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SRV - Profitability below expectations

SRV’s Q4 profitability fell below our expectations, with the operating profit at EUR 0.1m (Evli EUR 7.8m). Revenue was EUR 299.8m (Evli 299.6m). Profitability was burdened by additional costs from the REDI shopping centre and impairment charges in International Operations. SRV expects revenue to grow in 2019 compared to 2018 (EUR 959.7m) and the operative operating profit to improve compared to 2018 (EUR -10.0m) and be positive.
  • Revenue in Q4 was EUR 299.8m (EUR 338.7m in Q4/17), in line with our estimates (Evli EUR 299.6m). Growth in Q4 amounted to -11.5 % y/y.
  • Operating profit in Q4 was EUR 0.1m (EUR 11.2m in Q4/17), below our estimates (Evli EUR 7.8m), at a margin of 0 %. The operative operating profit amounted to EUR 1.5m and was affected by rising costs, additional REDI costs of EUR 11.1m, an impairment of EUR 4m in International Operations, and a EUR 14m capital gain for the sale of SRV Kalusto.
  • The order backlog strengthened to EUR 1,832m (2017: EUR 1,574.9m)
  • Guidance: SRV expects the full-year consolidated revenue for 2019 to grow compared to 2018 (EUR 959.7m). The operative operating profit is expected to improve compared to 2018 (EUR -10.0m) and to be positive. A total of 809 developer-contracted housing are estimated to be completed in 2019 (526 in 2018).
  • Dividend proposal: SRV proposes that no dividend be paid for FY2018.

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