Outlook for year 2011
3.11.2011
(Interim report 1-9/2011)
According to the Confederation of Finnish Construction Industries RT, the total volume of construction in Finland will see further growth of 4 per cent this year; however, in 2012 it will most likely remain at the current year’s level. Although the general economic situation has already weakened and fears of a new recession have mounted, such factors have a delayed impact on construction. Construction operations will thus remain at a reasonable level in the first half of next year thanks to the projects that have already been started up. Demand for new housing in Russia is still rising. Likewise, the volume of infrastructure construction in the Nordic countries is expected to grow by 3-6 per cent both this year and the next.
It is estimated that the construction of 30,000 new residential units will be started up in Finland in 2011, fewer units than predicted earlier this year. In 2012, the number of start-ups is forecast to drop to as few as 27,000. Increased consumer caution and the growth in the supply of new residences put the brakes on residential start-ups. The number of market-financed residential start-ups will most likely remain unchanged in the next few months, but state-supported housing production will decline substantially. Lemminkäinen estimates that it will start up the construction of about 1,200 units in its own housing development this year. In addition, the Company has already kicked off the construction of about 500 contracted residential units in 2011.
The construction of business premises in Finland will see moderate growth in 2011, but the number of start-ups is expected to head downward next year. There is demand for new business premises, especially in the growth centres, and several new projects for the construction of commercial buildings are in the pipeline. The weakening of consumer confidence will most likely be felt in the number of commercial building start-ups, as it has become harder to find tenants for pending projects. Lemminkäinen is erecting business premises in Töölönlahti, Helsinki. The total value of this large-scale project is about EUR 150 million. In addition, several individual projects for the construction of business premises and logistics facilities are ongoing. These projects are slated for completion in 2012-2013. The Company is preparing commercial building projects in growth centres, but they have as yet not been green-lighted.
There is still a great need for new housing in St Petersburg, Russia. Demand for new residential units is improved by measures to increase per capita living space, the growth in consumer purchasing power and better opportunities to get mortgages. Factors that might weaken demand in the near future include political risks in Russia and the threat of a global financial crisis, which could make it harder for consumers to get money and also increase the price of money. Lemminkäinen estimates that it will start up the construction of about 500 units in its own housing development in St Petersburg this year. The Company expects that the housing project kicked off last year – comprising about 150 residential units – will be completed towards the end of the year.
The total volume of infrastructure construction in Finland is expected to decline by about 3 per cent in 2011, but to start rising slightly next year. The market situation for rock engineering will most likely remain good in 2012, as demand is maintained by greater mining activity and underground excavation work in the growth centres. A number of new rail and railway projects will also be launched in 2012. The market for building construction impacts particularly on the demand for geotechnical engineering works, concrete products and mineral aggregates. The weak finances of cities and municipalities are now clearly evident in the decline in basic road maintenance. Lemminkäinen has a better workload in special contracting in infrastructure construction than in the corresponding period of the previous year, and the outlook for the first half of next year is good.
The volume of infrastructure construction in Sweden, Norway and Denmark is expected to grow by 3-6 per cent both this year and the next. Growth in the energy supply sector will increase demand for infrastructure construction in the next few years in all of the Nordic countries. Lemminkäinen currently has power plant contracts ongoing in Sweden and Norway as well as mine excavation contracts in Sweden. These contracts extend until 2012-2013. The construction markets of the Baltic countries are gradually improving in step with the recovery of their economies. Lemminkäinen has numerous infrastructure construction projects in progress in Estonia, Latvia and Lithuania, which extend until 2012-2013.
In Technical Building Services, growth expectations in Finland are still maintained by growth in the construction of new buildings, stricter energy requirements and the deterioration of HVAC systems. In electrical contracting, tender requests have declined in certain market areas after the summer. Decisions by housing cooperatives to delay large repair projects may also weaken the market for technical building services in the near future. Lemminkäinen’s short-term order book in Technical Building Services is satisfactory, and the margins of the order book have become healthier during the early year. The Company has set its sights on transferring the focus of operations to maintenance and servicing, increasing the share of Technical Building Services’ net sales accounted for by these services to over 50 per cent.
Lemminkäinen will keep its earlier profit guidance intact. The Company estimates that in 2011 its net sales will increase and that its pre-tax profit will clearly improve on 2010. The estimate is based on the good earnings trend in the third quarter and the high order book.
4.8.2011
(Interim Report 1-6/2011)
The European credit crisis has increased uncertainty in the markets. If this continues, it may impact on the availability of financing and weaken the economic business environment. Finland’s GDP is expected to see further growth of about 3-4 per cent this year. However, growth is forecast to slacken somewhat in 2012-2013.
According to the forecasts of the Confederation of Finnish Construction Industries RT, construction will increase by about five per cent in Finland this year. It is estimated that the construction of 31,000 new residential units will be started up in 2011, slightly less than in the previous year. Terraced houses and apartment houses account for about 20,000 of these units. Market-financed residential construction remains strong, but state-supported housing production will be down on the previous year. Lemminkäinen estimates that in 2011 it will commence the construction of a total of about 1,200 units in its own housing production in Finland, 20% more than in 2010. In addition, about 400 contracted residential units were already started up in the first half of the year.
The construction of business premises will see moderate growth in 2011. Lemminkäinen will build three new office buildings in the centre of Helsinki, valued at a total of about EUR 150 million. Construction work on the first site has already begun. The next two will be started up in spring 2012. In addition, several individual projects for the construction of business premises are ongoing around Finland.
There is still a great need for new housing in Russia, and Lemminkäinen estimates that it will start building about 500 units in its own housing development in St Petersburg in 2011. The Company expects that the housing project kicked off last year – comprising about 150 residential units – will be completed in the latter part of the year.
According to the estimates of the Confederation of Finnish Construction Industries RT and Euroconstruct, the total volume of infrastructure construction in Finland will decline in 2011. In Northern Finland, the mining industry is keeping the market for rock engineering at a good level. The pickup in building construction increases the demand for geotechnical engineering works, concrete products and mineral aggregates. Lemminkäinen has a good workload in infrastructure construction. In the case of paving works, 2011 is turning out to be on a par with 2010.
The volume of infrastructure construction in the other Nordic countries is expected to grow by 3-6 per cent in both 2011 and 2012. Government allocations for infrastructure development are substantially greater in Norway and Sweden than in Finland, and are spread over several years. In Sweden and Norway, growth in the energy supply sector will increase demand for infrastructure construction in the next few years. Lemminkäinen currently has power plant contracts ongoing in Sweden and Norway. The total value of these contracts is about EUR 60 million. Lemminkäinen has a solid workload in paving works in Norway and Denmark. Infrastructure construction in the Baltic countries remains at a low level.
Demand for technical building contracting and services are rising gradually on the heels of the growth in new building construction. Lemminkäinen expects that the trend in technical building services will improve towards the end of the year.
Lemminkäinen keeps its earlier profit guidance intact. The Company estimates that in 2011 its net sales will increase and that its pre-tax profit will clearly improve on 2010. The estimate is based on the growth in the order book and its margins.
5.5.2011
(Interim Report 1-3/2011)
According to the Confederation of Finnish Construction Industries RT, construction will see growth of about five per cent in Finland this year. Market-financed residential construction is growing, but state-supported housing production is on the wane. Lemminkäinen estimates that it will start up the construction of about 1,200 units in its own housing development in 2011. Own housing development projects will largely be completed and recognised as income to-wards the end of the year. The construction of business premises is picking up.
There is still a great demand for new housing in Russia, and Lemminkäinen estimates that it will start building about 500 units in its own housing development in St Petersburg in 2011. The Company expects that the housing project kicked off last year – comprising about 150 residential units – will be completed in the latter part of the year.
The volume of infrastructure construction in Finland has remained unchanged for a long time and is not expected to see growth this year, either. However, Lemminkäinen’s order book in infrastructure construction was larger at the end of the review period than in the corresponding period of the previous year. Thanks to the Company’s strong market position and specialised expertise in all subareas of infrastructure construction, it is well-poised for growth even in a tough market.
The volume of infrastructure construction in the other Nordic countries is expected to grow by 3-5 per cent this year. Lemminkäinen’s outlook for the rest of the year is good in infrastructure construction in Sweden, Norway and Den-mark. The Company has already commenced paving operations in the other Nordic countries, and thus the work sea-son is expected to be longer than in the previous year. In order to step up competitiveness, Lemminkäinen has down-scaled its operations in Norway and the Baltic countries, and streamlined its cost structure to match the market situa-tion.
The technical building services market is expected to improve gradually, when other types of new construction recover on the heels of housing construction. In renovation, the focus is still on measures to boost the energy-efficiency of residential buildings as well as piping renovation works. Lemminkäinen estimates that renovation, servicing and upkeep will account for a greater share of the Company’s operations in the near future.
Lemminkäinen will keep its earlier profit guidance intact. The Company estimates that in 2011 its net sales will in-crease and that its pre-tax profit will clearly improve on 2010. The estimate is based on the market situation, which is better than in the previous year, and on the year-on-year growth in the order book and its margins.
10.2.2011
Financial Statements 2010
The moderate growth in the volume of construction is expected to continue in Finland in 2011. Residential con-struction is still boosted by low interest rates and consumers’ confidence in their own finances. In 2010, Lem-minkäinen more than trebled its own housing production compared to the previous year, starting up the construction of a total of 1,191 new residential units. It is estimated that if the housing market remains favourable, the number of start-ups will also be at the same level in the year ahead. Though the annual number of business premises start-ups has most likely bottomed out, great growth cannot be expected yet.
Residential construction is estimated to remain brisk in Russia, even though slightly fewer residential units will be completed in 2011 than last year. This dip is primarily due to the low number of start-ups during the recession years. Lemminkäinen currently has about 150 residential units under construction in St Petersburg, and intends to start up the construction of more than 500 units this spring.
In 2011, the total volume of infrastructure construction in all the Nordic countries is expected to either remain at the previous year’s level or grow slightly. Thanks to Lemminkäinen’s strong market position in infrastructure construction in all its business territories, the Company is well-poised for steady growth in the year ahead. The Company’s outlays, particularly on rock engineering in Sweden, have yielded good results, and this favourable trend is expected to con-tinue in the near future. The work season for infrastructure construction in Norway is anticipated to be better than last year. Demand for infrastructure construction in Finland might be weakened by scant governmental financing and lower investments in the municipal sector.
The market for technical building services is expected to gradually return to normal as building construction picks up. In the next few years, renovation is expected to focus on piping renovation works and repairs to improve energy effi-ciency.
Lemminkäinen estimates that in 2011 its net sales will increase and that its pre-tax profit will clearly improve. This estimate is based on the better market situation and the fact that the order book is stronger than at the end of the previous year.
Updated 7.11.2011