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Edited Transcript of YTY1V.HE earnings conference call or presentation 7-Feb-20 8:00am GMT

Q4 2019 Yit Oyj Earnings Call

HELSINKI Feb 13, 2020 (Thomson StreetEvents) -- Edited Transcript of Yit Oyj earnings conference call or presentation Friday, February 7, 2020 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Ilkka Seppo Salonen

YIT Oyj - CFO & Deputy to President and CEO

* Kari Kauniskangas

YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment

* Tommi Järvenpää

YIT Oyj - VP of IR

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Conference Call Participants

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* Anssi Kiviniemi

SEB, Research Division - Analyst

* Matias Rautionmaa

OP Corporate Bank plc, Research Division - Analyst

* Olli Koponen

Inderes Oy - Analyst

* Svante Krokfors

Nordea Markets, Research Division - Analyst

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Presentation

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Tommi Järvenpää, YIT Oyj - VP of IR [1]

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Good morning, and welcome to YIT's Full Year 2019 Earnings Webcast. My name is Tommi Jarvenpaa, I'm the head of YIT's Investor Relations. Today, we will be discussing our highlights from last year and Q4. We made very good development in 2019. And actually, our Q4 result was at all-time highest level.

Next, our CEO, Kari Kauniskangas; and CFO, Ilkka Salonen, will provide more details on the results and performance in 2019. We will have a Q&A after the presentation. We will first take questions from the audience here in Helsinki, and after that, from the conference call lines.

Once again, warmly welcome. Kari, the floor is yours.

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [2]

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Good morning also on my behalf. It's a pleasure to be here. Our result and performance improved again in 2019, and our operating profit increased 26%, ending to a level of EUR 166 million. Despite of heavy investments to plots and new projects, our operative cash flow was clearly positive.

Most important moment of the year was completion and grand opening of Mall of Tripla. Mall has been well welcomed by clients and customers, having over 7 million visits by end of 2019. Tripla had a significant impact to the result of Partnership properties, but at the same time, the cost of finishing works and roofing within last few weeks, completing the project according to agreed time, declined the profit of Business premises for 2019.

In Housing Finland and CEE, the sales increased 33% total, and also consumer sales increased 18%.

Operating profit was on a good level despite of that there was 1,000 completions less than year ago in Finland.

Great turnaround has been done in Infrastructure projects and Housing Russia, where performance in adjusted EBIT has increased together EUR 55 million compared to last year, and we still have opportunities to continue the improvement in those segments.

In Russia, decision to close 5 units in Housing and 1 unit in Paving are under active implementation.

The sale of Nordic paving and mineral aggregates business is on handling of EU authorities, and we expect to get the permit and have the closing of the deal during the first or second quarter of 2020.

Based on the results of the year and positive outlook for 2020, Board of Directors has made a proposal to the Annual General Meeting to pay a dividend of EUR 0.28 per share to the owners of the company and also to give Board of Directors right to decide a payment of at maximum EUR 0.12 per share extra dividend based on Paving deal completion. Dividend will be paid in 2 tranches in April and October. Proposal is according to our public strategic target to have a growing dividend per annum.

During the last 2 years, we have managed to make integration of 2 traditional construction companies, make turnaround in several underperforming business areas and invested a lot to new projects and urban new plots and new urban development projects. After merging YIT and Lemminkäinen and ending the integration, we have been focusing to clients, competitive edges and performance improvement. Our current position is very strong. In Housing, we are leading player in all countries and key cities we operate. In Infrastructure, we have good position in selected market segments in all countries we operate. In urban development, the position is stronger than I personally expected when we announced this merger 3 years ago.

Just short recap on our strategy. The focus is improving the profitability of the company. We have 3 strategic priority areas where we are looking for growth and structural profitability.

In urban development, we have a great portfolio of new projects under development. Key topic is to keep those progressing well during this year. Just an example, last year, a number of life cycle projects, PPP projects and alliances we won was remarkable, almost EUR 1 billion. This year, a lot is planned to happen in both Partnership properties and Services Development area.

Overall, the focus of the company is improving profitability and performance of the company in 4 areas: improving the business mix; keeping the pricing on a healthy level; continue productivity improvement on site level, [pre-] application, tax schedule, Last Planner, procurement, that kind of ways; and harmonize the rate of control and creep of all projects as we have in several areas already. And the great thing is that we still have a lot of potential to improve profitability through internal actions independently on market development.

Then a few comments concerning the last quarter of the year. So as Tommi mentioned, Q4 was all-time high adjusted operating profit quarter for YIT. Even there were in addition to several successes, also some disappointments, like postponements of closing A Tower in Keilaniemi, Espoo, and extra cost of completing Mall of Tripla in [accurate] date.

Housing sales, especially for consumers, developed strongly in Finland. Sales increased over 50% compared to comparison period. Also, the sales for investors has continued on a strong level.

Performance, both in Housing Russia and Infrastructure projects, is improving clearly, even we are not yet on a level that we are looking for. Great start of Mall of Tripla has been also in results of Partnership properties.

In Business premises, the result was weak, driven by those extra costs in completing Mall of Tripla in accurate date. Earlier record was from the year from 2007. It was a bit more than EUR 100 million. Now the new record of the quarter result is EUR 121 million.

Backlog of orders is still very strong. It is almost on the same level than a year ago. And in addition, there are a lot of projects that we won during the last autumn, for instance, Espoo PPP project, alliance project in [Kivenlahti] and several lifestyle projects which are not yet recognized in our backlog of orders. So that is giving us a good view to this year, both from revenue and profit point of view.

In Housing Finland, sales to consumers, especially sale of completed apartments, was very strong, and that supported revenue of the quarter and also operating profit of the quarter. In Russia, the profitability overall of the projects in continuing units, it's on a good level, and the performance improved, even the number of completed apartments in Russia was not so high in those continuing units.

In Business premises, we see some extra cost from Mall of Tripla completion and also from [Heretzi] shopping mall projects, which we have mentioned already earlier.

Infra projects, we have been developing wind farms already several years. And now during last quarter, the first one was sold to the final owner. We still have several farms in our portfolio, and we are actively developing those further.

In Partnership properties, the great profit, of course, was driven by fair valuation of Mall of Tripla. And if you take all the impact of Tripla that it has had to the YIT's results and revenues during the last years, we are extremely satisfied on the profitability of the company. The profit is about double compared to what we estimated when the plot was won and acquired from the City of Helsinki and Senate Properties in August 2013.

Synergies, based on merger of YIT and Lemminkäinen, has been followed now 2 years, and this is the last report. So far, we have taken actions which will lead to savings of EUR 47 million. And then so far, EUR 41 million of those is already visible in our financial statement.

This year still, we have some topics on the agenda, mainly connected to changes -- finalizing the changes in our IT platform and to renew our core financial solution.

Few words concerning the market outlook. So the current outlook is that, practically, in all markets, the expected development is very stable. Last autumn, we have some expectations that the demand of Business premises would decline. But now, at the moment, the view is that it will stay on the same level than it was last year.

Also in CEE countries, Czech Republic, Slovakia and Poland, we estimated that the decline of GDP, a negative GDP in Germany in second quarter last year could have a negative impact to those markets as well. But now the development also in Germany has been positive, and we have not seen any decline in demand. So our estimation at the moment is that it will stay on the same level than last year.

During the autumn and last year, we have proceeded to execute our Green Growth group-wide development program. There are 4 key areas, including compliance, efficiency improvement, new businesses based on sustainable development and also increasing the skill and knowledge level of the group on that topic.

Compliance area, we have been also analyzing and going through United Nations Sustainable Development Goals and analyzed which are material for YIT. Based on our analysis, the internal goals are well in line with those goals in 5 key areas. Just an example, occupational safety, responsible subcontracting and procurement and reducing environmental impact of our own operations. So we are supporting strongly global initiatives of United Nations for sustainable development on the globe.

In Housing Finland and CEE, the number of completions increased both in Finland but especially in CEE countries. At the same time, consumer sales increased and leading also to very low level of unsold completed apartments. We have also continued to increase the number of startups, both in Finland and CEE countries, compared to previous year.

The outlook for this year is positive. The consumer demand has continued on a good level. The number of completions in Finland will be a bit lower than a year ago, but at the same time, number of apartments sold to investors is on a high level.

In Housing Russia, the operating profit for the whole year was again back on black figures. Unit sales in last quarter improved, even it was a bit lower level than a year ago. But taking into account the decision to close 5 of our units, the sales in continuing units has been very strong. The number of unsold apartments is a bit high. At the same time, we have to say that it's extremely low in continuing units and then mainly those apartments for sale and completed allocated in Moskva and Moscow region.

We have also continued in expanding the service business in Russia, and one of the steps was to establish a joint venture with local player in Yekaterinburg, leading to increase of clients and number of clients in that business. Currently, we have almost 80,000 clients where we are responsible on maintenance of the apartments.

[Unchanged is] to close the units that we made last summer. We are actively proceeding in that area. Due to the reason that there were some changes in local legislation, Law 214, we have also decided that we completed -- we construct ourselves some of the projects still in Moscow region to make the closing of the unit as smoothly as possible.

We continue still to reduce our capital employed in Russian operations, as we have announced earlier. At the same time, this new Law 214 and the escrow practice is a bit increasing at capital employed, and the speed of reduction and this increase due to law change are around on the same level. So we expect that the capital employed in Russia will stay now stable during this year.

Revenue of the quarter was strongly supported by the recognition of Mall of Tripla revenue. Unfortunately, the profitability was negatively impacted the rushing within the last few weeks to complete the project in due time.

Order backlog is a bit lower, but you can notice the clear change in the content. So the number of life cycle projects, alliances and -- is clearly higher than a year ago. And I have to notice that there are, for instance, this Espoo PPP project worth EUR 240 million, which was won last quarter of the year, but it's not yet in our backlog of orders. There are also some other alliance and life cycle projects which are not yet in these figures. So there is a clear shift now from tender-based projects towards the urban development projects also in this area.

Closing of transaction of this A Tower in Keilaniemi, Espoo, was postponed to this year, and that is a bit supporting the profit for this year also of this segment.

In Infrastructure projects, the performance continued to improve, and order backlog remained strong. Also here, we have a number of projects that are not yet included in the backlog of orders. So the outlook is positive, and we expect that the improvement in operating profit of this segment continues.

And as I said earlier, those wind farms that we have been developing during last few years -- or actually several years already, are coming to the stage where we are starting to consider the selling process of those farms as well.

It has been pleasant to notice how attractive partner YIT is for the global players in real estate investor market. As you can notice from the graphs, the cash flow invested to those joint ventures and funds has been so far around EUR 158 million. Last year, we got already rental incomes, and the fair valuation impact overall is now EUR 77 million for the assets.

Last year, the return on capital employed was on a very good level, close to 40%. But it was an exceptional year. So from now on, it's good to remember that the expected profits from this segment are around 15% return on capital employed level, and that should be the level also in the future.

As mentioned, we have several projects under preparation where we are negotiating with the joint ventures or funds establishment, and then we are expecting to proceed in these areas during this year with several steps.

Then a few words concerning discontinued operations, meaning Nordic paving and mineral aggregates business. Closing of the year was successful. And if I look at the figures overall, we made a clear turnaround in this segment during the year. The most remarkable change happened in Nordic countries, especially in Norway, where we first time made a positive result. Also result in Sweden improved, clearly. And overall, the Scandinavian business was on a positive level. Even overall figures, overall production volumes have been a bit lower than a year ago.

Preparation of carve-out is proceeding well. We are ready for transferring this business with the new owner, and now we are expecting the acceptance from EU competition authorities. And the expectation is that the deal will be closed during the first or second quarter of the year immediately when we get the acceptance.

Then I give Ilkka time for a few words on the financing situation.

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Ilkka Seppo Salonen, YIT Oyj - CFO & Deputy to President and CEO [3]

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Thank you. Good morning, everyone. Just a few words about our financial position. And as it was decided in the write-up, the merger, that one of the key targets for the company is financially healthy situation, and there we are. I have only 3 slides, pretty much repeating about the Q3 report, but there are a couple of highlights which I want to say over here.

Of course, the cash flow, operating cash flow during the last quarter was strong. One important point is that we have invested quite a lot for the plots and for the future business during the last quarters, especially in the last quarter in 2019, and roughly about half of the plot investments were actually directed to the CEE countries, I mean Czech, Slovakia and Poland.

Last year, operative cash flow, EUR 205 million. During the last quarter, that has the impact from the sales of Tripla offices. If we look at 3 months behind, I would say that the cash flow was slightly better than we expected. But due to the fact that we are still making quite a lot of structural changes, there are still some room to improve that one as well.

Net debt adjusted did around EUR 600 million, and the profile in our -- or the maturity structure in our loan portfolio is pretty much the same. Only exception is that we refinanced one of our bilateral, and the expiry date over there is on 2022. So it's a little bit more diversified than it was 3 months ago.

Matrices. In gearing, we are there where we are targeting, equity ratio improving, and of course, for the bankers, important figure, the net debt-to-EBITDA is going to the right direction.

That was [certainly] about the financial position, what we are having. And please, Kari, about the outlook and guidance.

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [4]

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Yes. When we are starting a new year, we have some key focus areas. And as you can remember on the wordings earlier, the performance improvement widely in all segments is in our key focus area during the year. Of course, finalizing the sale of Nordic paving and mineral aggregates business and ensure the progress of a great project portfolio that we have are key topics. And as mentioned, in service businesses, Partnership properties and services, we are looking for several steps during the year.

The completions are important to understand the operating profit development during the year. The curve of the profits per quarter will be quite similar than in the previous years as well. And it's good to notice that, for instance, in Housing Finland and CEE, there will be more completions during the last quarter than during the first 3 quarters together. In Russia, the completions are more even, but there are still lot of completions from the units to be closed in Moscow region happening during this year. In addition, in Finland, we have a quite significant amount of projects for investors under construction, and those are reported according to percentage-of-completion method.

So as mentioned, consumer demand has continued strong. Our brand and strong track record and strong balance sheet are supporting us at the moment in market. Housing production is proceeding. Backlog of orders is on a good level and amount of projects won especially taken into account. Based on these facts, we give the guidance for 2020 in the following way, that the group revenue is estimated to be within the range of EUR 2.9 billion to EUR 3.3 billion, and group adjusted operating profit of continuing businesses being within the range of EUR 150 million to EUR 190 million. Also, that significant fluctuation is expected to be between the quarters due to normal seasonality, due to closing of sales of Business premises and due to completion schedules of residential projects. The last quarter is expected to be clearly the strongest again during this year. For the first quarter, we estimate that the adjusting operating profit will be on the level or above the comparison period.

So I thank clients and trust our personnel and partners on commitment and great work during the year.

This was our presentation today. And now we have time for questions. We are ready to answer, and we start here from the Kapyla.

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Questions and Answers

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Svante Krokfors, Nordea Markets, Research Division - Analyst [1]

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Svante Krokfors, Nordea. A couple of questions. (inaudible)

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [2]

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No, no. [Heretzi], Tripla, and Myllypuro.

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Svante Krokfors, Nordea Markets, Research Division - Analyst [3]

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(inaudible) your target is 5% to 7% EBIT margin. Can you give some color on what it would have been adjusting for cost overruns?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [4]

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Well, of course, it would be a bit better, but that is the result for last year. Now we are looking for future. Those projects are successfully completed. Myllypuro already is completed, Tripla Mall in use, hotel in use, first office in use, and then the last offices will be completed now at the end of this month. And [Heretzi] will be completed by end of this quarter. So then we have those projects behind. And at the same time, the project portfolio behind those projects has been improving. Actually, the performance has been quite well. So we expect that the performance of this segment start to improve from the second quarter of this year on.

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Svante Krokfors, Nordea Markets, Research Division - Analyst [5]

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And then on Mall of Tripla valuation, you don't disclose exactly the fair value of Mall of Tripla, but is it correct to assume that it's around EUR 800 million?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [6]

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Yes. It's a bit less than EUR 800 million. And it's good to remember that we are fair valuating the ownership in joint venture, so that's including both the real -- the value of the mall as such, plus also the incomes from the [tenants], which are now in that joint venture.

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Svante Krokfors, Nordea Markets, Research Division - Analyst [7]

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And then also on the whole Tripla project, you said that the gain from there is double what you budgeted. Can you give some flavor on how that compares with the mall, the offices and the apartments?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [8]

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All the parts of the project are profitable. Of course, this fair valuation and the real value based on the rental incomes is bigger than we expected at the beginning. And I would say so that the main part of the profits are already recognized now.

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Svante Krokfors, Nordea Markets, Research Division - Analyst [9]

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Okay. And then perhaps on the Q1 guidance, I guess, it's -- the apartment completions are lower, that's one thing. But you also postponed the Accountor Tower to Q1. So can you give a bit more color on Q1? To me, it appears a bit weak guidance.

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [10]

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Yes. As you can notice, there will be a very low number of completed apartments in all -- 2 segments and 3 market areas. So that is, let's say, leading to low level of operating profit during the year. Yes, we are targeting to close the deal of Accountor Tower during this quarter. But this is also normally a seasonally weak quarter for Infrastructure projects as well.

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Svante Krokfors, Nordea Markets, Research Division - Analyst [11]

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And then finally, on the large project pipeline that you have. How has the -- is there any change in the interest from co-investors on that point? Getting better or less interest?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [12]

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As said, we have been surprised how attractive partner YIT is for global players in real estate market, and it looks like that there is big interest to be a partner for YIT in those big projects. And that is, of course, a positive sign for us and gives us trust what we are doing and continue on that part as well.

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Olli Koponen, Inderes Oy - Analyst [13]

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Olli Koponen from Inderes. I have a couple of questions. First, on the Housing Finland side. On the market, how do you see the market for different customer groups at the moment? You said -- you pointed out that you have some oversupply in the Housing side or it is on a high level.

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [14]

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We have been extremely surprised how well we are selling apartments to consumers. And based on my discussion with the sales personnel and unit directors of Housing, it looks like that the strong position, strong brand, good track record of YIT is now supporting clearly our position on the market. Also, based on our strong balance sheet, we are able to get [Ares] financing, still very well, which is, according to my understanding, also leading to increase of the market share of YIT in this market.

Also, one observation is that our products and projects usually are located within the city structure, close to public transportation hubs and good locations overall. So it looks like that in those locations, the demand has been on a good level, and we have not been suffering on oversupply in -- practically in any areas.

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Olli Koponen, Inderes Oy - Analyst [15]

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And if we look at the Housing starts to investors last year, it was on the same level as for consumers. Would it be reasonable to expect that investor completions would be on the same level as for the consumer completions this year?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [16]

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Yes. Investor completions doesn't matter actually because we are reporting those according to percentage of completion. But production in Housing is proceeding as fast as we can, so all the resources are in use.

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Olli Koponen, Inderes Oy - Analyst [17]

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On CEE, you said that the costs are rising because of good demand. Do you see the market overheating?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [18]

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I was a bit worried on that a year ago, but now it looks like that situation is more stable. The price increases are not so high anymore than it was maybe 1, 1.5 years ago. So at the moment, my estimation is that the market situation is stable.

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Olli Koponen, Inderes Oy - Analyst [19]

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Okay. And lastly, on the outlook, it is quite wide again. Can you elaborate what are the main reasons or projects that affect this?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [20]

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This year is different compared to last 2 years when we had 1 significant project. Or -- seeing no significant projects having a remarkable impact to our profit this year, the profit is expected to come from several sources, so there are no -- any single project which is having a significant role for the profit of the year. And that is the reason also why the guidance range is now lower than a year ago at the same, same time.

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Unidentified Analyst, [21]

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(foreign language)

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [22]

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Yes. There are some question concerning the cooperation, negotiations with employees which was started at the beginning of this week. So as you know this from the guidance, the revenue of the company is slightly coming down from the last year. Also the Paving operations are prepared to be sold. So -- and then this situation has been known by us already since the summer last year. So we have been preparing the cost structure and then group organization so that it would be on the level of the group volumes overall. And now we are in a situation where then still some small adjustments are needed. Even we made already quite big adjustments during the autumn based on normal changes in the organization.

In Business premises, it's more a question on, let's say, closed at the Tripla project and move the personnel to the other projects that we are preparing at the moment.

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Unidentified Analyst, [23]

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(foreign language)

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [24]

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There was a question concerning (inaudible) decision not to invest anymore for shopping malls. So every company makes their decisions based on their own priorities, and I don't have anything to comment on that.

There is still one question in Kapyla, and then we will have questions online.

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Unidentified Analyst, [25]

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Question related to this possible extra dividend related to Paving business sales. How do you think this -- about this capital allocation? I mean, typically, you have also good returns of capital available inside YIT, for example, Regenero or other businesses. So how you have considered those 2 options to use that capital inside businesses of YIT or giving extra dividend?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [26]

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The size of the planned extra dividend is 10% of the income from selling the Paving, Nordic paving and mineral aggregates operations. So it's actually quite a small part of that. And 90% of the income is then estimated to be invested to strengthen the balance sheet and reaching the right level of gearing. And also, we have enough capacity to invest to those projects that we are planning to start during this and next year.

And now I think there is time. Questions online.

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Operator [27]

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(Operator Instructions) We'll take our first question from Anssi Kiviniemi from SEB.

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Anssi Kiviniemi, SEB, Research Division - Analyst [28]

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It's Anssi from SEB. A couple of questions still left from my side. First of all, on your Capital Markets Day, you showed a nice slide where you indicated 2020 business momentum per division, and kind of I read that it was mainly related to profits and EBITDA, and thus you've indicated that every other business will be improving except for Partnership properties. So is the situation intact the way you see it currently?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [29]

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The situation per segment is exactly the same than what we considered at the end of September. Maybe one change is that Housing Finland and CEE made better result than we estimated at the end of September last year. So there, the performance, due to reason that the completions will be maybe 200 to 300 units less than a year ago, will be very similar level.

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Anssi Kiviniemi, SEB, Research Division - Analyst [30]

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Okay. Then on Partnership properties in 2020 outlook, there's some development gains or fair value gains to be made in Keilaniemi, 2 projects there. But is there anything else in the pipeline that we should expect happening in 2020?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [31]

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There's lot of it in the pipeline, and then of course, it's better not to list those before the deals or the steps have been taken. But as we have indicated earlier, this return on capital employed of this segment of 15%, it's a good guideline to consider what could be the estimated profit from that segment during the year. And this year, I think that is a good, good guideline.

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Anssi Kiviniemi, SEB, Research Division - Analyst [32]

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Okay. In 2018 and '19, you had a couple of projects that basically generated massive EBIT support for your operations. 2020, it's not so. But when we look into 2021, is there something that is similar large project contributing to your business there?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [33]

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From the presentation, you saw the list of those big projects. We estimate that during this year, in several of those projects, we will get the accepted detailed plan, which means that after that, the startup of the projects are possible. And of course, we are targeting to have the startup of those projects as soon as possible after we get the valid city plan for the areas. Then how those are reported and what will be the impact of those, 2021, it may be early to estimate. But if you look how we have been recognizing the profit and revenue from Tripla, for instance, that is maybe the way how we are proceeding. The projects are big, so none of those is going to complete 2021.

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Anssi Kiviniemi, SEB, Research Division - Analyst [34]

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Then on your balance sheet, as yourself highlighted, it's in a good position and strong position, especially when you compare it to some of the competitors. Kind of how big of a competitive advantage in this market is your size and balance sheet compared to the competitors? Could you kind of give us examples of how you can see the competitive edges playing out?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [35]

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Well, of course, I don't know exactly the situation of the competitors, and I can't compare. But from our point of view, I can say that, thanks to strong balance sheet and strengthening balance sheet, we have been able to continue good cooperation with all the banks. We have wide limit to have [Ares] financing, for instance, which means that the number of projects [means] directly to consumers. According to Ares housing company loan principle, it is probable that our market share in that market is going to increase during this year.

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Operator [36]

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(Operator Instructions) And we'll now take our next question from Matias Rautionmaa from OP Corporate Bank.

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Matias Rautionmaa, OP Corporate Bank plc, Research Division - Analyst [37]

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Yes. Matias from OP. A few questions still left from me. So one concerning about startups. Are you able to increase your startups in Finland? When we look at your resources, you said that they are already in full use. So are you able to increase startups?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [38]

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From a plot point of view, we have opportunities to increase number of startups. From a resources point of view, it's continuously the topic. And then that is also one reason why we decided to start those cooperation negotiations with personnel, so that we are able to move people from -- between the segments so that we can allocate resources as well as possible in this market environment. And for sure, we are driving the volume of self-developed housing projects for consumers on the maximum level, also from [Ares] limits point of view.

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Matias Rautionmaa, OP Corporate Bank plc, Research Division - Analyst [39]

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Okay. Well, one further question about the potential regulation that is maybe coming to the mortgage market that will limit some -- related to take mortgage. How do you see this as a threat? And are you already preparing for this?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [40]

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First of all, we know that this type of regulation is coming. At the same time, when we look at the principles, how we are preparing the projects, we continue to try to avoid extremely expensive apartments because also, independent on mortgage development, the number of potential clients is quite limited. So we continuously are designing apartments which are according to the purchasing power of potential clients.

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Matias Rautionmaa, OP Corporate Bank plc, Research Division - Analyst [41]

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And final question. To be sure that the dividend, is it really the extraordinary with respect to your target of increasing dividends on a yearly basis?

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [42]

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So yes, we are targeting to increase the annual dividend per share. And this EUR 0.28 per share, that's the comparison figure for us in -- for coming years. So this EUR 0.12, it's connected to Paving, Nordic paving and mineral aggregates deal, and that can be seen as extraordinary.

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Operator [43]

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(Operator Instructions) There are no further questions on the phone, sir. Thank you.

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Kari Kauniskangas, YIT Oyj - Chairman of Management Board, CEO, President & Head of the Housing Segment [44]

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Okay. Thank you, and thank you for being here. I wish you all a great, great year 2020. Thank you.