* Unit dragging group profits down, Q4 weaker than expected
* Recession-hit customers cut back on maintenance spending
* Shares jump 5.5 percent
(Adds size of spin-off, analyst's comment and share reaction)
HELSINKI, Feb 5 Finland's biggest construction
company YIT said it would spin off its building
services unit, responsible for weaker-than-expected fourth
quarter group profits, sending its shares up more than 5
The unit's operating margin was 2.4 percent last year, while
construction margins were 10.4 percent, boosted by strong sales
in Russia. Building services face tough competition as Europe's
recession-hit customers cut back on maintenance spending.
Building services, which represented 60 percent of the
group's 4.68 billion euros ($6.35 billion) sales in 2012, will
split from the construction business, be named Caverion and list
on Helsinki's Nasdaq OMX bourse, YIT said.
YIT shares rose 5.5 percent to 17.13 euros by 1057 GMT.
"It makes sense. YIT's construction business has reached a
good profitability level, they don't need the building services
any more to finance the Russian growth," said analyst Sauli
Vilén from Inderes equity research.
"The building services will have a good chance to cut costs
and restructure itself as a separate company," he said.
YIT had expanded its building services business through
acquisitions over the past decade and operate in 13 European
countries, with most sales in Nordic countries. Caverion was the
name of a German company it bought in 2010 for 73 million euros.
YIT said its total fourth-quarter 2012 operating profit for
segments, which includes earnings from works in progress, fell
11 percent from a year earlier to 67.5 million euros. Analysts
on average expected 74.5 million euros, a Reuters poll showed.
($1 = 0.7376 euros)
(Reporting by Jussi Rosendahl and Ritsuko Ando; Editing by
Louise Ireland and Ken Wills)