SRV Financial Statement Release 1–12/2023: Order backlog grows to over one billion, driven by business construction; amount of unsold apartments is low – result burdened by weak demand for housing


SRV Financial Statement Release 1–12/2023: Order backlog grows to over one billion, driven by business construction; amount of unsold apartments is low – result burdened by weak demand for housing

October–December 2023 in brief:

  • Revenue totalled EUR 181.8 (181.2) million (+0.3 %).
  • Operative operating profit amounted to EUR 2.4 (0.2) million with an operating profit of EUR 3.1 (-6.3) million. 
  • Cash flow from operating and investment activities totalled EUR 13.6 (4.6) million.
  • New agreements valued at EUR 253.1 (287.2) million were signed in October–December.

January–December 2023 in brief:

  • Revenue totalled EUR 610.0 (770.1) million (-20.8 %).
  • Operative operating profit amounted to EUR 1.1 (18.9) million with an operating profit of EUR -6.8 (-76.4) million. The divestment of SRV Russia Oy in the third quarter had a EUR -9.5 million impact on operating profit, of which EUR -9.3 million consisted of the recognition of translation differences in income. 
  • The result before taxes was EUR -15.8 (-79.1) million.
  • Earnings per share were EUR -0.9 (-6.6).
  • Cash flow from operating and investment activities totalled EUR 0.0 (-8.0) million.
  • The equity ratio fell to 34.4 per cent (36.3% 12/2022) and gearing rose to 71.7 per cent (55.1% 12/2022). Excluding the impact of IFRS 16, the equity ratio was 48.0 (48.2) per cent and gearing was -4.3 (-7.5) per cent.
  • At period-end, the order backlog stood at EUR 1,048.6 (838.8) million. New agreements valued at EUR 781.4 (624.6) million were signed in January–December. The sold share of the order backlog was 92.6 (89.2) per cent.
  • The Board of Directors proposes to the General Meeting that no dividend be paid for the 2023 financial year.

Outlook 2024

During 2024, SRV's revenue and result will be affected by several factors in addition to general economic trends, such as: the margin of SRV’s order backlog and its development; the start-up of new contracts and development projects; geopolitical risks, including related direct and indirect effects, such as material costs and the availability of materials and labour; and changes in demand. Higher interest rates and the reduced availability of financing are having a negative impact on demand for housing and business premises among consumers and investors, and thus pose uncertainty with respect to the estimated start-ups of new projects.  

In 2024, revenue will mainly consist of relatively low-margin – yet also low-risk – cooperative contracting and, to a lesser extent, of development projects sold to investors as well as housing construction competition and negotiation contracting. Developer-contracted housing production will account for only a small percentage of revenue, as no developer-contracted housing projects are scheduled for completion during the year.   

  • Full-year consolidated revenue for 2024 is expected to grow compared to 2023 (revenue in 2023: EUR 610.0 million)
  • Operative operating profit is expected to improve on 2023 (operative operating profit in 2023: EUR 1.1 million).

Significant events after the period

  • On 3 January 2024, SRV announced that change negotiations would be launched with a view to adjusting the company’s costs to the ongoing challenging market situation. 

President & CEO's review

“2023 was more difficult than we had originally expected at the beginning of the year, as market conditions remained challenging. Demand among consumers and real estate investors declined considerably on the back of inflation and the subsequent rise in interest rates. This had an exceptionally large and rapid impact on the housing construction market in particular. As a result, several planned projects were halted and many contract startups were postponed, leading to a significantly lower volume than expected for the year as a whole. At the same time our business construction grew strongly, driven by cooperative contracting. 

Our revenue ended up being considerably lower than in the previous year. Low volumes, coupled with the structure of our order backlog, meant that our operative operating profit also fell significantly short of the previous year, although it was still positive. Even though our financial result was modest, there is a bright side – project controllability continued to improve, which was reflected in the large number of projects that achieved their budgeted margins, which in turn partly compensated for the decreased volume and order backlog structure. This gives us confidence in future developments. Our revenue rose as anticipated during the fourth quarter, supported by our stronger order backlog, and operative operating profit was higher than in the comparison period.  

The improvement in operational controllability was reflected not only in the number of projects that achieved their budgeted margins, but also in better schedule management, a significant improvement in customer satisfaction (NPS B2B 61) and excellent progress in occupational safety. Our lost time injury frequency (LTIF) for 2023 was 8.7 compared to 12.1 in 2022. An improvement of more than two points in one year is a firm indication of tighter leadership and a stronger safety culture. It was also pleasing to receive recognition for this: two of our construction sites – the Wintteri multipurpose building in Uusikaupunki and a Wood City office in Helsinki – received awards in the Confederation of Finnish Construction Industries’ 2023 national occupational safety competition ‘Safety starts with me’. Our work to reduce emissions has also progressed exemplary. We have reduced the emissions of our own operations in accordance with our climate roadmap, and in 2023 our emissions decreased by approximately 50%.

Our order backlog continued to grow throughout the year, and stood at EUR 1,048.6 million in the fourth quarter – 25 per cent higher than in the comparison period. An order for the implementation phase of the northern part of the main building Laakso Joint Hospital was transferred to our order backlog during the review period. This order is part of an approximately EUR 800 million agreement for the Laakso Joint Hospital project, of which about EUR 300 million has been entered into the order backlog to date. The remaining phases will be entered into our order backlog in stages during 2024–2030. At the end of December, the value of preliminary agreements and other confirmed contracts that had not yet been entered into the order backlog was about EUR 715 million.   

During these challenging economic times for the construction industry, it is very important to maintain a strong balance sheet and ensure our financing is in order. The completion of As Oy Helsingin Kokardi in the Pasila district of Helsinki increased the total number of completed yet unsold residential units to 99 during the review period. However, this is still a low amount, so the company’s capital is not significantly tied up in unsold residential units. We are actively continuing negotiations to exit our last Russian holding, which we already wrote down in 2022, which is a 50 percent share of the Pearl Plaza shopping center in St. Petersburg.

In November 2023, we organised a Capital Markets Day at which we published SRV’s revised strategy and updated long-term objectives for 2024–2027: operative operating profit of at least 50 million EUR and a revenue of at least 900 million euro. In line with our strategy, our goal is to be sustainably profitable and build a lifecycle-wise environment by listening to our customers and other stakeholders. Our way of working is encapsulated in our customer promise ‘By listening, we build wisely’. We will steer our profitability by tapping into market opportunities and engaging in prudent risk management. SRV will achieve its long-term financial targets by continuously optimising its business structure. We will strengthen our leading position in cooperative alliance projects and project management contracting, and will also increase the relative share accounted for by housing construction to 30–40 per cent of revenue. We are also increasing the relative share of the portfolio accounted for by business premises based on in-house project development, residential development projects and residential developer contracting projects to 30–40 per cent of revenue.  

In January 2024, after the review period, we announced that we would launch change negotiations with a view to adjusting costs to the ongoing difficult market situation. We are aiming to negotiate cost savings of about EUR 4 million for 2024. We have a strong order backlog for cooperative contracting in the business premises segment, and this will carry us through a difficult year.  However, it is also necessary to adjust our cost structure to meet the challenges of the market situation. Although, in our view, no improvement in the market situation is expected for at least the first half of 2024, we anticipate that our revenue and results will improve in 2024. We predict that recovery will begin gradually, as the glut of unsold housing in the market will be cleared before new construction is launched, for instance, and banks and investors are cautious about investments and financing. Continued urbanisation will, however, create demand over the longer term.”

Saku Sipola

Key Figures

(IFRS, milj. eur)20232022changechange, %20232022
Revenue               610.0               770.1             -160.0-20.8                181.8                181.2
Operative operating profit                     1.1                 18.9                -17.8-94.4                  2.4                  0.2
Operative operating profit, %0.22.5-
Operating profit                 -6.8               -76.4                69.6                   3.1                 -6.3
Operating profit, %-1.1-
Profit before taxes                -15.8                -79.1                63.3                  0.7               -10.0
Net profit for the period                 -15.1               -85.7                70.5                -0.6                 -8.9
Net profit for the period, %-2.5-11.18.6-0.4-4.9
Earnings per share-0.89-6.625.70.09-0.77
Order backlog (unrecognised)             1048.6              838.8              209.825.0
Equity ratio, %34.436.3-1.9
Equity ratio, %, excl. IFRS 16 1)48.048.2-0.2
Net gearing ratio, %71.755.116.6
Net gearing ratio, %, excl. IFRS 16 1)-4.3-7.53.2
Financing reserves                78.6                65.9                 12.719.3

 1. The figure has been adjusted to remove the impacts of IFRS 16.

Business Review

The SRV Group’s Corporate Executive Team is the chief operating decision-maker of the Group as defined in IFRS 8 Operating Segments. The Corporate Executive Team reviews business as a single operating segment. The new segment structure was introduced as from 1 January 2023.

January–December 2023

The Group’s revenue declined by EUR 160.0 million to EUR 610.0 million (770.1 1–12/2022). Revenue from business construction rose by EUR 81.6 million to EUR 508.9 million, while revenue from housing construction was down EUR 217.9 million to EUR 101.1 million. The comparison figure for revenue includes the effect of the dissolution of construction profit margin eliminations amounting to EUR 14.5 million.

The Group’s operative operating profit decreased to EUR 1.1 (18.9) million. Operative operating profit was weakened by a significant decrease in the volume of housing construction. 

The Group’s operating profit was EUR -6.8 (-76.4) million. Most of the company’s remaining business operations in Russia were divested during the review period. The divestment had a EUR -9.5 million impact on operating profit, of which EUR -9.3 million consisted of the recognition of translation differences in income. The recognition of translation differences in income had no effect on the Group’s shareholders’ equity or the key figures in the balance sheet. The repayment of the loan receivable written down in the 2022 financial year had an impact of EUR 0.9 million on operating profit for the review period. The comparison figure for operating profit was impacted by, for instance, substantial write-downs of assets in Russia and the Fennovoima holding, the dissolution of profit margin eliminations and changes in the exchange rate of the rouble, which had a total impact of EUR -92.5 million.

At period-end, the Group’s order backlog stood at EUR 1,048.6 (838.8) million. The sold share of the order backlog was 92.6 (89.2) per cent. New agreements valued at EUR 781.4 (624.6) million were signed in January–December. The most significant new business construction projects were the first implementation phase of the Laakso Joint Hospital in Helsinki, a large Kerto timber mill for Metsä Wood in Äänekoski, the Horisontti office skyscraper in Kalasatama, Helsinki, an annex to the National Museum of Finland in Helsinki, the multipurpose Sammontalo Building in Lappeenranta, the Okmetic factory building in Vantaa, and the Inkeroinen multipurpose building in Kouvola. New housing construction projects included a housing portfolio consisting of two residential buildings for a housing fund managed by eQ and a 101-unit apartment building in Verkkosaari for the City of Helsinki’s Housing Production (ATT).  

October–December 2023  

The Group’s revenue totalled EUR 181.8 (181.2 10-12/2022) million. Revenue from business construction rose EUR 40.8 million to EUR 153.1 million, while revenue from housing construction was down EUR 39.4 million to EUR 28.7 million.   

The Group’s operative operating profit amounted to EUR 2.4 (0.2) million. Operative operating profit improved due to increased volumes in business construction and an improvement in the relative profitability of housing construction. A fall in housing construction volumes had a negative impact on operative operating profit.

The Group’s operating profit was EUR 3.1 (-6.3) million. 

Espoo, 1 February 2024
Board of Directors  

All forward-looking statements in this financial statement release are based on management’s current expectations and beliefs about future events. The company’s actual results and financial position may differ materially from the expectations and beliefs such statements contain due to a number of factors that have been presented in this financial statement release.

Briefing, webcast and presentation materials  
A briefing for analysts, investors and media representatives will be held as a webcast on 1 February 2024, starting at 11:00 EET. The webcast can be followed live at The recording will be available on the website after the presentation. The materials will also be made available on the website.  

For further information, please contact:

Saku Sipola, President & CEO, tel. +358 (0)40 551 5953,
Jarkko Rantala, CFO, tel. +358 (0)40 674 1949,
Miia Eloranta, Senior Vice President, Communications and Marketing, tel. +358 (0)50 441 4221,  

Nasdaq Helsinki

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SRV in brief

SRV is a Finnish developer and innovator in the construction industry. We are building a more sustainable and responsible urban environment that fosters economic value and takes the wellbeing of both the environment and people into consideration. We call this approach lifecycle wisdom. Our genuine engagement and enthusiasm for our work comes across in every encounter – and listening is one of our most important ways of working. We believe that the only way to change the world is through discussion.

Our company, established in 1987, is listed on the Helsinki Stock Exchange. We operate in growth centres in Finland. In 2022, our revenue totalled EUR 770.1 million. In addition to approximately 1,000 in-house staff, we have a network of around 3,800 partners.

SRV – Building for life

Contact information

SRV head officePostal address:
P.O. BOX 555
FIN-02601 Espoo,

Visiting address:
Derby Business Park,
Tarvonsalmenkatu 15,
FIN-02600 Espoo

020 145 5200

Business ID - 1707186-8
© SRV Yhtiöt Oyj 2024