YIT Q1 2025 presentation: Operating profit turns positive as CEE growth story continues

Introduction & Market Context

Finnish construction company YIT Oyj (HEL:YIT) reported a significant turnaround in its first quarter 2025 results, with adjusted operating profit improving across all business segments despite a slight decline in revenue. The company presented its interim report on April 29, 2025, highlighting progress in its transformation program and continued growth in Central Eastern Europe (CEE) markets.

YIT operates in a market environment that remains stable, with residential sales volumes in Finland expected to increase slightly during 2025. While the Finnish building construction market remains weak, the infrastructure market is stable, and the Baltic and CEE markets continue to show improvement.

Quarterly Performance Highlights

YIT reported an adjusted operating profit of EUR 8 million for Q1 2025, a substantial improvement from the EUR -14 million loss in the same period last year. This positive result came despite revenue declining to EUR 386 million from EUR 412 million in Q1 2024. The adjusted operating profit margin improved to 1.9%, compared to -3.4% in the comparison period.

As shown in the following financial performance breakdown, all segments contributed to the improved profitability:

The company’s return on capital employed (ROCE) showed positive momentum, increasing to 3.6% on a rolling 12-month basis, up from 1.8% in Q1 2024. This improvement was supported by both higher adjusted operating profit and enhanced capital efficiency across all business segments.

Segment Performance Analysis

Residential CEE: Growth Engine

The Residential CEE segment continued its strong performance, with revenue increasing to EUR 76 million from EUR 51 million in Q1 2024. Adjusted operating profit in this segment rose to EUR 5 million from EUR 2 million, resulting in an improved operating profit margin of 6.1% (compared to 4.2%).

The segment reported its highest apartment sales since Q4 2021, with 335 units sold in Q1 2025, compared to 237 in the same period last year. Several new projects were started during the first quarter, with 546 apartment starts, up from 478 in Q1 2024.

As illustrated in the following chart, the CEE segment has shown consistent growth:

Residential Finland: Signs of Recovery

The Residential Finland segment showed signs of recovery despite challenging market conditions. While revenue decreased to EUR 81 million from EUR 118 million in Q1 2024, the adjusted operating loss narrowed significantly to EUR -1 million from EUR -7 million. The adjusted operating profit margin improved to -1.4% from -5.6%.

The improvement was attributed to a more favorable sales mix and increased efficiency. The company has also made progress in reducing its inventory of unsold completed apartments, which remained at 682 units at the end of Q1 2025, down from 867 a year earlier.

The following chart shows the improvement in Residential Finland’s performance metrics:

A key challenge for the segment is the low number of apartment completions expected during 2025, which will limit its ability to generate profit. Only 74 apartments were completed in Q1, with no completions expected in Q2 or Q3, and approximately 200 units expected in Q4.

Infrastructure: Solid Performance

The Infrastructure segment delivered solid results, with revenue increasing to EUR 110 million from EUR 85 million in Q1 2024. Adjusted operating profit rose to EUR 3 million from EUR 1 million, with the margin improving to 2.6% from 0.7%.

The segment’s order book remained strong, corresponding to approximately 24 months of work. Public sector demand is expected to remain stable, with many investments currently in the design phase, including defense sector projects. Private sector demand is being driven by industrial construction and the transition to renewable energy.

Building Construction: Profitability Improvement

The Building Construction segment showed significant improvement in profitability, with an adjusted operating profit of EUR 2 million compared to a loss of EUR -11 million in Q1 2024. This improvement came despite revenue declining to EUR 125 million from EUR 169 million. The adjusted operating profit margin turned positive at 1.3%, compared to -6.5% in the comparison period.

It’s worth noting that the comparison period included a EUR -10 million change in the fair value of the segment’s equity investments, which affected the year-over-year comparison.

Financial Position and Outlook

YIT’s financial position showed improvement, with net interest-bearing debt decreasing to EUR 689 million from EUR 768 million in Q1 2024. The company also extended the maturity structure of its interest-bearing debt significantly, which further stabilizes its financial position.

Capital employed decreased to EUR 1,393 million from EUR 1,591 million in the comparison period, reflecting improved capital efficiency. However, the gearing ratio increased slightly to 91% from 89% in Q1 2024.

For the full year 2025, YIT provided the following guidance:

The company expects its group adjusted operating profit for continuing operations to be EUR 20-60 million in 2025, compared to EUR 32 million in 2024. This guidance reflects both the progress made in the company’s transformation program and the challenges posed by the low number of apartment completions expected in Finland during 2025.

Strategic Initiatives

YIT continues to execute its strategy focused on three key areas: delivering industry-leading productivity and financial performance, generating targeted growth and resilience, and elevating customer and employee experience.

The company highlighted its expansion towards wider coverage of the Czech Republic residential market as a key strategic initiative during Q1 2025. This aligns with its focus on growing operations in Residential CEE as a driver of profit growth.

As summarized in the following slide, YIT had a solid start to the year in line with its plans:

The company’s transformation program continues to support profitability improvement across all segments, with benefits expected to continue materializing throughout 2025. The maturity structure of interest-bearing debt has been significantly extended, further stabilizing YIT’s financial position and providing a foundation for future growth.

Full presentation:

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