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REFILE-UPDATE 2-Profit at Finnish builder YIT falls more than expected
July 26, 2013 / 12:45 PM / 4 years ago

REFILE-UPDATE 2-Profit at Finnish builder YIT falls more than expected

(Refiles to remove extraneous letters from headline)

* Q2 EBIT falls 12 percent y/y, 32 percent in Finland

* Sales weak in Finland but Russia solid

* Sees sales and profit flat in 2013, analysts sceptical

* Shares fall more than 6 percent

By Jussi Rosendahl

HELSINKI, July 26 (Reuters) - Finnish construction company YIT posted a bigger-than-expected fall in second-quarter profit due to slower residential demand in Finland, and analysts were sceptical it could achieve its 2013 targets.

Shares in YIT, Finland’s top builder and the biggest foreign residential constructor in Russia, fell more than 6 percent on Friday after it said quarterly operating profit from continuing operations fell 12 percent to 38 million euros.

The result missed the average forecast of 42 million euros in a Reuters poll.

“The residential sales for consumers in Finland were slower due to clients’ weaker access to financing, and also, their decision-making times were longer,” chief executive Kari Kauniskangas told a news conference.

The number of flats YIT sold directly to individuals in Finland fell 49 percent from the previous quarter to 334, while the number of its completed but still unsold Finnish flats rose 20 percent. It said sales of office properties were also weak.

Finland’s economy, previously considered one of the strongest in the euro zone, has suffered a prolonged slump. Finnish GDP fell 4.2 percent in April, the biggest drop since December 2009.

The quarterly result was helped by growth in Russia, and the company repeated its full-year forecast for sales and operating profit to be unnchanged from 2012.

YIT expects long-term growth in Russia, with construction and housing prices seen increasing this year despite recent revisions in the country’s economic outlook.

But analysts said that goal may be difficult to achieve without a recovery in the Finnish market. In the first half of the year, YIT made 69 percent of its sales in Finland, 24 percent in Russia and the rest in Baltic and in Central and Eastern European countries.

“I think it is quite likely they will need to lower their guidance at some point,” FIM analyst Markus Liimatainen said.

Even before Friday’s announcement, analysts had forecast YIT’s full-year core profit, including works in progress, would fall 7 percent to 187 million euros, according to a Reuters poll.

YIT was split into two companies last month, with its former services business spun off to form a new group named Caverion . Caverion on Friday reported a 61 percent slide in its operating profit to 7.8 million euros, citing lower demand and tight competition.

YIT shares fell 6.2 percent to 10.35 euros by 1140 GMT, while the broader Helsinki bourse was flat.

$1 = 0.7555 euros Reporting by Jussi Rosendahl; Editing by Ritsuko Ando and Anthony Barker

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