Lemminkäinen Group

8 May 2013
(1-3/2013 Interim report)

Finland

Housing sales surged to a record high in January–February before the changes in the asset transfer tax came into force at the beginning of March. There was minimal commercial construction outside the Helsinki metropolitan area, and several upcoming projects were postponed or completely suspended. Demand for renovation construction remained good.

Weak economic growth and tight public-sector budgets weakened demand for infrastructure construction. A rise in input costs has eroded funds for basic highway maintenance, which has caused further deterioration in the condition of the country's roads. Underground construction in urban growth centres remained brisk with numerous parking facilities in particular being built. The number of bridge renovations also increased. The extended winter reduced demand for paving and mineral aggregates.

Demand for technical building services rose, and a greater number of long-term property upkeep and maintenance agreements were signed. The market situation for contracting in technical building services was notably weaker.

A downswing in the general market situation in construction has led to an increased supply of subcontractor services, particularly in the Helsinki metropolitan area. Since the turn of the year, there has also been a slight fall in the material costs, excluding certain specialised products. However, according to Statistics Finland, total construction costs in March 2013 had risen by about one per cent on March 2012.

Other countries

Demand for infrastructure construction remained at a good level in Scandinavia. In Norway in particular, there have been plenty of road construction and basic improvement contracts on offer, and this has attracted infrastructure contractors from all across Europe. This increase in competition has been reflected in the price level of contracts. In early 2013, Norway and Denmark announced further long-term State investments in infrastructure development. While Denmark is focusing on rail projects, Norway is allocating further funds not only for road and rail investments, but also for road maintenance. The exceptionally cold and snowy winter delayed the start of the paving season, especially in Denmark and southern Norway.

In St Petersburg, delays in the authorities' permit processing have slowed down the start of new residential projects. The construction and repair of major inter-city highways boosted demand for infrastructure construction in Russia. Although demand for infrastructure construction remained at a good level in Latvia and Lithuania, the market situation weakened in Estonia.

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7 February 2013
(Lemminkäinen´s Financial statements bulletin 2012)

Finland

Start-ups for residential construction decreased by about 10 per cent on the previous year. The demand for small and medium-sized apartments remained good in the Helsinki Metropolitan Area and other urban growth centres. Few commercial premises were built outside the Helsinki Metropolitan Area. A lot of projects were in the pipeline, but their launches were delayed or discontinued. However, demand for building renovations remained good, and the number of renovation projects continued the steady growth trend of the past few years.

The outlook in infrastructure construction weakened after the summer, and the total volume fell on the previous year. Difficulties in the public sector reflected in the infrastructure construction market and, for example, the demand for mineral aggregates weakened during the second half of the year. Underground construction in city centres and mining operations in Northern Finland were brisk.

Demand for the renovation of technical building systems focused on piping renovations in residential buildings and improving the energy-efficiency of buildings. Demand for upkeep and maintenance of technical building services rose, and a greater number of long-term repair and maintenance agreements were signed. The construction of commercial premises slowed significantly outside urban growth centres, which reduced demand for contracting services in technical building systems.

Other markets

The Swedish government’s long-term investment plan to develop the country’s infrastructure maintained a good level of activity in transport infrastructure construction. Growth in mining operations in Northern Sweden increased demand for rock engineering. Norway and Denmark’s many ongoing road and railway projects, coupled with increased investments in energy production, encouraged new players to enter the market.

In the Baltic countries, construction has recovered alongside the rest of the economy. Several EU-funded road construction and renovation projects were started in 2011–2012.

Of Lemminkäinen’s key market areas, Russia is experiencing the fastest growth in its total volume of construction. The delays in permit processing in St Petersburg slowed the launch of new residential construction projects. The prices of new housing units in St Petersburg rose by almost 10 per cent during 2012. The construction and repair of major inter-city highways boosted the demand for infrastructure construction.

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1 November 2012
(Lemminkäinen´s Interim report 1-9/2012)

Finland

Fewer residential units were started up than last year. However, sales of small and medium-sized apartments were steady in the growth centres and the Helsinki Metropolitan Area. A greater number of small apartments in city centres were bought as investments. Few business premises were built outside the Helsinki Metropolitan Area. Demand for renovation in building construction remained good.

The outlook for infrastructure construction weakened after the summer. The difficulties in the public sector and the rise in raw material prices decreased the amount of infrastructure investments and, for example, paving work. That said, special contracting in infrastructure construction – such as underground construction in city centres – remained brisk.

In technical building services, demand for contracting weakened towards the end of the year due to the slowdown in new building construction. Demand for the renovation of technical building systems focused particularly on measures aimed to improve energy-efficiency of buildings and piping renovations in residential buildings. A greater number of long-term property maintenance and upkeep agreements were signed.

Other markets

The Swedish government’s long-term investment programme for infrastructure development maintained infrastructure construction activity at a good level. Growth in mining operations in northern Sweden increased the demand for rock engineering in particular. The market for infrastructure construction remained good in Norway and Denmark. Demand increased due to many ongoing road and railway projects and growing investments in energy production.

In the Baltic countries, construction has recovered gradually with the rest of the economy. The market for infrastructure construction picked up significantly, as several road construction and renovation projects were started up in 2011 – 2012.

Of Lemminkäinen’s key market areas, Russia is seeing the fastest growth in its economy and the total volume of construction. Residential construction was brisk in St Petersburg and the prices of new residences have risen by almost 10 per cent in 2012. However, the authorities’ slow processing times have led to delays in the launch of new projects

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2 August 2012:
Lemminkäinen´s Interim Report 1-6/2012

Finland

The uncertain economic situation was evident in residential construction. Fewer residential units were started up than last year. During the first half of the year, housing sales remained steady in the growth centres and the Helsinki Metropolitan Area. The construction of commercial premises and offices was concentrated mainly in the Helsinki Metropolitan Area. Retail stores were also built outside the growth centres. The volume of renovation construction continued to grow steadily.

In infrastructure construction, demand for special contracting increased due to underground urban construction and numerous demanding city-centre projects, such as underground car parks. Activity in building foundation engineering was also brisker than expected. Savings measures in the public sector and the rise in construction input costs have reduced the demand for infrastructure construction. However, this has not had an effect on the paving business yet – plenty of paving work was available during the first half of the year.

Demand for technical building services has remained at a good level. In renovation construction, demand was increased by works to improve energy efficiency and changes in building heating methods. In addition, more cooling systems were installed during repair works. A greater number of long-term property maintenance and upkeep agreements were signed.

Other markets

The Swedish government’s long-term investment programme for infrastructure development maintained the infrastructure construction activity at a good level. Growth in mining operations in northern Sweden increased the demand for rock engineering in particular. The market for building renovation remained stable, but fewer new buildings were started up than last year.

In Norway and Denmark, the volume of infrastructure construction grew due to many ongoing road and railway projects and greater investments in energy production. The good market situation in Sweden and Norway has increased competition, as new players from the rest of Europe have entered these markets.

In the Baltic countries, construction has recovered gradually in step with the rest of the economy. Infrastructure construction accounts for about half of all construction in these countries. A greater number of road construction and renovation projects were started up in the first half of the year.

The demand for residential construction in Russia was supported by the growth in consumer purchasing power, the better availability of consumer mortgages, and the decline in interest rates. In St Petersburg, the authorities’ slow processing times have led to delays in the launch of new projects in 2012.

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3 May 2012:
Lemminkäinen´s Interim Report 1-3/2012

Finland

The uncertain economic situation was reflected in construction activity, but its impact was less than feared. The housing sales remained steady throughout the first months of the year. Weak tenant demand decreased the launch of business and commercial building projects, but there was brisk demand for the construction of individual retail stores, even outside growth centres. Renovation construction continued to grow steadily, and more renovation contracts were on offer for public service buildings in particular.

Underground urban construction and demanding city-centre projects maintained a good market situation in special contracting in infrastructure construction. In building construction, the number of new construction projects was higher than expected, which increased activity in foundation construction and maintained demand for mineral aggregates and concrete products. An increasing number of Lemminkäinen's paving and civil engineering projects have been concentrating on growth centres.

An increase in building construction last year maintained good demand for technical building services. Improvements to energy efficiency and changes in heating methods increased demand for renovations. More long-term agreements for property maintenance and upkeep were also signed.

Other markets

In Sweden, ongoing tunnel projects and mining operations maintained good workloads in civil and rock engineering. In building construction, the market situation for renovations remained stable, and new residential construction continued to grow.

In Norway and Denmark, the market situation in infrastructure construction remained good. More road construction and basic renovation projects are being launched in the Baltic countries, especially in Estonia.

In Russia, demand for new residential construction in St Petersburg remained high. Demand for residential construction in Russia is being supported by growth in consumer purchasing power and the increased availability of consumer mortgages. Authorities' slow processing times delayed the launch of new projects.

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9.2.2012:
Lemminkäinen´s Financial Statements Bulletin 2012

Finland

The operating environment for construction was stable during the first half of the year, but in the autumn economic uncertainty increased markedly. However, weakened consumer confidence did not impact in residential unit sales, which remained steady during the entire year. Low interest rates, insignificant growth of unemployment, and the population shift to growth centres have maintained demand for new housing.

After two consecutive years of decline, there was an upturn in the construction of business and commercial premises in 2011. The total annual volume of business premise construction still lagged behind the peak year of 2008 by approximately one fifth. Trading in real estate slowed down towards the end of the year, and the yield requirements for sites, particularly outside growth centres, were up slightly. A great number of construction projects were being planned. Finding tenants, however, proved to be challenging, and this slowed down project initiation. After the 2008 recession, the annual number of start-ups in industrial construction has remained below the long-term average.

The total volume of infrastructure construction decreased for the third year running. The government and municipalities have cut their allocations for basic road maintenance and road investments. The market for rock engineering was good. Demand was maintained particularly by underground rock excavation works in growth centres and mine investments in Northern Finland. New building construction projects kept the demand for geotechnical engineering works, concrete construction and mineral aggregates at a good level. The volume of paving works remained close to the level of the previous year despite the price increase for bitumen products.

Growth in building construction increased the demand for technical building projects as well as for maintenance and servicing. Demand for electrical contracting was down after the summer, but regional variations were considerable. As for technical building system renovation projects, the order book grew due to piping renovations in residential buildings, repairs improving the energy efficiency of buildings, and changes in heating methods.

Other markets

In Sweden, highly active mining operations and major tunnel projects have kept rock engineering contractors busy in 2011. The state of Sweden has allocated considerable resources to the development of the country’s infrastructure, thus increasing the total volume of infrastructure construction for several years running. The building construction market situation in Sweden is good for renovation projects in particular.

The volumes of infrastructure construction in Norway and Denmark grew by approximately 5 per cent in 2011. In both countries, the paving season was better than in the previous year. Demand for infrastructure construction was also boosted by the growth of the energy supply sector, and several ongoing road and rail projects.

The economies of the Baltic countries started out on the road to recovery, but construction was still muted. The number of road construction and renovation projects exceeded that of the previous year. In Estonia, demand for infrastructure construction grew faster than in other Baltic countries.

According to the estimates of Euroconstruct, the volumes of new residential construction in St. Petersburg, Russia, grew by approximately 10 per cent compared to the previous year, with the value of the business reaching EUR 2.8 billion. Prices for new apartments were up by approximately 8 per cent. The demand for residential construction in Russia was supported particularly by the growth in consumer purchasing power, and the better availability of consumer mortgages. More and more apartment buyers finance their apartment with a mortgage, and the numbers of granted mortgages showed a considerable increase.  

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3.11.2011
Lemminkäinen's Interim Report 1-9/2011


Operations in Finland

The operating environment for construction remained relatively stable in spite of the rise in general economic uncertainty. Consumer confidence has weakened substantially, but this has not as yet been felt in housing sales, which have remained steady during the entire year. Low interest rates and the population shift into growth centres have maintained demand for new housing.

The construction of business premises has seen moderate growth this year, although office vacancy rates are high in certain areas. The construction of commercial premises was supported by the consolidation of retail outlets into ever-larger business units. However, finding tenants poses challenges, slowing down the start-up of many commercial buildings that are in the pipeline. Property investors are still cautious in their decision making. The number of start-ups in industrial construction has remained below normal after the 2008 recession.

The total volume of infrastructure construction in 2011 is expected to fall short of the previous year. Demand was weakened by higher input prices and the scarcity of financing available to clients. In particular, the government and municipalities have cut their allocations for basic road maintenance and road investments. Fewer new civil engineering projects were started than last year. The market for rock engineering was good. Demand was maintained by mine investments and underground rock excavation works in growth centres. On the other hand, the good workload in rock engineering attracted foreign players into the infrastructure construction market. New building construction projects kept the demand for geotechnical engineering works, concrete construction and mineral aggregates at a good level. In the case of paving, 2011 is turning out to be on a par with 2010.

Demand for technical building contracting and services increased during the first part of the year on the heels of the growth in new building construction. Profitability in this field also improved slightly. Demand for electrical contracting declined after the summer. Great regional differences were seen in demand. Brisk building construction increased demand for HVAC installation work and services.

Operations outside Finland

In Sweden, large tunnel projects and highly active mining operations have kept rock engineering contractors busy in particular. The Swedish government has made large outlays on infrastructure development, which has substantially increased the volume of infrastructure construction work. In building construction, the workload was good in both new construction and renovation.

In Norway and Denmark, the paving season has been significantly better than it was last year. Demand for infrastructure construction has also been increased by growth in the energy supply sector and numerous ongoing traffic route projects.

The economies of the Baltic countries started out on the road to recovery, but infrastructure construction was still muted. That said, more road renovation and construction projects have been started up this year than in 2010.

In St Petersburg, Russia, the prices of new residential units rose by about 8% and those of old units by about 5% during the first part of the year. More and more homebuyers wish to finance their homes with mortgages. The amount of mortgages granted in St Petersburg almost tripled year-on-year.

Updated 27 February 2013