Interim report Q3 / 21

Q3

YIT Corporation Interim report 1-9/2021

Table of contents

Interim report January-September 2021	3
Markku Moilanen, President and CEO	4
Guidance	4
Market environment and outlook by region	5
Results	6
Cash flow and financial position	7
Investments and divestments	7
Housing Finland and CEE	8
Housing Russia	9
Business premises	10
Infrastructure	11
Partnership properties	12
Shares	13
Personnel	13
Sustainability	13
Governance	13
Significant risks and uncertainties	13
Events after the reporting period	14
Interim report January-September 2021: Tables	15

Interim report January−September 2021

Good profitability progress continued in the third quarter. Group third quarter adjusted operating profit improved to EUR 18 million and more than doubled to EUR 69 million during January−September.

• YIT's third quarter adjusted operating profit improved to EUR 18 million (16).
• Solid profitability in both housing segments with Housing Finland and CEE reaching adjusted operating profit of EUR 17 million (16) and Housing Russia posting adjusted operating profit of EUR 6 million (7).

• Business premises' adjusted operating profit improved significantly to EUR 2 million (-19).

• Infrastructure's adjusted operating profit remained positive at EUR 3 million (10) despite margin reductions in certain old projects.
• Net interest-bearing debt at EUR 411 million (740), gearing at 40% (84).
• Strong residential sales continued. Number of unsold completed apartments at a low level.

• Housing start-ups in Finland and CEE continued to increase to 2,025 (1,634).

• Plot reserve stood at EUR 787 million (852) at the end of the quarter.
• Co-operationnegotiations concluded in Finland, allowing YIT to align its organisation with a renewed operating model. The estimated number of personnel reductions is a maximum of 230 employees throughout YIT Group out of which a maximum of 190 employees in Finland.
• Tuomas Mäkipeska takes up position as Chief Financial Officer on 1 November 2021.

Key figures

EUR million	7-9/21	7-9/20	1-9/21	1-9/20	1-12/20
Revenue	587	687	1,927	2,094	3,069
Operating profit	6	-16	46	-20	35
Operating profit margin, %	1.0	-2.4	2.4	-0.9	1.1
Adjusted operating profit	18	16	69	29	85
Adjusted operating profit margin, %	3.1	2.4	3.6	1.4	2.8
Result before taxes	-1	-27	22	-52	-6
Result for the period, continuing operations	-3	-26	12	-44	-8
Result for the period, including discontinued operations	-3	-26	12	-12	27
Earnings per share, EUR	-0.02	-0.12	0.04	-0.06	0.13
Operating cash flow after investments	-23	-9	155	190	336
Net interest-bearing debt	411	740	411	740	628
Gearing ratio, %	40	84	40	84	68
Equity ratio, %	40	31	40	31	33
Return on capital employed, % (ROCE, rolling 12 months)	8.4	8.9	8.4	8.9	5.2
Order book	4,099	3,831	4,099	3,831	3,528
Combined lost time injury frequency (LTIF, rolling 12	9.8	10.0	9.8	10.0	9.8
months)
Customer satisfaction rate (NPS)	51	52	51	52	51

Nordic paving and mineral aggregates businesses sold on 1 April 2020, are reported as discontinued operations. Unless otherwise noted, the figures in brackets refer to the corresponding period in the previous year.

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Markku Moilanen, President and CEO

"YIT's good progress in improving profitability continued in the third quarter. The Group's adjusted operating profit was EUR 18 million, higher than the EUR 16 million reported a year before. Looking at our cumulative performance during this year, it is evident that we are moving in the right direction. Our adjusted operating profit during the first nine months of the year more than doubled to EUR 69 million from last year's January-September adjusted operating profit of EUR 29 million.

This good performance is the result of solid earnings development in the housing segments, as well as our rigorous work to stabilise performance in Business premises. Our housing market presence is solid in the selected cities in which we operate in Finland, Russia, Poland, the Czech Republic and Slovakia. Throughout the year, the market has been strong in all the regions and at YIT we have done excellent work in leveraging this presence and turning it into profits.

In the third quarter, our housing completions reached their low point based on the decision to momentarily cease start-ups during the spring 2020 in the midst of the COVID- 19 pandemic. Despite this, the Housing Finland and CEE segment's third quarter adjusted operating profit was firmly positive, which reflects improved margins, a more favourable sales mix and better overall efficiency. At the same time, Housing Russia continued its stable performance with a satisfactory adjusted operating profit.

Business premises posted yet another positive quarter and improved its profitability significantly from last year's third quarter. However, the earnings level is not yet satisfactory due to some old low-margin projects which are still being finalised, but profitability is expected to gradually improve as the segment continues its work in completing those

projects. Infrastructure's third quarter adjusted operating profit was negatively impacted by margin reductions in certain projects; however, despite these, the result remained positive. This demonstrates that the underlying business which is based on our core competencies is healthy and, while certain old low-margin projects are impacting our profitability, the outlook for the business is positive.

Our focus to significantly improve our project management, as well as our operating model renewal continued in the third quarter. We concluded co-operation negotiations in Finland, which are expected to result in reductions of up to 190 people in Finland and Group-wide reductions of up to 230 people. This will enable us to align our organisation with our renewed operating model, which aims for more efficient, competitive, and customer- oriented ways of working.

Simultaneously, we have worked on our new strategy. We will announce the new strategy and objectives prior to our Capital Markets Day which will be held on 23 November."

Markku Moilanen

President and CEO

Guidance for 2021

In the fourth quarter, housing completions in Housing	The result is dependent on certain project completions and
Finland and CEE are expected to be at a high level.	contract closings towards the end of the year. Temporary
Housing Russia's solid underlying performance is	shutdowns or slower progress on construction sites and
estimated to continue and in Business premises the	delayed completions due to the COVID-19 pandemic could
stabilising development is expected to continue for the rest	lead to the postponement of revenue and profit from one
of the year. The Infrastructure segment is expected to be	quarter or year to another. Changes in market yields or
impacted by certain low-performing projects. In	estimated future cash flows may have impacts on the fair
Partnership properties, portfolio development is expected	value of the investments.
to continue.	YIT aims at transferring increased construction material
YIT expects its full-year 2021 adjusted operating profit to	costs into contracting and housing prices. Thus, YIT
be higher than in 2020 (EUR 85 million).	expects it to have only minor impact on its earnings during
	the rest of the year.
	Supported by a strong balance sheet, YIT has answered
	to market demand by significantly increasing its apartment
	start-ups in Finland and CEE countries. This is expected
	to tie up capital as the year progresses.

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Market environment and outlook by region

Estimates of the

market

environment and market outlook are based on the company's own assessment

Housing market

Q3	Outlook for Q4

Finland

• Consumer demand continued at a strong level.
• Institutional investor demand stayed stable and yield requirements decreased slightly.
• In the rental market, the situation began to normalise.
• Housing company loan financing was challenging due to the cautiousness of banks.
• Construction material cost inflation persisted.

• Consumer activity expected to remain stable.
• Institutional investor demand expected to remain stable.
• Competition for plots expected to become more intense.
• Rental market expected to continue to normalise.
• Availability of housing company loan financing expected to remain challenging.
• Construction material cost inflation expected to level off.

Baltic countries

• Consumer demand was strong.
• Availability of foreign workforce was challenging.
• Construction material cost inflation persisted.

• Consumer demand expected to stay stable at a good level.
• Availability of foreign workforce expected to remain challenging, and uncertainty caused by the COVID-19 pandemic to continue.
• Construction material cost inflation expected to level off.

Central European countries

• Consumer demand was strong.
• Delays in authorities' planning permission processes.
• Cost inflation of construction materials was high, and it had an effect on the availability of some materials.

• Consumer demand expected to stay stable at a good level.
• Delays in authorities' planning permission processes expected to continue.
• Construction material cost inflation expected to level off.

Russia

• Interest rates for mortgages started to increase.
• Price levels continued to increase.
• Competition for plots was intense.
• Construction material cost inflation persisted.

• The government's interest rate subsidy programmes expected to continue.
• Consumer demand expected to stay stable.
• Competition for plots expected to remain intense.
• Construction material cost inflation expected to level off.

Real estate market

Q3	Outlook for Q4

Finland

• Public sector demand remained active.
• Investor demand was brisk, especially for logistics, prime offices and societal properties.
• Yield requirements for commercial properties remained stable.
• Office rental demand started to normalise.
• Cautiousness in the contracting market increased as the price levels rose.
• Construction material cost inflation persisted.

• Public sector demand expected to remain active.
• Investor demand expected to remain active.
• Yield requirements for commercial properties expected to remain stable.
• Office rental demand expected to continue to increase.
• Cautiousness in the contracting market expected to continue due to the increased price levels.
• Construction material cost inflation expected to level off.

Baltic countries

• Investor demand was strong.
• Availability of foreign workforce challenging, and uncertainty caused by the COVID-19 pandemic increased.
• Construction material cost inflation persisted.

• Investor demand expected to remain strong.
• Availability of foreign workforce expected to remain challenging, and uncertainty caused by the COVID-19 pandemic to continue.
• Construction material cost inflation expected to level off.

Central European countries

• Investor demand was stable and price levels stable.
• Rental demand was stable.
• Construction material cost inflation persisted.

• Investor demand expected to strengthen.
• Rental demand expected to remain stable.
• Construction material cost inflation expected to level off.

Infrastructure market

Q3	Outlook for Q4

Finland

• Public sector demand remained on a relatively low level.
• Investor demand was moderate.
• Competition was intense, adding pressure on the prices.
• Construction material cost inflation persisted.

• Public sector demand expected to remain subdued.
• Investor demand expected to remain moderate.
• Competition expected to remain intense.
• Construction material cost inflation expected to level off.

Baltic countries

• Public sector demand was at low level.
• Competition was intense adding pressure on the prices.
• Availability of foreign workforce challenging, and uncertainty caused by the COVID-19 pandemic increased.
• Construction material cost inflation persisted.

• Public sector demand expected to slow down as the governments' budgets have already been running over.
• Competition expected to remain intense.
• Availability of foreign workforce expected to remain challenging, and uncertainty caused by the COVID-19 pandemic to continue.
• Construction material cost inflation expected to level off.

Sweden

• Public sector demand remained strong supported by several ongoing major infrastructure projects.
• Private demand remained solid supported by several ongoing industrial investments.
• Construction material cost inflation persisted.

• Public sector demand expected to remain at a good level due to traffic infrastructure development programmes and urbanisation development.
• Private demand expected to remain at a good level. Large-scale industrial investments ongoing and in preparation.
• Construction material cost inflation expected to level off.

Market environment in Q3/2021		Market outlook for Q4/2021
Good	Normal	Weak	Improving	Stable	Weakening
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