YIT Slumps Most in Two Months as Crisis Hurts Maintenance Unit
“In central Europe, there are fewer projects and price competition is tougher,” Chief Executive Officer Juhani Pitkaekoski said in a phone interview. “The market for large projects has changed.”
YIT fell as much as 2.9 percent, the most since Aug. 22. Shares in the Helsinki-based construction company dropped 1.7 percent to 14.85 euros at 4:08 p.m. in the Finnish capital with a volume 25 percent above the three-month average, making it today’s biggest decliner in the OMX Helsinki 25 index.
The operating profit margin in YIT’s central European building services unit declined to 2.6 percent in the third quarter from 3.7 percent a year earlier, the company said in a statement. Building services includes the design and installation of heating, plumbing and safety systems.
The 17-member euro area contracted 0.2 percent in the second quarter from the prior period as the debt crisis undermined sentiment among companies and consumers. Sweden offers the most improvement potential in a 40 million-euro cost savings plan from 2013, YIT said today.
“Revamping big business units always takes time, unfortunately,” Pitkaekoski said. “We’re a bit behind in profitability improvements in Sweden.”
YIT’s third-quarter net income of 46.3 million euros beat by about 20 percent the 39.1 million-euro average estimate of 10 analysts surveyed by Bloomberg. Construction accounted for about three quarters of the 68.4 million-euro operating profit in the quarter, driven by Finnish and Russian housing demand, YIT said.
“Russia as a whole was an extremely good result,” Sauli Vilen, an analyst at equity-research company Inderes Oy said by phone. “The company is finally starting to meet the expectations there.”
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