Source January–June 2025 Half-year Report, published on 8 August 2025:
"Private demand in the market remained weak in the first half of the year. Due to the exceptionally long period of weak market conditions, competition for contracts, including cooperative projects, has tightened. However, there are signs of improvement. Stronger sales of older residential units, a number of larger real estate portfolio transactions that have been completed and the development of financing for new funds create confidence in the turnaround ofthe market, but it is difficult to assess when and how strong it will be. In line with our strategy, we are continuing to focus on bolstering our project development portfolio in both residential and business construction in order to respond to opportunities opened up by the market turnaround and by managing our profitability through prudent risk management and project selection.
We cannot be satisfied with the second quarter of 2025. Our revenue declined by 9 per cent compared to the comparison period and was EUR 169 million. Also, our operative operating profit contracted of the comparison period. In particular, the lower volumes in development projects and the lack of developer-contracted housing projects strained our ability to generate profits. The leasing of business premises in our office skyscraper development project Horisontti accelerated towards summer. Half of the premises are now leased but due to the slower lease pace we had to recognise lease responsibilities to our second quarter result. However, margin accrual in cooperative contracting remained strong and the margin in infrastructure construction improved on the comparison period.
Our order backlog decreased in the second quarter and stood at EUR 932 million at the end of June. We estimate that the flow of orders will be signifantly stronger during the third quarter. Tendering activities continue to be active, and we are identifying projects worth several billion euros that will be included in the tender calculations of public and private actors in the coming years. In addition, previously won contracts and projects under preliminary contracts that have not as yet been recognised in our order backlog totalled around EUR 625 million at the end of June. These include the Turku Ratapiha project and the
next phases of the Helsinki Laakso Joint Hospital.
The company's balance sheet is healthy. The number of unsold, completed residential units remained low at the end of June, and most of the units are leased at the moment. In June, we agreed on a new EUR 40 million unsecured revolving credit facility with our main financing banks. It is tied to our sustainability targets and strengthens our liquidity during the next three years. Our robust financial position and balance sheet are major strengths in the uncertain market situation.
Alongside the challenges posed by the market, we have made significant strides in continuously improving our operations. Project management is in good shape and efficiency is being enhanced, as evident in a number of key indicators. The rolling 12-month accident frequency rate, which is a good indicator of performance in project management and highly relevant for occupational safety, declined and was 8.9 at the end of June. Our customers are satisfied with our operations, and our NPS B2B customer satisfaction rating was 69 at the end of June. Our employees are motivated, as shown by our good NPS of 29. I am particularly pleased with our revised values, which are the outcome of extensive discussions: We're great to work with, Our expertise delivers results, Our enthusiastic approach takes us far. I believe that our values have been taken to heart by all our employees and that they support our efforts in ensuring personnel well-being, good customer service and delivering results.
We continued to forge ahead with our lifecycle-wise strategy during the review period, and in June we published a biodiversity roadmap to guide our approach to taking biodiversity into consideration in our business operations in 2025–2030. We were the first construction company to include a nature footprint target in our roadmap. The aim is to reduce the nature footprint at the corporate level and increase the positive nature handprint in cities.
In July, after the review period, we signed an agreement with real estate investment company Balder Finland for the sale and completion of the Market Square Hotel in the centre of Oulu. Thanks to this agreement with the new investor partner, construction will be restarted in autumn 2025 once the required amendments to the land lease agreements have been signed. The Market Square Hotel will be completed in summer 2026.
Due to low demand among consumers and investors, our strategy of stepping up the share of development projects in our portfolio has been delayed. During 2025, no developer-contracting projects will be recognised as income because, unlike other types of projects, developer-contracted housing is only recognised as income upon completion. A housing project intended for sale to consumers that we started up in February, Asunto Oy Espoon Niittykummun Neuvokas, will be recognised as income when completed in summer 2026.
Lower interest rates, slower inflation, the positive trend in wages and smaller taxes on work are boosting consumers' purchasing power, thereby improving opportunities for buying a residential unit; though, uncertainty about the economy is still weighing down on home-buying intentions. As interest rates remain moderate and Finland's GDP develops favourably, we expect the investor and tenant demand to gradually strengthen, of which a sign is the first portfolio deals. We have many interesting projects under development and are in a good position from a supply perspective to respond to a market turnaround. The urbanization development continues strong and we aim to launch projects for sale to consumers during this year in Finland."
Saku Sipola
President and CEO
SRV Group Plc