YIT Q2 2025 slides: Raises guidance as contracting segments drive performance

Introduction & Market Context

Finnish construction company YIT Oyj (HEL:YIT) presented its Q2 2025 results on July 25, showing improved profitability despite revenue challenges. The company raised its full-year guidance on the back of stronger performance from its contracting segments, even as residential completions remain heavily weighted toward the fourth quarter.

YIT’s stock closed at €2.86 on July 24, near its 52-week high of €2.89, reflecting continued investor confidence following the positive momentum established in Q1 2025, when the company reported a significant turnaround in its financial performance.

Quarterly Performance Highlights

YIT reported Q2 2025 revenue of €412 million, down from €434 million in the comparable period, while adjusted operating profit improved to €10 million from €7 million, representing a margin increase to 2.4% from 1.6% a year earlier.

As shown in the following chart of YIT’s Group Financials, the company’s rolling 12-month revenue stands at €1,772 million with an adjusted operating profit margin of 3.2%, still below the company’s strategic target of at least 7%:

The quarterly performance breakdown reveals that Infrastructure and Building Construction segments were the primary profit drivers, while residential segments in both Finland and CEE faced challenges due to the absence of apartment completions during the quarter:

"Contracting Segments delivered, Residential CEE gearing up for 2026," noted the company in its presentation, highlighting that Infrastructure and Building Construction improved operative performance while the Finnish residential market is gradually turning with new project starts taking place.

Segment Performance Analysis

The Residential Finland segment showed signs of recovery with an adjusted operating profit of €2 million compared to a loss of €6 million in Q2 2024. This improvement came despite lower revenue of €77 million (vs. €99 million), attributed to enhanced operational efficiency and a favorable sales mix:

YIT continues to manage its inventory of unsold completed apartments in Finland, which stood at 587 units at the end of Q2 2025. The company projects this inventory to return to normal levels by the end of 2025:

In Residential CEE, YIT reported an adjusted operating loss of €2 million compared to a profit of €2 million in Q2 2024. The segment’s performance was affected by the absence of apartment completions during the quarter, with profit generation expected to be heavily tilted toward Q4:

The Infrastructure segment demonstrated strong growth with revenue increasing by 36% to €128 million (from €94 million), maintaining solid profitability with an adjusted operating profit of €5 million (vs. €6 million):

Building Construction improved its profitability despite revenue declining to €187 million from €205 million, with adjusted operating profit increasing to €6 million from €5 million:

Financial Position and Outlook

YIT’s financial position strengthened during the quarter, with net interest-bearing debt decreasing to €670 million from €788 million and gearing ratio improving to 84% from 97%:

The company’s return on capital employed (ROCE) stood at 3.9%, still significantly below its strategic target of at least 15%:

In a positive development, YIT raised its full-year guidance, now expecting its Group adjusted operating profit for continuing operations to be €30-60 million in 2025, compared to the previous guidance of €20-60 million. This upgrade aligns with the company’s improving performance trajectory since Q1 2025, when it reported a turnaround from losses to profits.

The company’s key operational metrics show apartments under construction totaling 5,429 units across Finland and CEE, with 59% already sold:

Strategic Progress and Future Plans

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

The company highlighted its progress toward strategic targets, though current performance remains below the long-term goals set for the 2025-2029 period:

Management emphasized the potential to reallocate up to €500 million in capital to fund residential segments’ growth and reduce indebtedness. The strong plot portfolio is positioned as an asset as the company accelerates starts in residential segments, particularly in CEE where market conditions remain favorable.

The financial performance is showing positive momentum, with improved profitability visible in ROCE development, though significant work remains to reach the ambitious targets of at least 5% revenue growth, 7% adjusted operating profit margin, and 15% ROCE by the end of the strategy period in 2029.

With no apartment completions expected in Q3 and the majority of completions scheduled for Q4, YIT’s performance for the remainder of 2025 will continue to be backend-loaded, particularly in the residential segments that are crucial for the company’s long-term profitability targets.

Full presentation:

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