YIT Oyj — Investor Presentation 2021

Nov 22, 2021

YIT announces new focused strategy to deliver predictable, market-leading results

YIT announces new focused strategy to deliver predictable, market-leading results

YIT Corporation Stock exchange release 22 November 2021 at 12:00 p.m.

YIT announces new focused strategy to deliver predictable, market-leading
results

YIT’s Board of Directors has confirmed the company’s strategy for 2022–2025. The
objective of the new strategy is to be the most reliable partner to all
stakeholders delivering predictable, market-leading results.

Markku Moilanen, President and CEO of YIT: “YIT is a development and
construction company with a clear mission to create better living environments.
We are a high-quality urban developer, and we have established a solid
foundation with strong brand, best-in-class customer satisfaction, talented
people, and strong local presence in our key markets. However, at the same time,
we have struggled with inconsistent focus, nonoptimal capital allocation and
project delivery issues. We have sought growth in areas where YIT is not truly
advantaged, and our operating model has turned out to be inefficient. It’s clear
that we need to improve our performance and competitiveness.”

The key target of YIT’s new strategy is to deliver predictable, market-leading
results. YIT plans to achieve this objective by seeking growth in the Housing
business and completing transformation in other businesses. To support this, YIT
has redefined and clarified its business model and introduced three strategic
priority areas: Focus, Productivity, and ESG. To measure its success, YIT has
also updated its financial targets.

YIT boosts growth in Housing and focuses on core capabilities to deliver
predictable, market-leading results

YIT has redefined and clarified its business model. Going forward, all business
segments have clear, individual strategies and targets within YIT.

In Housing, YIT continues to build functional and sustainable homes and
environments making sustainable living easy. YIT aims to grow its Housing
revenue by over 20% by 2025 with an operating profit margin of over 10%. The
company announced earlier today that it is considering strategic options
regarding its operations in Russia. The potential sale of the Russian businesses
would release a significant amount of capital which YIT could use to pursue
profitable Housing growth in the growing cities of Finland, Poland, Czech
Republic, and Slovakia. YIT aims to invest an additional EUR 200 million in
attractive urban plots by 2025 in these growing regions, in which the company is
already a leading housing developer with a strong track record in operational
and financial performance.

Business Premises and Infrastructure businesses continue to have an important
role within YIT. Business Premises continues to build and renovate commercial
and public spaces to ensure optimal usability of buildings over their life
cycle. Infrastructure builds networks and facilities to enable a smoother flow
of sustainable living. Both segments are well on their way to execute
transformations by focusing on the profitable core around their differentiated
competences and by being subsequently more selective in projects. Business
Premises and Infrastructure are targeting stable cash flow to further enhance
the growth of the Housing business. Profitability is set to be among the best in
the industry with both segments targeting an operating profit margin of over 4%
by 2025.

The Partnership Properties segment will be dissolved and replaced by a new
Property Development segment. The segment will be responsible for YIT’s end-to
-end commercial and mixed-use project development. Property Development’s target
is to create attractive development and construction margins and steer YIT-wide
construction pipeline through project development and selective co-investments.
Property Development will be a customer-centric developer and a best-in-class
partner. At the same time, long-term ownerships and service businesses will no
longer be in focus. Property Development aims to achieve a ROCE of over 10% by
2025.

Measures to improve productivity unlock significant potential

YIT’s financial performance over the past years has been marked by issues in
project tendering and delivery leading to project margin reductions. YIT is
tackling these productivity issues by rigorous focus on project selection, as
well as risk and project management. The ongoing project execution capability
improvements are expected to yield EUR 50 million profitability improvement by
2024.

In addition, YIT is streamlining the company’s operating model to build a
customer-centric organization and to improve cost competitiveness. From these
measures, YIT expects to achieve annual cost savings of EUR 15-20 million by
2023 in continuing operations.

In medium term, the priority is in driving transformation on supply chain
management to gain benefits from economies of scale and to boost industrial
construction in order to shorten lead times. These actions are expected to
further unlock significant efficiency improvement potential reflected in
improved sales margins by 2025 and beyond.

Updated ESG strategy will set new standards for the industry

President and CEO Moilanen: “Climate change requires us to rethink how resources
are used, and life cycle thinking is becoming more critical. Buildings generate
almost 40% of annual global CO2 emissions, and it is evident that substantial
changes in the construction industry are needed. Sustainability is becoming ever
more important for our customers and investors, and we want to be the forerunner
in the industry by seeking and offering solutions together with our customers.”

On the Environmental criteria, YIT commits to the Science Based Targets
initiative (SBTi) to limit global warming to 1.5 degrees in line with the Paris
Climate Agreement. YIT is the first Finnish construction company to commit to
reducing emissions from both its own operations and its value chain in
accordance with the Science Based Targets Initiative. With this commitment, YIT
strengthens its previous climate work and updates its current climate targets to
be more comprehensive, which will also reduce the emissions of YIT's customers.

On the Social criteria, YIT continues to develop and build better living
environments for society. YIT creates commercial and public spaces, as well as
infrastructure networks that are foundations for a sustainable society. What
comes to YIT’s workforce, the company continues its determined work to decrease
accident frequency and pursues zero-harm workplace. YIT offers personal and
professional growth for its people, and the ambition is to keep the ideal
employer position in the construction industry.

On the Governance criteria, YIT continues to have zero tolerance in grey
economy, corruption, labor exploitation and discrimination. YIT will also take
decisive steps to advance ESG matters throughout of its supply chains. Going
forward, YIT will pursue ESG commitment by requiring its suppliers to meet the
same environment, social and governance norms as it has set for itself. The
company believes that this will set new standards for the entire industry.

Financial targets updated

YIT will measure the success of its strategy by new Group financial targets to
be reached by the end of 2025:

· Operating profit margin: 6%
· Gearing: less than 50%
· Dividend: stable growth

The Group operating profit margin target is based on individual segments’
operating profit margin targets. While market outlook for the construction
industry looks promising in YIT’s operating regions, the company takes a
conservative approach on the market growth assumptions and expects the targeted
profitability improvement to come primarily through sharpened focus and
productivity improvements. Furthermore, the company expects to gain competitive
advantage from its ESG commitments.

President and CEO Moilanen: “I believe in our company and our new focused
strategy. I am proud of the competence, professionalism and commitment of our
people, the market-leading quality of work at our construction sites, and the
highly appreciated YIT brand. By vigorously focusing on reliability,
predictability, and sustainability, I am confident that we have all elements in
place to improve performance and create value for our customers, employees,
society and shareholders.”

The new strategy to be discussed in the Capital Markets Day tomorrow

The new strategy will be discussed in more detail in the YIT Capital Markets Day
tomorrow, 23 November 2021 from 1:00 p.m. EET onwards. The event can be followed
through live webcast at https://yit.videosync.fi/2021-cmd.

For further information:
Tommi Järvenpää, Vice President, Investor Relations, YIT Corporation, tel. +358
40 576 0288, tommi.jarvenpaa@yit.fi

YIT Corporation

Tommi Järvenpää
Vice President, Investor Relations

Distribution: Nasdaq Helsinki, major media, www.yitgroup.com

YIT is the largest Finnish and a significant North European development and
construction company with a strong customer focus and clear mission to create
better living environments. We develop and build functional homes for
sustainable living, future-proof public and commercial buildings and
infrastructure for smoother flow of people, businesses and society. We employ
7,400 professionals in ten countries: Finland, Russia, Sweden, Norway, Estonia,
Latvia, Lithuania, the Czech Republic, Slovakia and Poland. Our revenue in 2020
was EUR 3.1 billion. YIT Corporation's share is listed on Nasdaq Helsinki Oy.
www.yitgroup.com (https://eur03.safelinks.protection.outlook.com/?url=http%3A%2F%
2Fwww.yitgroup.com%2F&data=04%7C01%7Ctommi.jarvenpaa%40yit.fi%7Cb06d5978b7b24c89e
1bb08d9ace67dd3%7Cde5d17d0fbc24c29b0f7d6685b6c3ef0%7C0%7C0%7C637730928212172185%7
CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVC
I6Mn0%3D%7C3000&sdata=z%2Fi5YUrjWld29WvKHnqEdneErdKgabX8gq5qjlsWO8U%3D&reserved=0
)