YIT keeps head above water in sinking market on improving earnings

Construction sector firm YIT (OMX: YTY1V) held up relatively well after reporting considerably improved earnings on Thursday. Second quarter revenue was up 33% year-on-year to 1137 million Euro. Operating profit of 67.9 was an 89% improvement on Q2 2010 as operating margin grew from 4.2 to 6%. Order backlog is up 3% to 3.8 billion Euros for YIT group and to around 3.5 billion for the segments.

YIT has four business segments since March: Construction Services Finland builds houses and infrastructure projects in Finland, International Construction Services builds housing and commercial properties in Russia, the Baltic countries, the Czech Republic and Slovakia and Building Services Northern Europe and Building Services Central Europe (which were previously combined as ‘Building and Industrial Services’- unit) provide maintenance and management service for property and plants.

All segments saw revenue growth and only Building Services Northern Europe printed a negative number for operating profit growth as continued tight price competition and low level of new investments weighed in. The unit is under restructuring. Construction segments in particular showed good profitability with German operations as the star performer.

YIT is guiding for profitable growth to continue in 2011. It retains guidance of revenue growth and clear operating profit growth. Finland, Russia and Germany are expected to continue to provide opportunities for profitability improvement. Macroeconomic uncertainty may bring adverse effects as customers are more vary of new investments. More information is available here.