Lemminkäinen Group

1 November 2012:
Interim Report 1-9/2012

Finland

Low interest rates and the tax changes that will come into force at the beginning of next year might boost housing sales towards the end of the year. However, in the long run, in addition to the tax changes, the bleaker outlook for the export industry and the general economic uncertainty weaken the desire to buy residences. It is estimated that in 2013 housing starts will remain at the present year’s level. If the market situation permits, Lemminkäinen is prepared to start the construction of about 1,000 residential units built as development projects next year.

The total volume of other new building construction is expected to decrease in 2013. It is forecasted that only a few new commercial and business premises will be started up. In the future, industrial construction will focus on energy production. The volume of renovation construction is expected to continue to rise steadily.

The total volume of infrastructure construction is not estimated to grow either this year or the next. Growth is prevented by factors such as slow economic growth and the financial challenges in the public sector. Rising input costs are expected to decrease basic transport infrastructure maintenance and further weaken the condition of roads. The demand for special contracting in infrastructure construction is maintained at a good level by underground urban construction, demanding city-centre projects and new mining projects. Lemminkäinen has a good order book in infrastructure construction and its margins are higher than before.

The outlook for the maintenance and upkeep of technical building systems is estimated to remain stable in the near future. Demand for building repair works is also estimated to be good, but competition is tightening significantly. This is already evident in price levels in this area. Demand for technical building service contracting has declined due to the slowdown in new building construction, and this trend is expected to continue next year. Lemminkäinen has a satisfactory order book in technical building service contracting. In addition, the company has signed several new long-term maintenance and upkeep agreements during 2012.

Other markets

The governments of Norway, Sweden and Denmark are implementing multi-year transport infrastructure development plans. These three countries are also investing heavily in the development of energy production. Mining in Northern Sweden increases demand for infrastructure construction. Large-scale road projects have been planned for the areas around Sweden’s growth centres.

Of Lemminkäinen’s key market areas, Russia is seeing the greatest growth in the total volume of construction. In St Petersburg, the factors that support the demand for residential construction are the growth in consumer purchasing power, the better availability of consumer mortgages and migration. The challenges in Russia include the authorities’ decision-making processes and rapid changes in regulations.

Infrastructure construction activity in the Baltic countries has picked up. A record number of road construction and improvement projects have been started up this year. However, the growth trend in infrastructure construction in the Baltic countries will be determined by the availability of financing.

Lemminkäinen´s Profit guidance for 2012:

Lemminkäinen estimates that its 2012 net sales will remain at the same level as in 2011, and that its pre-tax profit will improve on 2011. This estimate is based on the cost savings achieved by the efficiency programme as well as the completion of 700 residential units built as development projects in the fourth quarter. In 2011 Lemminkäinen´s net sales totalled EUR 2,183.9 million and pre-tax profit EUR 25.0 million.

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2 August 2012:
Interim Report 1-6/2012

Finland

The Finnish housing market is quite stable. That said, fewer residential units will be started up this year and the next year compared to 2011. Due to the market uncertainty, the advance reservation requirement for residential start-ups will be raised, especially outside of the Helsinki Metropolitan Area. Exceptionally low interest rates and consumers’ firm confidence in their own finances are supporting demand for housing. Lemminkäinen estimates, that in 2012 it will start up the development and construction of about 1,100 residential units.

The volume of new building construction is expected to decline this year. Plenty of commercial construction projects are being planned, but no start-up decisions have been made yet. The market for renovation in building construction is somewhat better. Lemminkäinen has several ongoing projects to repair public service buildings in 2012 and 2013. In the Helsinki Metropolitan Area, the company is currently working on large-scale new office construction projects.

The volume of infrastructure construction is expected to decline this year, largely due to the decrease in building foundation works. A number of new rail and railway projects will be launched in 2012. In infrastructure construction, demand for special contracting is maintained by underground urban construction, demanding city-centre projects and mining. Scarcity of funding and a rise in input costs decrease basic transport infrastructure maintenance and further weaken the condition of the traffic routes. Lemminkäinen has a good order book for 2012 in all business areas of infrastructure construction.

Demand for maintenance, upkeep and technical repairs is also likely to remain good during the rest of the year. Thanks to the brisk construction of new buildings last year, the market for technical building service contracting is good. The company has also signed several new long-term maintenance and upkeep agreements during 2012.

Other markets

Infrastructure construction will continue to grow in Sweden, but residential construction is expected to decline substantially compared to 2011. Infrastructure construction in Sweden is supported by large-scale transport infrastructure projects in the growth centres and mining operations in Northern Sweden. The volume of infrastructure construction in Norway and Denmark is expected to grow by more than 5 per cent both this year and in 2013. The growth drivers are large investments in new road and railway projects and in energy and hydropower plants. Lemminkäinen has ongoing power plant contracts and special contracting projects in infrastructure construction in Sweden and Norway. The company also won several paving works during early 2012.

In Russia, demand for residential construction in St Petersburg is expected to remain good. Factors that impact on residential unit demand include consumer purchasing power, domestic population shifts, the availability of consumer mortgages, and the general political and economic climate in Russia. Lemminkäinen has few completed residential units for sale in Russia. The company estimates that its new site containing about 400 units will be gradually completed by mid-2014.

Activity in infrastructure construction in the Baltic countries has increased, but construction costs have risen quickly. During the current year, Lemminkäinen has won many road construction and renovation projects in various parts of the Baltic countries.

Lemminkäinen’s profit guidance for 2012

Lemminkäinen will keep its profit guidance intact. The company estimates that its 2012 net sales will remain at the same level as in 2011, and that its pre-tax profit will improve on 2011. Lemminkäinen’s estimate is based on good performance during the first half of the year, as well as a larger order book and order book margin than in 2011.

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3 May 2012:
Interim Report 1-3/2012

Finland

Compared to the other Nordic countries, Finland's housing market is stable. Internal migration and exceptionally low interest rates are supporting demand for housing. Lemminkäinen estimates that it will start up the construction of about 1,100 units in its own residential development in Finland in 2012.

The volume of new construction is not expected to rise this year. Weak tenant demand is delaying the start of new commercial construction projects. Steady growth is, however, expected to continue in renovation construction. Lemminkäinen has several ongoing renovation projects for public service buildings in 2012 and 2013.

The volume of infrastructure construction is expected to remain at the same level as in 2011, or even to drop slightly. Demand for special contracting in infrastructure construction is being maintained by underground urban construction, demanding city-centre projects, and an increase in mining operations. A number of new rail and railway projects are also being launched in 2012. Paving volumes are not expected to increase, and demand may also be weakened by the rising price of bitumen. Overall, Lemminkäinen's order book for infrastructure construction is larger than in 2011.

A fall in the volume of new building construction may weaken demand for technical building services towards the end of the year. Demand for maintenance, upkeep and technical repairs is more stable, and the market situation is not expected to weaken significantly. Lemminkäinen has a satisfactory workload in technical building services, and its order book margin is better than last year. The company has also signed several new long-term maintenance and upkeep agreements during 2012.

Other markets

In Sweden, Norway and Denmark, infrastructure building volumes are growing faster than in Finland. In Sweden, major motorway projects in Stockholm and mining operations in Northern Sweden are boosting construction volumes. In Norway and Denmark, the number of road and rail projects has increased, which supports demand for paving. Growth in the energy supply sector will increase demand for infrastructure construction in all of the Nordic countries. In Sweden and Norway, Lemminkäinen has ongoing power station contracts and specialised infrastructure construction projects. The company also won several paving works during early 2012.

In Russia, demand for residential construction in St Petersburg is expected to remain good. Factors that affect the demand for residential units include consumer purchasing power, internal migration, the availability of consumer mortgages, and the general political and economic climate in Russia. Lemminkäinen has few completed residential units for sale in Russia. The company estimates that its new site containing about 400 units will be gradually completed by the end of 2013.

Activity in infrastructure construction in Estonia is increasing. Construction costs have risen quickly throughout the Baltic countries.

Lemminkäinen's profit guidance for 2012

Lemminkäinen's guidance remains unchanged. The company estimates that its 2012 net sales will remain at the same level as in 2011, and that its pre-tax profit will improve on 2011. Lemminkäinen's estimate is based on good performance during the first quarter, as well as a larger order book and order book margin than in 2011. The company estimates that the construction market will remain stable.

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9 February 2012:
2011 Financial statements bulletin

Finland

The volume of new building construction is expected to decrease in 2012. Residential unit start-ups are restrained by the uncertain economic outlook and growth in new residential unit offering. Factors that support apartment purchasing continue to consist of increasing household income, low interest rates, and stable employment rates. Lemminkäinen estimates that it will start up the construction of about 1,000 units in its own residential development in Finland in 2012.

The real estate market has slowed down, and yield requirements, particularly for sites outside growth centres, have grown slightly. Demand for commercial construction is weakened by the cautiousness of tenants, who are not eager to get involved in ongoing projects. Lemminkäinen has extensive ongoing business premise projects in the Helsinki metropolitan area, and the order book for business premises is satisfactory. The company is preparing commercial building projects in growth centres, but they have as yet not been green-lighted.

The possibility of a slowdown in new building construction reduces demand for building technical service projects, although the industry will be impacted by this only after a delay. The growing need for piping renovations, repairs that improve energy efficiency and changes in heating methods increase the demand for building technical services and renovation regardless of economic trends. Lemminkäinen’s order book in Technical Building Services is satisfactory, and the margins of the order book have clearly become healthier.

The volume of infrastructure construction is not expected to grow in 2012. Paving volumes are also likely to remain on the 2011 level. Demand for rock engineering 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. Lemminkäinen has various ongoing special contracts in infrastructure construction around Finland, and the order book, in its entirety, exceeds that of the previous year.

Other markets

In Sweden, Norway and Denmark, the volume of infrastructure construction is growing faster than in Finland. In Sweden, demand is increased by major motorway projects in Stockholm and mining activity Northern Sweden. In Norway and Denmark, the number of road and rail projects has increased, which also supports the demand for paving works. The construction markets of the Baltic countries are gradually improving along with the recovery of their economies. Lemminkäinen has numerous infrastructure construction projects in progress in Norway, Sweden and the Baltic countries, which extend until 2012 - 2013.

In St. Petersburg, Russia, residential construction volumes are expected to remain roughly on the level of the previous year. Factors that impact residential unit demand include consumer purchasing power, domestic population shifts, the availability of consumer mortgages, and the general political and economic climate in Russia. Good plots are increasingly difficult to obtain, which may, to some extent, hamper new start-ups. Lemminkäinen has initiated a project of about 400 residential units on the Vasily island in St. Petersburg, and estimates the project will be completed in phases by the end of 2013.

Lemminkäinen’n profit guidance for 2012

Lemminkäinen estimates that in 2012, its net sales will remain on the same level as in 2011, and that its pre-tax profit will improve on 2011. This company’s estimate of its net sales and profitability development is based on the year-on-year growth in the order book and its margins. The guidance is also based on the assumption that the market situation will not deteriorate considerably from late 2011.

Updated on 1 November 2012