YIT Oyj (YTY1V), Finland’s biggest residential developer, fell the most in 18 months in Helsinki trading after the building maintenance unit it’s spinning off caused first-quarter earnings to miss estimates.
The shares slumped as much as 8.9 percent, the most since Oct. 28, 2011, for the biggest drop on the Nasdaq OMX Helsinki 25 index. The stock traded down 8.3 percent at 14.98 euros at 12:40 p.m. in the Finnish capital. The volume was five times the three-month daily average.
First-quarter net income of 25.1 million euros ($32.7 million) missed the 39.2 million-euro mean estimate of nine analysts surveyed by Bloomberg by 36 percent. Operating profit for building services in northern Europe fell 85 percent to 2.2 million euros from a year earlier, while central Europe building-maintenance profit declined 34 percent to 3.4 million euros. YIT reiterated its forecast for unchanged sales in 2013 and growth in full-year operating profit.
“As a result of prolonged uncertainty the customers have postponed additional service and maintenance work further,” the Helsinki-based company said in a statement, referring to the northern European operations.
YIT’s results were “disappointing,” Sauli Vilen, analyst at equity-research provider Inderes Oy, said in a note to clients today. He has a buy rating on the shares with a 12-month price estimate of 20 euros. The company’s target to reduce 600 jobs is “inadequate,” Vilen said. “We had expected new measures from the company to turn the business around.”
The demerger of the building services unit, which includes the design, installation and maintenance of heating, plumbing and safety systems, into Caverion Oyj is on track, YIT said. Shareholders will meet on June 17 to decide on the spin off and Caverion is expected to start trading on the Helsinki stock exchange at the start of July.
“The result will drive Caverion’s pricing during its listing, as market confidence in the company will be low,” Vilen said. “Markets will have to materially lower their estimates and the company is going to be priced as a turnaround company with high risk premia.”
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