YIT Oyj — Earnings Release 2017

Feb 1, 2018

YIT's Financial Statements Bulletin 2017:  Good development in all segments: Finland, Slovakia and Czech Republic as the result engines

YIT's Financial Statements Bulletin 2017:  Good development in all segments: Finland, Slovakia and Czech Republic as the result engines

YIT Corporation Stock Exchange Release February 1, 2018 at 8:00 a.m.
Unless otherwise noted, the figures in brackets refer to the corresponding
period in the previous year and are of the same unit.

Segment reporting, POC

Residential projects for consumers recognised as income in line with degree of
sales and construction1

October–December

• Revenue increased by 8% to EUR 554.3 million (513.7).

• Adjusted operating profit amounted to EUR 56.4 million (28.7) and adjusted
operating profit margin was 10.2% (5.6).

• EUR -16.0 million of adjusting items were booked in the period.

• Order backlog remained stable at the level of the end of September and
amounted to EUR 2,568.5 million (9/2017: 2,527.5).

January–December

• Revenue increased by 7% to EUR 1,908.6 million (1,783.6).

• Adjusted operating profit amounted to EUR 122.3 million (79.9) and adjusted
operating profit margin was 6.4% (4.5).

• EUR -20.0 million (-27.0) of adjusting items were booked in the period.

• Board of Directors proposes a dividend of EUR 0.25 (0.22) per share.

Group reporting, IFRS

Residential projects for consumers recognised as income upon completion1

October–December

• Revenue increased by 17% to EUR 612.4 million (525.0).

• Operating profit amounted to EUR 44.1 million (25.3), and operating profit
margin was 7.2% (4.8).

• Adjusted operating profit amounted to EUR 60.1 million (25.3) and adjusted
operating profit margin was 9.8% (4.8).

• Operating cash flow after investments, excluding discontinued operations
amounted to EUR 171.0 million (-21.4).

January–December

• Revenue increased by 19% to EUR 1,993.8 million (1,678.3).

• Operating profit amounted to EUR 85.5 million (17.7) and operating profit
margin was 4.3% (1.1).

• Adjusted operating profit amounted to EUR 105.6 million (44.7) and adjusted
operating profit margin was 5.3% (2.7).

• Operating cash flow after investments, excluding discontinued operations
amounted to EUR 164.5 million (-43.1).

1In segment reporting, the revenue and profit are recognised by multiplying the
percentage of completion by the percentage of sale, i.e. according to the
percentage of completion method, which does not fully comply with the Group’s
IFRS accounting principles. According to the Group’s IFRS accounting principles,
revenue from residential projects for consumers is recognised upon completion.
Furthermore, in Group reporting, part of the interest expenses are capitalised
according to the IAS 23 standard, which causes differences in operating profit
and financial expenses between segment reporting and Group reporting.

Outlook for 2018

Due to the merger of YIT and Lemminkäinen, YIT does not issue numerical guidance
for the Group but is issuing a general outlook that describes future development
instead. YIT’s outlook is based on assumptions and the management’s estimates of
the development of demand in the Group’s operating environment and segments. The
Board of Directors will assess, and later announce, whether it is appropriate to
issue numerical guidance for the merged company.

The Board of Directors of the merged company will separately assess the merged
company’s outlook for 2018 and publish the outlook in a separate stock exchange
release as soon as possible.

Housing Finland and CEE: Consumer demand for apartments is expected to remain at
a good level. Activity among large residential investors is expected to be lower
than in the previous years.

Housing Russia: The demand for apartments is expected to remain at the same
level as seen on average in the second half of 2017. Residential prices are
expected to remain low.

Business Premises and Infrastructure: The rental demand for business premises is
expected to remain at the previous year’s level in growth centres. The
contracting market is expected to remain active, but contract sizes are expected
to decrease on average.

Partnership Properties: Activity among property investors is expected to remain
at a good level, particularly for centrally located projects in the Helsinki
metropolitan area and in major growth centres.

The adjusted operating profit2 is expected to fluctuate significantly between
the quarters. The adjusted operating profit for the first quarter of 2018 is
expected to be low due to normal seasonal variation.

2Adjusted operating profit reflects the result of ordinary course of business
and it does not include material reorganisation costs, impairment charges or
other items affecting comparability. Adjusted operating profit is disclosed to
improve comparability between reporting periods. Adjusting items are defined
more precisely in note 3.4 in the tables.

In order to clarify its terminology for key financial figures, YIT starts to use
the terms Capital Employed and Return on Capital Employed (ROCE) for segment
reporting instead of previously used Operative Invested Capital and Return on
Operative Invested Capital (ROI). The formulas for these financial figures
remain unchanged.

Kari Kauniskangas, President and CEO:

The year 2017 was a success for YIT. In terms of the Group’s profitability, the
final quarter of the year was one of the best in YIT’s entire history. I am
especially pleased about the fact that all of our segments showed positive
development during the year. Our earnings per share multiplied compared to the
previous year. With respect to our strategic objectives, we achieved the targets
set for our revenue growth and cash flow. We also took large strides towards our
long-term target for return on investment. The year 2017 will also be remembered
for the merger of YIT and Lemminkäinen, which was announced in the summer and is
now completed at the beginning of February. The combination is a strategically
important step for YIT and it creates a balanced and stable platform for the
growth into one of the leading urban developers in the Northern European
construction market.

The revenue of the Housing Finland and CEE segment increased by 15 per cent and
its adjusted operating profit grew by 37 per cent year-on-year. The adjusted
operating profit margin was close to 10 per cent for the full year and exceeded
12 per cent in the final quarter. In 2017, we achieved our goal of improving
profitability by increasing consumer sales and responding to consumer demand by
building affordable and flexible apartments in growth centres. Residential
demand and YIT’s growth continued to be strong in the CEE countries, with
profitability remaining at a good level. We have established a significant
foothold in the Czech Republic and Slovakia in the six to eight years we have
been present in those markets, as exemplified by our position as the largest
housing developer in Bratislava.

In Russia, the macro environment turned to growth after several years of
recession, and residential sales picked up in the second half of the year after
a challenging start to 2017. We anticipate that housing demand will continue to
improve slowly and that prices will remain low. Our euro-denominated revenue was
on a par with the previous year, while our adjusted operating profit margin was
2.4 per cent for the full year and 6.4 per cent in the final quarter. We took a
significant step towards our goal of decreasing our capital employed in Russia
by selling approximately half of the Novo-Orlovsky plot in St. Petersburg for
about RUB 2.5 billion (approximately EUR 36 million) in December.

In the Business Premises and Infrastructure segment, the highlight of the year
was the successful completion and sale of the Kasarmikatu 21 office building
together with our partners. We also completed all of our other pending property
transactions in December. Our order backlog is strong and the major projects,
such as Tripla, progressed according to plan. During the year, we prepared the
launch of the new Partnership Properties segment. The new segment became
operational on January 1, 2018. The new segment will focus on financing the
initial phases of major development projects and on the ownership and subsequent
realisation of the developed properties at the right moment. This improves our
capacity to carry out diverse and large projects and enhances the transparency
of our reporting.

The preparations for the merger between YIT and Lemminkäinen proceeded according
to plan, within the limits stipulated by competition law. We are ready to
complete the merger and we are excited by the opportunities that the merger will
create for our personnel and the Group as a whole.

I would like to take this opportunity to thank our customers for their trust and
cooperation, as well as our personnel and partners for working with such
commitment and enthusiasm to achieve our goals.

Key figures

Group reporting, IFRS

EUR million 10–12/17 10–12/1 Change 1–12/17  1–12/16  Change
        6
Revenue 612.4 525.0 17% 1,993.8 1,678.3 19%
Operating profit 44.1 25.3 74% 85.5 17.7 383%
Operating profit 7.2% 4.8% 4.3% 1.1%
margin, %
Profit before taxes 39.5 21.8 82% 70.9 -2.5
Profit for the review 31.6 15.0 110% 56.6 -7.1
period1
Earnings per share, 0.25 0.12 110% 0.45 -0.06
EUR
Operating cash flow 171.0  -21.4  164.5  -43.1
after
investments,excluding
discontinued
operations
Net interest-bearing 455.0 598.6 -24% 455.0 598.6 -24%
debt at end of
period
Gearing ratio at end 88.7% 112.3% 88.7% 112.3%
of period, %
Equity ratio at end 33.2% 31.2 % 33.2% 31.2%
of period, %

Segment reporting, POC

+---------------------+--------+--------+------+-------+-------+------+
|EUR million |10–12/17|10–12/16|Change|1–12/17|1–12/16|Change|
+---------------------+--------+--------+------+-------+-------+------+
|Revenue |554.3 |513.7 |8% |1,908.6|1,783.6|7% |
+---------------------+--------+--------+------+-------+-------+------+
|Housing Finland and |206.4 |210.0 |-2% |835.2 |727.9 |15% |
|CEE | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Housing Russia |95.6 |84.0 |14% |268.3 |267.9 |0% |
+---------------------+--------+--------+------+-------+-------+------+
|Business Premises and|254.9 |222.4 |15% |814.7 |797.4 |2% |
|Infrastructure | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Other items |-2.6 |-2.8 | |-9.6 |-9.7 | |
+---------------------+--------+--------+------+-------+-------+------+
|Operating profit |40.4 |28.7 |41% |102.3 |52.9 |93% |
+---------------------+--------+--------+------+-------+-------+------+
|Operating profit |7.3% |5.6% | |5.4% |3.0% | |
|margin, % | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Adjusted operating |56.4 |28.7 |97% |122.3 |79.9 |53% |
|profit | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Housing Finland and |25.1 |18.4 |37% |81.7 |59.9 |37% |
|CEE | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Housing Russia |6.1 |2.8 |121% |6.3 |-2.3 | |
+---------------------+--------+--------+------+-------+-------+------+
|Business Premises and|32.5 |11.2 |190% |56.3 |38.1 |48% |
|Infrastructure | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Other items |-7.4 |-3.7 | |-22.0 |-15.7 | |
+---------------------+--------+--------+------+-------+-------+------+
|Adjusted operating |10.2% |5.6% | |6.4% |4.5% | |
|profit margin, % | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Housing Finland and |12.2% |8.7% | |9.8% |8.2% | |
|CEE | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Housing Russia |6.4% |3.3% | |2.4% |-0.9% | |
+---------------------+--------+--------+------+-------+-------+------+
|Business Premises and|12.7% |5.0% | |6.9% |4.8% | |
|Infrastructure | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Adjusting items |-16.0 |0.0 | |-20.0 |-27.0 | |
+---------------------+--------+--------+------+-------+-------+------+
|Profit before taxes |33.7 |21.3 |59% |81.2 |13.8 |489% |
+---------------------+--------+--------+------+-------+-------+------+
|Profit for the review|26.0 |16.1 |62% |62.8 |7.4 |748% |
|period1 | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Earnings per share, |0.21 |0.13 |61% |0.50 |0.06 |747% |
|EUR | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Return on investment |8.8% |4.7% | |8.8% |4.7% | |
|(last 12 months), % | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Net interest-bearing |455.0 |469.3 |-3% |455.0 |469.3 |-3% |
|debt at end of period| | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Equity ratio at end |35.1% |35.1% | |35.1% |35.1% | |
|of period, % | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+
|Order backlog at end |2,568.5 |2,613.1 |-2% |2,568.5|2,613.1|-2% |
|of period | | | | | | |
+---------------------+--------+--------+------+-------+-------+------+

1Attributable to equity holders of the parent company

+-----------------------+-------+-------+------+
| |1–12/17|1–12/16|Change|
+-----------------------+-------+-------+------+
|Dividend per share, EUR|0.25 2 |0.22 |14% |
+-----------------------+-------+-------+------+

2Board of Directors’ proposal to the Annual General Meeting

Events after the review period

January 12, 2018 YIT raises its estimate regarding the adjusted operating profit
for 2017 and books a cost related to revaluation of balance sheet items. YIT
provided preliminary financial information regarding the adjusted operating
profit and revenue for 2017. The preliminary adjusted operating profit exceeded
the given guidance and the preliminary revenue is in accordance with the
guidance. YIT revaluates balance sheet values of several plots or balance sheet
items in Finland and Lithuania reported under Business Premises and
Infrastructure and Housing Finland and CEE segments. Only minor revaluations
were made in Housing Russia segment. The cost to be booked now was announced to
be EUR 14 million at the most.

January 26, 2018 The FCCA has given the final approval decision for the merger
of YIT and Lemminkäinen, which is intended to be completed on February 1, 2018.

January 31, 2018 The Boards of Directors of both companies approved the
completion of the merger on January 31, 2018 and the merger has been notified in
the Finnish Trade Register so that the merger is completed on February 1, 2018.

In January, residential sales to consumers are estimated to be around 120 units
in Finland (1/17: around 150), around 80 units in the CEE countries (1/17:
around 80) and nearly 200 units in Russia (1/17: around 150).

Outlook for 2018

Due to the merger of YIT and Lemminkäinen, YIT does not issue numerical guidance
for the Group but is issuing a general outlook that describes future development
instead. YIT’s outlook is based on assumptions and the management’s estimates of
the development of demand in the Group’s operating environment and segments. The
Board of Directors will assess, and later announce, whether it is appropriate to
issue numerical guidance for the merged company.

The Board of Directors of the merged company will separately assess the merged
company’s outlook for 2018 and publish the outlook in a separate stock exchange
release as soon as possible.

Outlook by segments

Housing Finland and CEE: Consumer demand for apartments is expected to remain at
a good level. Activity among large residential investors is expected to be lower
than in the previous years.

Housing Russia: The demand for apartments is expected to remain at the same
level as seen on average in the second half of 2017. Residential prices are
expected to remain low.

Business Premises and Infrastructure: The rental demand for business premises is
expected to remain at the previous year’s level in growth centres. The
contracting market is expected to remain active, but contract sizes are expected
to decrease on average.

Partnership Properties: Activity among property investors is expected to remain
at a good level, particularly for centrally located projects in the Helsinki
metropolitan area and in major growth centres.

The adjusted operating profit is expected to fluctuate significantly between the
quarters. The adjusted operating profit for the first quarter of 2018 is
expected to be low due to normal seasonal variation.

Outlook by regions

Finland

Consumer demand for apartments is expected to remain at a good level. Activity
among large residential investors is expected to be lower than in the previous
years. Location and the price level will continue to play a key role.

The divergent development of apartment prices and demand between growth centres
and the rest of Finland is expected to continue. The availability of mortgages
is expected to remain good. The increased supply of apartments is anticipated to
prevent the overheating of the market and therefore the rise of housing prices.

The rental demand for business premises is expected to remain at the previous
year’s level in growth centres. Activity among property investors is expected to
remain at a good level, particularly for centrally located projects in the
Helsinki metropolitan area and in major growth centres. The contracting market
is expected to remain active, but contract sizes are expected to decrease on
average. New infrastructure projects are expected to maintain the market volume
at the current level.

High construction activity has led to increased competition for skilled
professionals and the situation is expected to continue. Construction costs are
estimated to increase slightly. Construction volume is expected to remain at a
high level.

The increased regulation and higher capital requirements imposed on financial
institutions may affect construction and property development.

Russia

The demand for apartments is expected to remain at the same level as seen on
average in the second half of 2017. In Russia, the low point of the economic
cycle is now in the past, but residential demand is anticipated to only improve
slowly and price levels are expected to remain low. The improved economic
situation is anticipated to have a cautiously favourable impact on the
residential market. Expectations of interest rate cuts are expected to influence
consumer behaviour. Changes in regulations concerning residential transactions
are expected to lead to increased volatility in supply and demand for apartments
as well as changes in sales practices.

Demand in Russia is also expected to focus primarily on affordable apartments.

Inflation in construction costs is expected to remain moderate.

The CEE countries

Residential demand is expected to remain at a good level. Residential prices are
estimated to increase further. The prices of plots have increased and
competition for plots is expected to remain intense. The availability of
financing and low interest rates are expected to continue to support residential
demand. The shortage of resources is expected to increase inflation in
construction costs. The contracting market for business premises is expected to
remain at the current level or decrease slightly in the Baltic countries.

Factors affecting the guidance

The most significant factors on which YIT can answer the market demand are sales
and pricing, project management and project risk management, product development
and the product offering, cost management, measures aiming to reduce production
costs and measures affecting the capital efficiency.

Factors outside of YIT’s sphere of influence are connected mainly to global
economic development, the

functionality of financing markets and the interest rate,the political
environment, economic development in areas of operation, changes in demand for
apartments and business premises, the availability of resources such as key
persons, changes in public and private sector investments and changes in
legislation, permit and authorisation processes and the duration thereof, as
well as the development of foreign exchange rates.

Due to the long-term nature of construction and urban development projects, the
changes in the demand may be quicker than the company's ability to adapt its
offering.

News conference for investors and media

YIT will arrange a news conference on Thursday, February 1, 2018 at 11:00 a.m.
Finnish time (EET, at 9:00 a.m. GMT) at YIT's head office, Panuntie 11, 00620
Helsinki, Finland. The event is in English and targeted for analysts, portfolio
managers and the media. Welcome!

Webcast

The news conference and presentation by the President and CEO of YIT Corporation
Kari Kauniskangas can also be followed through a live webcast at
www.yitgroup.com/webcast. The live webcast starts at 11:00 a.m. (EET) and a
recording of the webcast will be available at approximately 1:00 p.m (EET) at
the same address.

Conference call

The news conference can be participated also through a conference call.
Conference call participants are requested to dial in at least five minutes
prior to the start of the conference, at 10:55 a.m. (EET). Conference call
numbers are:

Participants from UK and outside of Nordic countries +44 (0)330 336 9105

Participants from Sweden +46 (0)8 5033 6574

Participants from Norway +47 2100 2610

The participants will be asked to provide the following confirmation code:
5413651

During the webcast and conference call, all questions should be presented in
English. At the end of the event, the media has the opportunity to ask questions
also in Finnish. Questions can be also posted via the chat feature of the live
webcast.

Annual Report and Financial Statements

Annual Report 2017 including the Financial Statements will be published during
week 8/2018, at the latest.

Disclaimer

Notice to Shareholders in the United States

The YIT shares issued in connection with the merger have not been registered
under the U.S. Securities Act of 1933, as amended (the "Securities Act") and are
being issued in reliance on the exemption from registration set forth in Rule
802 under the Securities Act.

YIT is a Finnish company and the issuance of YIT shares will be subject to
procedural and disclosure requirements in Finland that may be different from
those of the United States. Any financial statements or other financial
information included in this release may have been prepared in accordance with
non-U.S. accounting standards that may not be comparable to the financial
statements of U.S. companies or companies whose financial statements are
prepared in accordance with generally accepted accounting principles in the
United States.

It may be difficult for U.S. shareholders to enforce their rights and any claims
they may have arising under U.S. federal securities laws in connection with the
merger, since YIT is located in a non-U.S. jurisdiction, and some or all of its
officers and directors may be residents of countries other than the United
States. As a result, U.S. shareholders may not be able to sue YIT or its
officers and directors in a court in Finland for violations of U.S. federal
securities laws. Further, it may be difficult to compel YIT to subject itself to
the jurisdiction or judgment of a U.S. court.

U.S. shareholders should be aware that YIT may have purchased Lemminkäinen’s
shares otherwise than under the merger, such as in open market or privately
negotiated purchases, at any time during the pendency of the merger.

For further information, please contact:

Hanna Jaakkola, Vice President, Investor Relations, YIT Corporation, tel. +358
40 5666 070, hanna.jaakkola@yit.fi

Esa Neuvonen, Chief Financial Officer (until January 31, 2018), YIT Corporation,
tel. +358 40 500 1003, esa.neuvonen@yit.fi

YIT CORPORATION

Kari Kauniskangas

President and CEO

Distribution: NASDAQ OMX, principal media, www.yitgroup.com

YIT creates better living environment by developing and constructing housing,
business premises, infrastructure and entire areas. Our vision is to bring more
life in sustainable cities. We want to focus on caring for customer, visionary
urban development, passionate execution and inspiring leadership. Our growth
engine is urban development involving partners. Our operating area covers
Finland, Russia, the Baltic countries, the Czech Republic, Slovakia and Poland.
In 2017, our revenue amounted to approximately EUR 1.9 billion, and we employ
about 5,500 employees. Our share is listed on Nasdaq Helsinki. www.yitgroup.com

Attachments: