CEO’s review

CEO’s review

Half-year Report 1-6/2019, 17 July 2019

In terms of earnings, the first half of the year was disappointing due to weaker margins and certain non-recurring items. In addition, slightly fewer housing units were completed and recognised as income than in the comparison period. On the other hand, during the spring and early summer, we strengthened our financial position. Extending the credit facility, together with the hybrid bond issue in May and the early repayment of loans, improved the company’s financial position and contributed to the development of our operations, earnings performance and other financing.

We are a pioneer in urban construction. This year, too, we are involved in the development of living environments for many city dwellers. A good example of this is the Ring Road I tunnel, which was opened to traffic at the beginning of June. This 460-metre tunnel is the longest concrete-structure tunnel in Finland. It is part of larger-scale urban environment development efforts in Keilaniemi, Espoo. Work on landscaping and the park deck will continue until the last months of the year. Construction started in 2016.

Housing start-ups will decline both this year and the next. Demand for housing outside of Tampere and the Greater Helsinki Area is waning compared to previous years. Private housing investors are also more cautious in their purchase decisions. Apartments in good locations – particularly small units – are selling well. At the end of June, we had 70 unsold completed residential units in Finland.

Our order backlog remains strong. During the first half of the year, we booked new orders valued at EUR 221 million. We are currently working on numerous school projects, the latest of which is a wooden Finnish-Russian school valued at EUR 23 million, as well as large hospital projects in Helsinki, Tampere and Jyväskylä, the Deck and Arena project in Tampere and the Terminal 2 expansion project at Helsinki Airport.

The occupancy rates of shopping centres in Russia are at a good level and visitor numbers saw year-on-year growth. Negotiations on the sale of the Pearl Plaza shopping centre are ongoing. In June, we signed a deal-related cooperation agreement with the Russian Sperbank.

In the future, SRV’s long-term commitment to the creation of a new kind of urban environment will continue under new leadership. I would like to wish luck and success to my successor Saku Sipola at this great company! I would like to thank all our customers, partners and SRV employees for our shared journey.

Juha Pekka Ojala

President and CEO
SRV Group Plc