned, we had a thorough process of setting the targets segment by segment. And we think that the segment targets are realistic. And also we built from ground, up, the group-level targets, which we also see realistic. As we have mentioned -- so it's the targets are above 7% and above 15% on a group level, but we've undertake a prudent approach on group level. And rather over-deliver and under-promise is the way we want to do it.

Joona Harjama from OP. I'm coming back to the JVs. And since -- it seems that role of JVs is increasing, so naturally it affects positively on your profit side, but on the other hand, the visibility to the debt side is quite restricted, so are you planning to somehow increase the visibility to the debt side in the JVs? Or what's your view on that?

Regarding the financial reporting -- thanks for the question, Joona. And regarding the financial reporting. So we have been during the last year actually increasing the transparency and giving a bit of a more color and details on the numbers as well. Regarding the JVs, they are -- you're right that they are -- or their role is growing. We are prudently disclosing the deals that we are doing. And then kind of, JV by JV, we won't be disclosing the exact kind of financing structure behind them, but what -- we can say that we want to openly kind of describe the JVs' role going forward because we see it's a viable structure for us to maintain good profits and volumes without tying too much capital.

Yes, one question from the webcast. Back in June 2023, EUR 400 million capital release potential was announced. How much of it hasn't been released yet? Is today's discussion around releasing noncore capital overlapping with what was announced June last year? Or is it completely separate selection of noncore capital?

Yes, it's a good question, and I can take this one. Yes, we announced the potential of EUR 400 million last year. We have executed, of that, EUR 140 million, so far. And the same amount is included in our numbers in the presentation, what we kind of state as potential for capital release. So this is not on top of the EUR 400 million.

Yes.

I have no more questions from the...

One from...

Good. Thank...

[indiscernible] [ Nordea ]. You mentioned that you have already achieved over EUR 40 million of fixed cost reductions, but you still see some more upside there. Can you specify, how much upside do you still see? And from where would it come from?

Yes, we are not putting a specific number there. We have now -- on Q3, we reported EUR 41 million, but there are still some things ongoing; and that kind of the sources, what we have been touching there, is our use of premises, for example, how much space we are needing. We have been -- quite aggressively renewed our IT landscape by simplifying the overall picture what we are having, introducing new tools. There is still some work to be done in order to phase out all the old tools such a way that we don't only get kind of net recurring cheaper costs but also a little bit improved tools for the -- supporting the productivity and simplifying the work on site. I mentioned there that we will continue our prudent management of the fixed costs. And what does it mean for us is that we believe that the level we have achieved is very much sustainable level even though we are expecting that the company is growing on the coming years.

And then a follow-up question. You have quite ambitious growth target for the Residential CEE, like, 15% CAGRs, but how does it compare to the overall market growth in that area?

So we are -- on those cities, we are growing a bit faster than market. We have been growing about 7% rate over the past years. Even through this cycle, that has also impacted our residential operations in the CEE countries, so there is a proof point there, but part of that growth is also as we have opened new cities. We just announced Brno. Last December, we started in Kraków. Now we have there already 2 projects ongoing. Poland is a country of 40 million people. So there is different type of a market. We -- I think we are, in Poland -- Antti, correct me if I'm wrong. I think we are 1% or so from the market, so we are not yet kind of a significant market player in all places even though we are the #1 in -- for example, in Bratislava, but there is opportunity and space for our products. And we will discuss also more about that on the afternoon.

Yes, Anssi Raussi from SEB again. One more from me, and it's about your dividend target. And you mentioned some conditions there that -- when you can pay dividend, but when do you think that you don't have these restrictions anymore to pay dividend?

Yes...

Yes, thank you, Anssi. Regarding the dividend. So as we mentioned, we are -- in the first phase of the strategy, we are really focusing on stabilizing the financial situation further, improving actually the financial performance. That is improving the profitability but also deleveraging the company and we are focused on that. And by that work, we are then fulfilling the conditions in our financial contracts. We are not here taking any kind of a view on the timing of the dividends. That's then based on the Board of Directors' review based on the financial year and their kind of a proposal to the Annual General Meeting then, so not taking a kind of a specific time point here.

Olli Koponen from Inderes. Just one question from me also. You don't have any kind of cash flow targets mentioned in your kind of financial targets. And I think that is kind of a key part of your kind of development going forward. Do you kind of have any kind of ambitious levels there that you might kind of give us light on, maybe past this period when you are done selling the assets you need to sell?

If I -- where the cash flow for us is important for, of course, is to invest in the self-developed business. And majority of that cash flow, we will need to invest to the plots as we are starting the project. Antti will share a bit light on that, but if we look next 5-year forward, we have majority of the plots under our ownership today. So that's one element. We do need some when we look about our growth rates in CEE, but overall that is kind of -- which is one big item that you need to invest cash. Tuomas talked about the nonoperative capital. Then there is another source of cash streams, which is the currently owned apartments on our balance sheet. Some of that, we have loans which is connected to the housing company loans; some of that probably reinvested back to the business. And so that's more like operative decisions, but on that note as well, we aim to operate with a lower capital employed on this -- both of the residential segments going forward. We do not have a specific cash flow metric there, but maybe it gives a bit of flavor that -- how do we see and what do we think about that specific metric for the strategy period.

Any more questions from the audience? As it seems there are no more questions, let's take a break now and enjoy some coffee and desserts. And we'll start the next presentation at 2:30. Thank you.

Thank you.

Thank you. [Break]

Okay, welcome back, everyone. Next, we will hear about the new residential strategy, followed by Building Construction and Infrastructure. But no further ado, the stage is your, Antti.

Good afternoon on my behalf. And welcome to residential business world. So my name is Antti Inkilä. I'm head of residential construction. My background is civil engineering from Aalto University. I have worked in YIT almost 30 years already, in different positions, mainly in residential business; and last 10 years, as Head of Housing. During my 30 years in residential business, there have been several ups and downs in the market, so cyclicality is part of our business. At the moment, we have 2 different types of market: CEE, which has a strong potential to growth and great profitability; and in -- and Finland, where we are definitely exposed to market cycle. I will talk first through our 2 markets to show the situation and our position where we are right now and how we are going to build more resilience to cyclicality. I will then work through how we will reach our targets across 2 markets, explaining our priorities and our action programs. I'll also talk about the growth we plan and prepare for. I will start with Finland, continue with CEE countries and sum up to our common strategic strengths. So let's start with Finland. As Heikki already mentioned, we have had quite a big market downturn in residential business. And the duration of downturn has been exceptionally long, but as all the statistics about population growth in major cities indicates, there will be an increase in demand for new apartments in the future. We are strongly working on developing our operational [ efficient ] and to enhance customer experience. Question mark is still when the recovery will begin, but when it begin, we are ready to deliver and increase our market share. Let's look at the macro picture. Even the demand in last few years has been modest, the urbanization will continue to be the key driver for growth. More than 350,000 people will move to large cities and surrounding areas during the next 15 years, creating stable demand for new apartments. Our land bank is focused to cities with strongest growth. Looking at what happened in the past few years, let me put this into some numbers. The market change in Finland happened so fast that, like other -- the rest of the market, we were also affected heavily. Going forward, though, our competitive strengths will show through once more. We are the largest player with the strongest plot reserve in key cities, enabling future growth. In the past, we have attained strong EBIT level and return on capital employed. We have still those needed capabilities and a sharper axe in order to get back to those past profitability levels, but now let's then see: What are our future financial targets? So we have 3 financial targets going forward. First, we will increase our market share. We target over 10% EBIT level, and we target over 20% return on capital employed. Now let me show you in more detail how we are going to reach those targets, starting with the increase in market share. We have 3 strong enablers. Due to the strong portfolio, we have an advantage in the market with around 15,000 apartments ready to be built in growing cities. We will continue to win with the best customer experience. Our quality level is high and we are known and trusted for that. We will develop our living concepts for different segments with customer insights and inclusive home ownership models. Let's take a look how we are going to improve our profitability. In the past, we have been able to deliver about 9% EBIT level. And I'm confident that we are going to do the same in the future, but first, we have to ensure our operations are matched to market demand level. We will reduce running costs connected to oversized balance sheet but be ready, accelerate operations according to market development. Time is money. We have already reduced lead times with systematic [ sparing ] in scheduling and [ tuck timing ] in each project. We will continue to decrease lead times during this strategy period. With market and customer data, we know what customers want and will increasingly use standardized product elements to optimize our offering to meet customer needs. Last but not least are our brand and especially our YIT professionals. We have a strong heritage with robust processes and deep knowledge across the organization. We are committed to delivering quality and compelling customer experience. This gives us pricing power and also decrease coming warranty costs. Now let's take a look how we will improve return on capital employed. Like I said earlier, we aim to increase return on capital employed to over 20%. And this is our most important financial KPI in the future. First, we will release capital from unsold completed apartments and plots with long development period. We will continue to reduce lead time, leverage partnerships and take an innovative approach to plot investments. Finland's residential construction remains a vital part of our business and our future. We are ready for the market as it grows once more. Now I will talk you through Residential CEE. The history of CEE operations began 1998 when we bought Kausta company from Lithuania. Most recently, we expanded to Poland, 2015. In between, Estonia, Latvia, Czechia and Slovakia also joined our team. Today, we are leading developer in these growing cities. There are few examples of ongoing project what we have. In Sweden, we have about 1,000 apartments and 2 office buildings ongoing. In Kaunas, just beside the river, we have a area with 700 apartments. And in Poland, in Gdansk, we have Zurawie area, where Rainer Mahlamäki has made -- designing about 400 apartments, so the total volume of this project is more than EUR 900 million. Let's take a look our recent financial performance in CEE. The market situation in CEE has not so -- has not been so bumpy than in Finland lately. Of course, the Ukrainian war had a negative impact, but the downturn was shorter and the recovery is already ongoing. Even with these uncertainties, we have maintained volumes and strong profitability. Our plot reserve positions us well to capture growth in the future. In CEE, we have a focused approach operating in just 1 to 3 cities per country. The potential in these cities is remarkable with a relevant yearly market of 60,000 apartments or EUR 11 billion yearly. Although our growth record is solid and we have a great brand recognition, our market share remains relatively small, so we have significant headroom to grow as the citizens in these locations aspire for better living and they also have money to pay for that. Urbanization and income levels are key drivers for residential demand. The urban population share is high and growing, especially in capital cities where income levels are higher. The quality level of those old apartments is often low. And rising purchasing power creates demand for new quality apartments. We are in the right cities and have the right brand profile with a great [ portfolio ], providing a solid foundation for sustained growth across the countries. Indeed, looking ahead, we are well positioned to outpace market growth, thanks to our strong brand reputation and skillful people for build quality and customer service. Let's then look what kind of financial target these opportunities enables. In CEE, we target growth that exceed 15% per annum, with strong profitability at over 15% EBIT. Our return on capital employed target is above 25%, results from profitable growth and capital efficiency. Let's review the plan on how we are going to make it. Our growth strategy focus on 2 main priorities: expanding with our current cities and entering new major cities in the countries where we already operate. In existing cities, our strong brand and local knowledge are key drivers for increasing market share. Combined with our extensive plot reserve, we are well positioned to grow. Additionally, we plan to selectively expand into fast-growing cities within our current countries. This approach allows us to leverage our local teams and replicate proven and successful concepts. Our target in profitability is to maintain current levels. Key priorities are cost efficiency, data-driven pricing and systematic development process. They are the same than in Finland. We will carry across other tools and learnings from Finland, as I will explain. Reaching over 25% return on capital employed target requires us to release capital from unsold completed apartments and use capital-efficient partnership and financial models. At the moment, we already have agreements to build more than 2,000 apartments using these types of models. Before I continue to summary of both Residential Finland and CEE, I wanted to highlight our strong position in the countries where we operate. For instance, in Latvia, this year, we have been winner of "the most sustainable project." In Lithuania, we are #1 construction and development company. And in Slovakia, we have been developer #1 already 8 years in a row, so we have several successes in each of our operating countries, showing the momentum we have for the future. What makes YIT strong in residential? First of all, we put our customers first. Secondly, we have and will continue to increase productivity via improved lead times and cost-efficient actions. And thirdly, we are ready to capture growth with our industry-leading and continuously developing housing process and plots also in attractive locations. So let's dive down into each of these topics. The customers are at the core of everything what we do, and that is reflected in our high NPS figures across markets. We use data-driven insights to improve touch point with the customer and also scan future demand. Our high-quality delivery secure controlled handovers. We develop compelling and functional homes for our customers. Our energy-efficient solutions support sustainable and affordable living. And our innovative financing models extend the benefits of home ownership to a larger number of consumers even during uncertain times. We work tirelessly to optimize our production process. We have already improved average lead time by 15% since '22. We aim to further improve this by 20% during the strategy period, so 5% in a year. And this is enabled by, number one, segment-level support to achieve lead time targets. In practice, it means that, in preplanning phase, every project will be viewed and consulted by our expert to secure efficient production. Number two, preplanning and prefabricate products: Before the project starts, we have a mandatory preplanning phase. Internally we call it, call them time window. So it means that, thorough production planning, logistics, scheduling, quality plan, safety plan, we are going to do it. So well planned is how it's done. Especially in CEE, we have lots of opportunities to use Finnish know-how to increase use of prefabs and at the same time cut down construction time. That work is already ongoing and it will continue. Number three, more efficient logistics and supply chain management. With our category procurement model, we are able to benefit our partners' expertise already in design phase to find the best solutions and also use benefits of scale in procurement. Our current plot portfolio enables us to build 35 apartments across markets, with significant share in high-growth locations. We are ready to capture growth with our industry-leading development processes and with our plots in attractive locations. Now that we can begin to see conditions for recovery in our home market as well as continuing to drive efficiencies and best practices, we are ready for the upturn when it really comes. In CEE, leveraging our brand and importing our best practices from Finland will expand margins in these strong growth cities. So to summarize. In our home market, our focus, on cities where growth will come. And we -- work we have done during the tough years will pay off. In CEE, we will continue to grow profitable, extending with new cities with [ some ] dynamics. We are now more resilient for the future and set for the growth. When the storm has passed, I'm looking forward to deliver for our customers and our investors. So thank you very much for your attention. And now I'd like to ask my colleague Peter Forssell to give you a presentation about Building Construction. So Peter, please.

Thank you, Antti. And good afternoon. Let me first introduce myself. My name is Peter Forssell, and I'm leading YIT Building Construction segment. I started in YIT 30 years ago as a summer trainee. I have now 26 years experience working abroad in our international operations. In that time, I had responsibilities mainly in contracting and real estate development business. I have worked all the way from construction [ bit ], across a range of management roles. And I have experienced all aspects of the business like customer interaction, business changes, new business start-ups, et cetera. I have been in this role 1 year, and I'm very excited what we can do going forward. Over the next few minutes, I'm going to set out our strategy for the Building Construction segment. There are 3 things I will highlight: firstly, improvements from procurement, project management and internal efficiency; secondly, profitable growth opportunities backed by megatrends and the expanded market presence in key YIT countries; and thirdly, creating value together with our customers from project development to life cycle services. Then let's move to fascinating world of building constructs. Our customers have recognized our expertise to deliver complex projects over many business areas. Let me give you 3 examples. Kamppi Health and Well-being Centre here in Helsinki city center is a great example of project where we were selected due to the highest quality even if we were not the cheapest option. Next one is Nokia campus in Oulu further north in Finland, where we were selected due to our extensive offering, including delivery of state-of-art building systems. On the right, Freda furniture factory Phases 1 to 4 in Kaunas, Lithuania, [ that present ] project where customer has selected us, time after time, due to the trust to our capabilities. I believe this reputation sets us up well for future. We have been able to maintain a stable top line, with recent challenges, and have great growth potential. Our recent profitability has not met our expectations, and therefore, we have done our homework. We have developed our project management capabilities and principles, investing for additional management. And we have launched our new project situation platform. The whole team is now working to our agreed principles. Our capital -- operating capital employed is already on the right track, and we have assets on our balance sheet to be released. So we have stable track record of revenues, with real opportunities for further improvements in profitability. Let me now show you how we expect to benefit from market changes and the resulting tailwinds. There are great opportunities driven by megatrends. Onshoring of critical [ supplies ] and green transition are supporting industrial investments in our operating countries. The growth of AI demands huge amount of new computing capacity. And just in Finland, data center growth is expected to be 30% annually during our strategy period. Due to geopolitical situation, defense sector has launched several projects in Finland and Baltics; and further growth there is expected. Same time, we see a rather stable outlook on our core sectors, where the demand for smart buildings allows us to help our customers fully realize the benefits like better energy efficiency of advanced smart building solutions. We understand the opportunities that these megatrends will bring and we are well placed to take full advantage. Our strategy creates resilience through operating in multiple regions and subsegments. We're already well positioned in key YIT countries and able to capture opportunities further. Also, we're building up our capabilities to serve international clients on multiple regions. Currently, 80% of our operations are in Finland, with 20% in Baltics and CEE. Our goal is to increase the share of international revenues. This resilience through diverse regions and markets gives us confidence for our future. So let me show you how our strategic plans translates to our financial targets. As you heard from Heikki, our strategy has 3 main areas: firstly, to deliver industry-leading productivity and financial performance; secondly, targeted growth and resilience; and thirdly, all driven by an elevated customer and employee experience. This comes together in our financial targets, which I'll cover in more detail in the next 3 slides. We've positioned ourselves for growth. We're capturing growth on expanding segments like industrial, data center and defense, all supported by megatrends. New energy efficience regulations and sustainability demands drive increase in renovation market, where we can utilize our expertise, both on traditional reconstruction and new energy-efficient building technology solutions. And on top of our existing Baltics and CEE presence and to grow our international revenue by entering cities where YIT already has residential presence. We're clearly improving our profitability. Systematic project management, which brings more discipline is a key change that result in higher final project margins and productivity. We've capabilities to serve our customers better throughout the value chain on investment projects. Our customers will benefit from our capabilities on land plot screening, project development and design management, all carried out from permitting to construction. Increasing levels of life cycle management has the potential to increase our recurring revenues. We'll continue to execute our transformation program initiatives to reduce costs by focusing our internal efficiency and maximizing benefits of scale through category-based procurement. We'll work with negative capital employed. First and foremost, we'll sell nonoperating assets in our balance sheet, especially Tripla and other properties. And on every project, we'll use optimal methods to ensure capital efficiency, whether it is payment terms, back-to-back agreements or it can be JV models, of which we've a very good examples, especially in Baltics and CEE. So we've set realistic financial targets with ambition to capture even more. As we conclude, I want to highlight the core strengths. Productivity initiatives, plan for profitable growth and compelling value proposition that make YIT an attractive investment. Firstly, we're focused on boosting productivity by advancing our transformation priorities, category-based procurement, strengthening project management and increasing internal efficiencies. Additionally, we're positioned in high potential markets, where megatrends drive demand and our expanding presence across regions and subsegments encases our resilience and reach. Finally, our unit value proposition, spanning project development, construction and life cycle services sets us apart, enabling us to deliver win-win solutions and create value with our customers. All in all, this gives us lots of potential we can harness in the future. Thank you. Now, I'll ask Aleksi to talk about Infra segment future.

Thank you, Peter. and welcome to my section of YIT Capital Markets Day 2024. A brief introduction of myself. My name is Aleksi Laine, and I work as a Head of Segment in Infrastructure. During my time in -- I've worked with the company for 17 years, serving our customers and stakeholders. During my time in YIT, I've basically worked in all fields of Infra. I've been responsible for our industrial projects, worked as a Head of Division in our Foundation Engineering and Tunneling as well as in our Traffic Infrastructure. So I've a really long experience, and I'm passionate to take this business forward with my YIT colleagues. I know we've an exciting future ahead and that our strategy is positioning us well to take advantages of all the opportunities that we can see in our various markets. Today, we'll discuss how YIT Infra will create value in our mix of complex infrastructure projects. I'm going to show you 3 things in particular. Firstly, how we're already transforming YIT with our strong order book and pipeline of projects and with our stable market, providing us future resilience. Secondly, I'm going to show you what we're specifically targeting in our strategy. And thirdly, how we're set to deliver for our customers and stakeholders. So let me start by setting out the key elements of our YIT Infrastructure business. We're the reliable provider of complex infrastructure projects with wide range of capabilities and expertise. Here are just a few examples what YIT Infra does. From the perspective of urban development, we've delivered with an alliance model projects such as Tampere Tramway, Raide-Jokeri and Crown bridges alliance. We're thrilled that our pipeline includes also the extension of Tampere Tramway to Pirkkala and Linnainmaa as well as urban development projects in Helsinki through program alliance, which we were able to announce today. From the industry perspective, our construction experts have served the demands of industrial clients for decades. Whether if it's the biggest underground wastewater treatment plant, such as Blominmäki, Espoo or it's the highest tallest tower -- cable tower Prysmian. We're the ones that deliver. In addition, we're the second biggest maintainer of Finnish roads with our contracts covering all parts of Finland. You can see that our current pipeline capabilities and balanced portfolio gives us a strong foundation to develop our business going forward. Before moving on, I'd like to briefly explain what we mean when we discuss about complexity and capabilities. Antti presented a great reward gallery of residential CEE. I thought it would be appropriate to explain through infrastructure gallery of our own, what complexity and capability means from our perspective. Here are a few examples. Raide-Jokeri, which we built with our partners and serves the transportation needs for 50,000 peoples daily, was selected as the best project in Finland in 2023 and received multiple other recognitions. Our Blominmäki project, where we excavated 1 million cubic meters of rock and constructed a facility that serves the needs of 400,000 residents in the capital region of Helsinki was selected as the best project in Finland in 2022. Our Crown bridge project, which is under construction, has already received recognition for its technical efforts through BIM modeling as well as its excellence in temporary traffic arrangements in extremely difficult conditions. These are just a few examples what we mean when we discuss about complexity and capability. Now let me look at -- now let's take a look at our financial performance. We've gone through a significant transformation since 2021 and are in good position moving forward. We've been able to improve our profitability and at the same time, release significant amount of capital. The profitability of our continuing operations has been solid. With the decisions we've made, including the decision to eventually withdraw from the Swedish market, gives us the opportunity to further focus developing our business in our key business areas. Our business model allows us to work with positive net working capital and negative capital employed. We've the strategy to deliver industry-leading financial performance and at the same time, resilience. Now let's look at our view on the market development. Our wide range of capabilities are tailor-made for creating value in a number of attractive customer segments. As we assess the outlook of our key segments in the strategy period, we see a solid market driven by both public and private investments. From Infra perspective, this means that, for example, sustainable moving of people and goods as well as urbanization support the investments in rail and tramway infrastructure. Our capabilities are strong and continuously improving. Energy transformation, demand for renewable energy and energy infrastructure is clearly underway and brings us more and more opportunities. In addition, the maintenance of our infrastructure is essential and that provides us with an attractive stable revenue streams. So our wide range of Infra capabilities, combined with the strong position of YIT, will enable us to serve diverse customer needs and secure strong revenue base. In Infra, our addressable market is stable enough to provide us resilience from construction cycles. Public market in Infra has generally been stable and due to the long life span of Infra project, it gives us a good forward-looking visibility, which enables us to plan our operations well ahead. The private market is very active. And while historically, it's been more cyclical, the pure scale of the market and its opportunities allows us to utilize our competencies with our other segments. So Infra market is stable and has great opportunities and it's more about what we do as YIT to reach our targets. It's up to us to deliver. Now moving forward to our financial targets. As I've shown you, the foundation in Infra is strong, and we're eager to further develop our business towards our financial targets. We've built our financial targets through 3 focus areas, which are delivering, industry-leading productivity and financial performance. Targeted growth with an emphasis on resilience and elevating customer and employee experience. I'm confident that with these focus areas, we'll deliver. Now please, let me show you in more details how in YIT Infra, we'll reach our targets. Our growth is supported by our existing strong order book and a solid pipeline of projects to build upon. In the public sector, our pipeline is giving us a strong backbone, and we're going to build up our portfolio by strengthening our capabilities for future rail projects. In addition, we aim to utilize the opportunities in defense that we can see in our market. In the private sector, we aim to double our revenues in energy and industrial construction, while maintaining our strong position in other sectors of our business. Our versatile expertise enable us to utilize the growth potential and transform our possibilities into concrete net sales. With our balanced portfolio and with the prudent risk management, we'll deliver profitable results and our ongoing transformation is supporting our targets. Our key focus areas for delivering profitability are optimizing our project portfolio risk/reward ratio within our client base and segment focus. We want to invest in our key capabilities to maintain industry-leading profitability levels. And we want to constantly develop our productivity and leverage the economics of scale, which will secure our competitive advantages. These focus areas will cement our profitability at an industry-leading levels. Our business has the ability to release capital and generate strong cash flow. In order to maintaining our target, our focus is in 3 focus areas: managing our portfolio from maturity and balance perspective, focusing on prudent project and risk management and leveraging the scale of economics within our supply chain. Our overall targets are clear. And as Infra, we've a strong foundation to build upon. Now please let me recap. In order to summarize what I've just presented, here are our key investment highlights. So we've made a significant turnaround and are in a good place to move to the next chapter of YIT Infra with a focus on best possible project portfolio. We've excellent capabilities that can create value to our customers and stakeholders. Our order book is strong and our pipeline is solid. Our market is stable and provides us resilience. With our business, we generate strong cash flow and are able to release capital. So we've all the elements in place. And what's most important, we've the great team of proud YIT builders passionate to deliver. Thank you. And now I think it's closing remarks from Heikki. So let me hand it over to you.

Yes. Thank you very much. I think I'll have a quite difficult task actually to conclude all of the data points that were presented here in just a few seconds, but let me try that. So what we started is to say that the storm is coming down, and we actually have been using that time to fix our platform and invest our capabilities so that we're in a much better position than we were going into this a few years ago. Tuomas then continued with his part sharing that we've a strong balance sheet. We've EUR 1.7 billion of assets. We've a capability and potential to release hundreds of millions of that to use those proceeds and be more capital efficient as we go to meet our financial targets. And we're capable to apply and take use new, more capital-efficient business models, how the capital is circulating through our businesses as we move forward. Then maybe the summary is that our 4 segments are in a different situation. I think that is fair to say. Residential Finland, the machine is up and running, yet we still need the market recovery in order to get that to the full speed. And we're in a great place when that happens. Our CEE Residential business is already on a great track, and we're targeting there a significant growth during our strategy period. Then Peter talked about Building Construction segment. It's actually -- when we look at it, it's a complete business model renewal, how we're planning to run that segment going forward. And that is something where we're focusing on the core, something that we're strong at, releasing the capital, putting the foundations in place and getting it to the contracting part as we want to focus on. And then on the Infra side, we've executed the turnaround still, like Aleksi highlighted, so there's still further potential. And that potential that has been now presented here clearly is that we identify the productivity is key for us. It is something that we've on our own hands, continuous basis to improve our performance. And actually, all of this we're doing together. We're doing that together with our customers, with our more than 4,000 YIT employees and together also as a management team. So maybe that is my summary for the day. And still -- once more, thank you for your attention so far. We've Q&A to go right, Essi.

Yes. Thank you, Heikki. So it's time for the final Q&A session.

Yes. Gentleman, please welcome also to the stage.

[Operator Instructions] Please go ahead.

Joona Harjama from OP. I'd like to ask regard -- about the housing and the lead times. So now you mentioned that you've achieved a 15% saving in the lead times. But how do you see going forward, when the volumes go up? And firstly, how do you see the availability of labor? What might be the effects when the volumes goes up and the market is better in the upcoming years? So how do you see that might affect the lead times and the target of the 20% improvement?

Yes. Thank you for the question. We've proceeded with the decreasing lead times with evolution. And like I said, that each project that we'll start, our YIT expert will go those plans through. And in that case, we make sure that our targets will meet also in the future. So 5% in a year is practically 2 weeks duration time every year. So it's doable. Then what comes to resources, yes, you're right. If the -- and when the market comes back, there may be a situation that we've scarcity of resources. And what we've done in order to make sure that we've enough people, even we've made some temporary layoffs, we've had trainings with those peoples. We every year have quite a lot of summer trainees and what is the most important thing is that our leadership and management skills are in the level that people are eager to come to work with us. So I agree that this is a very critical point of our future success that we're able to keep the best talent and also to keep the best talent -- new talent to our company. But we're really, really hard working on that. And in that sense, it will be difficult, but I'm sure that if anyone will be successful in that, we are.

Yes, I'm Ssirau from SEB. So if we look at the costs in the housing segment, how would you describe the development during the last couple of years, if we include plots, workforce, materials and if we try to compare like new project with the freshly acquired plots compared to something a couple of years ago?

So maybe I take this. Thank you for the question. Of course, there was a time in '21 when -- '22 when the cost inflation were very high. And now that has stabilized. We don't see big changes when it comes to plot prices. Maybe the level of new plot investment is quite low, but we don't see any signs that the plot level -- plot prices level has came down. Usually, it shows that they will just wait the better time if it seems that there isn't enough demand for those.

Okay. And if I continue on your land bank, what would be like the average age of average plot in your land bank if we try to think like in terms of euros?

Maybe I'll take that. I think we've discussed it before, it's difficult to assess. But if you look at our plot acquisitions over the past 2 years or even past 5 years or so in Finland, we haven't done a lot of new plot acquisitions during that period of time, if that gives you a bit on a flavor.

And if I may continue a bit on both of the questions. So regarding the plot portfolio and the capital time. So definitely, as mentioned, so we're targeting to increase a lot the capital turnover regarding the plot portfolio as well. So that's clear. Also regarding the construction costs kind of comparing to the past. So we see that altogether, taking all the elements into account, so we're able to construct with a significantly lower cost. So that's basically what we see. You commented on the plot prices and so on. But anyway, so that's in a big picture.

Olli Koponen from Inderes. And firstly, on the residential CEE growth, you said you're targeting 15% growth in a year, and I was just wondering from which country are you kind of seeing the growth in the near future? And is there kind of a difference between the prices in the countries and maybe the margin that you get from the countries?

Well, maybe I take this. As I told, the biggest market is in Poland. And in Warsaw only, there is more residential yearly production than in whole Finland. So that is the, let's say, main growth area. And also in other Central European countries, they are in -- maybe the main growth opportunities there. And another question was...

It's relating to prices and margins in the countries that you operate?

So we've a certain criteria when we're ready to invest in plots and new projects. And they -- at the moment, they don't differ from each others. But obvious is that when you've a growth market, then there is possibilities to get a better profitability.

Okay. And second question on the Construction segment. What kind of projects are you doing there now mainly? Is it only kind of contracting? Or is there going to be some kind of own developed projects going forward?

Yes. Majority at the moment is, of course, contracting, but together with the partners, we can also deliver like development projects.

And to follow up on that, do you kind of see that in a contracting business in kind of business premises, you can achieve a 6% EBIT margin that is kind of a high target, I think?

Yes. The productivity there is, let's say, main word what we need to increase in order to reach that.

Emil Immonen from Carnegie. I wanted to ask on the plots a little bit more. So you've a huge bank of them, and you can build a lot of apartments. But what would be approximately maybe a normal amount of inventory of plots you'd want to have? How many years forward should it be?

Thank you for the question. It's somehow also related to locations where we are. We know that in Helsinki Metropolitan area, the design process, and if we even have zoning process, it's longer than, for instance, in Joensuu. So let me say so that in some locations, we've to have about 3 years portfolio in order that our production will continue as smooth as possible. And in some areas, it's enough to have 1-year plot portfolio.

Maybe to build on what Antti mentioned there. So in some instances, we acquired the plot at the point in time when it starts to -- or it is the time to start the construction, if you think it from the kind of balance sheet perspective, tying up the capital. And in some cases, then we need to buy that for one another reason, 3 years ahead. So there is also -- what Antti was mentioning there on the kind of how do we apply the capital efficiency methodologies on our managing the plot portfolio. So there are also differences as well as there are differences between the plot sellers and how we're capable to secure that plot inventory and access to it in the different countries.

Do you mean by this? I think Antti mentioned innovative approaches to plot acquisitions.

I think that was the exact word that Antti used. So that is -- I think there's -- it's buying without cash. I think it's a saying that sometimes we've used internally, i.e., you make an agreement of purchasing when -- and we're disclosing those as a commitment, as you can see on our financial reports as well. And then we've also then also options like we had discussed to walk away from those with certain clauses. But that's the kind of approach we've been applying, and it gives us less of a kind of carrying the capital before the zoning plans and construction permits would be ready to start.

In the business premises or building construction now, you mentioned data centers as one potential growth area. And you said it would grow 30% in Finland. What do you base this number on?

Thanks. Good question. Actually, it is based from the international market research, where it was also mentioned specific numbers for Finland outlook. I don't recall at the moment the exact report.

But you don't have a pipeline of projects in that line. It's more an opportunity you see.

So we'll communicate them individually on the projects. This was more on what the market's full outlook is.

Great. And then one more question on infrastructure. Is there a reason why you want to do that only in Finland as opposed to the other business areas where you're active in CEE and Baltics?

Take this Aleksi.

Yes. Okay. Well, first off, actually, as you probably know, we've in our construction side, also operations concerning Infra, for example, in Lithuania. But only -- yes, but in the Baltics. But in infrastructure, as I was explaining, our main focus is now in Finland and we see that, that being as a good selective focused strategy for us.

Yes. And there's a kind of to help a colleague out, Infra is like it's always about the references and how established you're and you need to have the best talent on industry of that specific country. So kind of establishing that business organically is a bit of a different game there.

Okay. We've a few questions from the webcast. Maybe if we start with the Contracting segments. The new margin targets in Contracting segments are well above the levels seen in peers and in YIT's own history too, and also above peers EBIT margin targets within contracting. How do you expect to outperform your peers by such a high margin, given the competitive landscape?

Can I -- since it's for the both segments, can I actually a bit take on that. It depends on the comparison. If you actually look on the European league, as we're benchmarking ourselves, it's not exceptionally different from the best-in-class industry players, what we're seeing. It's -- and that's kind of our benchmark, where we're benchmarking ourselves. Then the Peter answered already partially that it's all about productivity. And the productivity is then measured and taken out as a faster lead times. Overall we're delivering below the budget, and we can see that we'll make a customer happy and smile on that face. And then when it comes to the rest, there is no single silver bullet. You need to perform on all your levers. You need to have efficient effective cost structure. You need to have a prudent project management. You need to have all small things in place, which comes to the day-to-day management. So -- and that gives you the competitiveness. If you look at our Infra already performing on a 5% level, and we've -- when we look at our overall Contracting portfolio, so we're confident that, that is the level that we've said that we're going to reach.

Great. Thank you. Maybe if we continue then with the Contracting segments, how is the current order backlog supporting the EBIT margin targets in Contracting segments? Are the new orders at the level of that is supporting these targets? Are the alliance contracts at budgeted margins supporting the EBIT margin targets?

I think it's -- overall answer is that we've a strong and healthy order book.

Great. Thank you.

Yes, one more from me. You mentioned this buying without cash method. And -- but you've these commitments. But if you start one of these projects, what is the timing of cash flows in these kind of projects regarding your plot acquisition, official acquisition?

I can take this one. Of course, it depends totally on the contract and different -- they vary between the commitments what we've. As we've mentioned already earlier, basically, all of the commitments are so that we can exit them if needed. And in each and every contract, we're optimizing the payment schedules. And that's part of where we can, of course, improve our net working capital efficiency. That's one of that -- one of them. And then in a big picture, kind of relating back to the earlier question also regarding the total plot portfolio, there is no urgent need for making any new investments now. And therefore, we're increasing heavily the turnover of the capital related to the plot portfolio. So it's both the size of the portfolio and then kind of the payment terms and timing of -- or schedule of those, so -- which will increase the capital efficiency.

Ari Jarvinen, [ MKNA ] Advisory. So only one question from me this time. There's been pretty big changes on the interest rate markets and the outlook has been going down in Europe, up in the U.S., which is quite exceptional as such. So if you'd describe the tone with your discussions with institutional investors before the summer and now related to maybe getting some deals done and yield expectations and so forth, how would you describe? Has there been any change? And could we expect some material kind of like deals because the real estate market has been frozen, but now the valuation must be moving with these changes in the rates? Anybody can answer?

Antti, do you want to first take the residential a bit from that?

Yes, I agree, Ari, what you said that the yield level must come down. There is raising discussion about that. And we're now living in very interesting time. So how much of interest rate is coming down before the year-end. And so -- let's say so that it seems promising. We're going to the right direction.

And if we describe the tone of voice, so maybe there was a time when you had that discussion by yourself and now you've a partner to discuss with and the tone of voice is more forward leaning and kind of we see that there is especially parts in Europe where the activity on the transaction market would be starting again to pick up, but it's of course, too early to conclude fully yet.

Okay. One more question we've at the webcast regarding housing. The housing EBIT margin recovery strategy seems to be very dependent on the market recovery. However, what direct measures that are under your control are you taking -- are taken in the strategy period?

So like I mentioned, we're improving our productivity. We're decreasing our lead times. We're focusing to offer desirable homes. We're using our data to forecast the needs of our customers and also what is the offering in certain markets. And of course, in addition to that, we're all trying training our people to be more, more professional and find more productive ways to build out projects.

And maybe to continue from the fixed cost perspective on top of that. So we've made a lot of difficult decisions, and we haven't had a work to provide to all of YIT colleagues. And so there were temporary layoffs that has been used to balance the workforce, but there are also other fixed costs by nature that are connected to the size of the balance sheet, what we're having today and those decisions and actions are, of course, fully executed all the time, and those are on our hands while the market recovery is something that we've a less of impact.

Do we've more questions from the audience? No. Okay. It seems that we're done with the Q&A and it's time to thank you all for your participation. We wish you all a great rest of the day. Thank you.

Thank you very much.

Thank you.