YIT - 3 of 4 pistons running smoothly
YIT as expected saw a return to growth in Q4 and healthy profitability figures. Expected continued weakness in the Finnish residential construction market overshadows the good performance in other segments heading into 2026. We retain our REDUCE-rating with a TP of EUR 2.9 (3.0)
No larger surprises in Q4 figures
YIT’s Q4 results were well in line with expectations, with revenue up 7% to EUR 557m (Evli/cons. EUR 565.5m/576.0m) and adj. operating profit at EUR 25m (Evli/cons. EUR 24.4m/25.3m). The EUR 70-100m guidance for comp. Group adj. operating profit (2025: EUR 50m) matched pre-Q4 expectations (Evli/cons. EUR 88m). A further positive was the raised growth targets (CAGR) for the strategy period 2025-2029 for Building construction and Infrastructure to 4% (2%) and 10% (5%) respectively. Release of capital employed through among other things the successful refinancing of Tripla aided balance sheet development, with net debt down ~100m q/q.
Good performance overshadowed by weak residential (FIN)
On a segment basis our main concerns relate to Residential Finland, while estimates for the other segments are largely intact. YIT flagged challenges relating to profitability in 2026, and with the very low number of investor apartments under construction and expected consumer apartment completions still at low levels, we now assume continued revenue decline and negative profitability for the segment. Our Group adj. operating profit estimate for 2026 is down to EUR 78m (88m). Earnings upside in 2026 in our view lies primarily on Residential CEE, where our expected >50% increase in EBIT may still prove to be conservative, along with timing of materialization of planned cost savings, and the upper guidance bracket is certainly not unachievable.
REDUCE-rating with a target price of EUR 2.9 (3.0)
We retain our REDUCE-rating and adjust our TP to EUR 2.9 (3.0). Valuation upside would in our view require good performance in all four segments and/or successful actions relating to non-core assets to further improve the balance sheet and ease the strain of financial expenses and enable allocation of capital to better growth opportunities.