YIT – More life in sustainable cities Roadshow Lisbon March 9, 2017 Hanna Jaakkola, VP, Investor Relations yitgroup.com Contents 1 YIT in brief 3 2 Strategy and business model 8 3 Latest highlights 14 4 Housing Finland and CEE 19 5 Housing Russia 29 6 Business Premises and Infrastructure35 7 Key financials 43 8 Looking ahead and conclusions 51 9 Why invest in YIT? 54 10 Appendices 58 YIT | 2 | Investor presentation, March 2017 1 YIT in brief Merenkulkijanranta residential area Helsinki, Finland Over 100 years in Finland, over 50 in Russia, growing presence in CEE Allmänna YIT becomes Finland's No.1 Ingeniörsbyrån Expansion to Entry to construction Ab (AIB) Operations the Baltics Poland company establishes in Russia and CEE in office in begin construction Helsinki services 1912 1961 1980’s 2000’s 2015 1960’s 1995 2006 2013 YIT Demerger of Corporation Building Services: listed on the • Both companies large Stock enough to grow Today’s YIT started to Exchange independently form from 3 • Different strategies companies: Investments • and business models Perusyhtymä, Yleinen in land bank • Meaningful geographical Insinööritoimisto Oy and residential overlap only in Finland and Insinööritoimisto development in • Better management focus Vesto Oy Russia in separate companies YIT | 4 | Investor presentation, March 2017 A real estate developer and construction company with solid track record Revenue by segment*, EUR 1.8 bn 44% 41% Housing Finland and CEE Housing Russia Business Premises and Infrastructure 15% Adjusted operating profit by segment, EUR 80 million Business Premises 38 and Infrastructure Housing Russia 60 Housing Finland and CEE -2 Luokka 1 Revenue by geographical area 11% 15% Finland Russia 74% The CEE countries YIT | 5 | Investor presentation, March 2017 Figures based on segment reporting (POC) *%-shares excluding other items Balanced business portfolio HOUSING FINLAND AND HOUSING RUSSIA BUSINESS PREMISES AND CEE INFRASTRUCTURE BUSINESS We construct and develop apartments We construct and develop apartments We build offices, shopping centres, care OPERATIONS and entire residential areas. and entire residential areas, and we facilities, roads, bridges, rail and metro operate in service and maintenance stations, harbours and more. We also businesses. operate in the area of road and street maintenance. OPERATING Finland, Estonia, Latvia, Lithuania, the Seven regions in Russia: Rostov-on- Business premises: Finland, Estonia, COUNTRIES Czech Republic, Slovakia, Poland Don, Yekaterinburg, Kazan, Moscow, Latvia, Lithuania, Slovakia Moscow region, St. Petersburg, Infra: Finland Tyumen CUSTOMERS Households, private and institutional Primarily households Businesses, the public sector and investors institutional investors MAIN Lemminkäinen, SRV, Skanska, Bonava, PIK, LSR, Etalon, SU-155, Lemminkäinen, SRV, Skanska, NCC, COMPETITORS Lehto Group, Lapti, Merko Ehitus, local Lemminkäinen, local players in different Merko Ehitus, Destia, Kreate, Peab etc. players in different countries cities YIT | 6 | Investor presentation, March 2017 Our vision – More life in sustainable cities OUR VISION More life in sustainable cities OUR GROWTH ENGINE Urban development involving partners OUR DNA Result- oriented project executor OUR MISSION OUR VALUES CARE A STEP AHEAD COOPERATION PERFORMANCE YIT | 7 | Investor presentation, March 2017 2 Strategy Konepaja residential area Helsinki, Finland Revenue growth and healthy profitability through economic cycles Revenue development (EUR million) by business segment Business Premises and Infrastructure Housing Russia Housing Finland and CEE CAGR International Construction Services Construction Services Finland 5.7% Construction Services 1,929 1,841 1,716 1,800 1,793 1,632 1,631 1,573 1,660 1,399 1,448 1,384 600 1,296 489 689 599 1,112 1,143 483 487 471 616 797 356 743 828 496 474 266 268 1,329 1,149 1,144 1,028 1,102 1,227 656 727 778 728 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Adjusted operating profit (EBIT) development (EUR million) by business segment, excluding group costs 15.0% Business Premises and Infrastructure 12.3% Housing Russia 13.0% 11.8% Housing Finland and CEE 11.0% 11.1% International Construction Services Construction Services Finland 11.0% 9.1% 9.2% 9.1% Construction Services 8.9% 214 EBIT-% 7.7% 200 7.8% 9.0% 7.4% 7.3% 171 7.4% 167 6.3% 158 80 143 67 143 140 7.0% 121 31 5.4% 5.3% 108 4.6% 41 20 102 9 35 90 96 64 5.0% 70 70 56 55 61 23 38 133 134 112 108 117 11 82 3.0% 66 64 56 60 -18 -2 1.0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: Segment level figures (POC), i.e. sum of Construction Services related segment figures in YIT financial reporting and thus excluding effect of other items. YIT | 9 | Investor presentation, March 2017 Focus on reforming our operations Coach, encourage Improve internal Provide and train people agility easy-to-use services Reduce Build true Improve construction costs partnerships capital efficiency YIT | 10 | Investor presentation, March 2017 Renewed strategy for 2017–2019 More life in sustainable cities INNOVATOR ANNUAL GROWTH FOR LIVING 5–10% in Housing Solutions for urban living e.g. affordable apartments Livingservices Renovation services Performance Higher value-add for leap customers e.g. hybrids, big infra, alliances GROWTH INNOVATIVE PARTNER in Business Premises & Infrastructure YIT | 11 | Investor presentation, March 2017 We are making a difference CARE FOR • Proactive customer experience management • WOW service attitude CUSTOMERS • Digital customer journey VISIONARY URBAN • Strengthened long-term city development • Hybrid and area development DEVELOPMENT • Concepts PASSIONATE • Latest knowledge and more diversity • Empowered teams EXECUTION • Standardisation and pre-fabrication • Involving and encouraging people INSPIRING • Network excellence LEADERSHIP • Preferred employer YIT | 12 | Investor presentation, March 2017 Financial targets Long-term Target Outcome 2016 financial target level 5–10% annually on 8%, Revenue growth average 9% at comp. fx Return on investment 15% 4.7% Sufficient for Operating cash flow after investments EUR -43.1 million dividend payout Equity ratio 40% 35.1% 40 to 60% of Dividend payout 373.3%* (95.3%)** net profit for the period All figures according to segment reporting (POC) *The Board of Director’s proposal to Annual General Meeting **Calculated with adjusted EPS YIT | 13 | Investor presentation, March 2017 3 Latest highlights Vapo office Vantaa, Finland Key messages in Q4/2016 • Exceptionally strong residential sales to consumers in new projects in Finland and the CEE countries • Good progress in ongoing projects and a solid order backlog in Business Premises and Infrastructure • Operating profit positive in Russia due to good sales and high number of completions • Despite the improvement, financial key ratios still on an unsatisfactory level UPM headquarters Helsinki, Finland YIT | 15 | Investor presentation, March 2017 Group: Revenue grew and profitability improved in Q4 • Revenue increased by 10% y-o-y, 9% at comparable exchange rates • Operating profit margin improved y-o-y in all segments • Order backlog remained stable q-o-q, share of sold backlog continued to increase Revenue and adjusted operating profit margin (EUR million, %) Order backlog (EUR million) 2015: EUR 1,651 million, 4.6% 2016: EUR 1,784 million, 4.5% -1% 10% 9.0 % 2,641 2,613 514 8.0 % 469 464 444 416 7.0 % 375 392 5.6% 362 6.0 % 56% 60% 4.5% 4.3% 4.3% 5.0 % 5.5% 3.6% 5.2% 3.3% 4.0 % 3.0 % 2.0 % 44% 40% 1.0 % 0.0 % Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 9/2016 12/2016 2015 2016 Revenue Adjusted operating profit margin Unsold Sold All figures according to segment reporting (POC) Note: The adjusted operating profit margin does not include material reorganisation costs, impairment or other items impacting comparability YIT | 16 | Investor presentation, March 2017 EBIT-bridge Q4/2015–Q4/2016 • Positive profitability development in Housing Finland and CEE due to less capital release actions and shift in the sales mix Adjusted operating profit (EUR million), change Q4/2015–Q4/2016: 72% 28.7 1.3 -0.1 2.3 1.4 1.9 0.2 16.6 5.7 -0.7 YIT Group Volume Profitability Volume Profitability Volume Profitability Other items FX-impact YIT Group Q4/2015 Q4/2016 Housing Finland and CEE Housing Russia Business Premises and Infrastructure YIT | 17 | Investor presentation, March 2017 Several successes recently • Letter of intent signed on the implementation of the Tripla hotel • The implementation agreement on Tampere light rail project signed, ~EUR 110 million booked in the order backlog • Several new projects won in Business Premises and Infrastructure segment • Regenero, a JV formed by YIT and HGR Property Partners, acquired its first property in Espoo for a development project in January • Residential sales to consumers started to pick up in Finland – Smartti concept launched and 9 projects started • Expansion in the CEE countries proceeding well, a housing fund established to support the growth in the area in a capital-efficient way Ranta-Tampella residential area Tampere, Finland YIT | 18 | Investor presentation, March 2017 4 Housing Finland and CEE Koti Hyacint Prague, the Czech Republic Housing Finland and CEE Revenue, adjusted operating profit and ROI in Q4 • Revenue declined by 5% y-o-y due to less capital release actions in Finland, profitability improved due to less capital release actions in Finland and positive change in sales mix • Exceptionally high share of unit sales for