Good morning, and welcome to YIT's full-year 2022 results webcast. My name is Samu Heikkilä, and I am YIT's investor relations manager. The results and highlights of YIT's 2022 will be presented by our President and CEO, Heikki Vuorenmaa, and our CFO, Tuomas Mäkipeska. After their presentation, we will be taking questions from the conference call line. At this point, I would like to hand over to our CEO, Heikki. Please go ahead.
Thank you, Samu. During 2022, our execution of strategy progressed on multiple fronts. On a business premises and infrastructure, our revenue remained stable, but decreased in the property development, where the comparative period was supported by the Lestijärvi Wind Farm sale. Our increased profitability, both in adjusted EBIT and EBIT margin, reflects the stabilized underlying performance. In the business premises and infrastructure segment, this was supported by productivity gains and enhanced project management. During 2022, we took those decisive steps on our strategy execution. As I mentioned before, one of the key events of the year was the sale of the YIT business in Russia. The strategic review of the Russian business was originally initiated already in November 2021, and then accelerated after Russia's invasion of Ukraine in early 2022.
The sale was finalized under challenging conditions, which led to a weaker financial outcome than originally anticipated. However, after the sale, we were able to fully focus on our strategy and core businesses. In our strategy, we also outlined the plans to achieve annual cost savings, EUR 15 million-EUR 20 million by 2023 in our continuing operations. By the end of 2022, the annual cost savings amounted to over EUR 20 million, exceeding the goal outlined in that strategy. We also achieved additional efficiencies from enhanced project management. At the end of 2022, we set ambitious goals to carbon neutral construction by updating our climate targets and created a carbon roadmap to reduce emissions. We are aiming to be a carbon neutral on our own operations by 2030, and we are committed to cut at least 30% of our value chain emissions by the same year.
We have already reduced the emissions from our own operations by over 55% compared to the reference year, 2019. We have also taken an important step in reducing our value chain emissions, like mentioned earlier. If we take a look at the numbers across the different segments. First, let's start from the housing performance. In 2022, we had approximately 3,000 consumer apartment completions, which is 300 less than 2021. In addition to lower completions, profitability was impacted by lower sales. We again achieved very high customer satisfaction and renewed our number one position in the annual EPSI Rating. This is a result of long-term work and reflects our personal commitment to exceed customer expectations.
During 2022, we were able to strengthen our land bank in selected growing cities, which enables us today to construct approximately 34,000 new homes. On the business premises segment, we progressed by improving our profitability. Our assessing operating profit increased to EUR 20 million, which was supported by enhanced project management, but also by the sale of two self-developed projects during the second quarter. Over the year, we experienced increased construction material costs that had a negative impact on margins. While maintaining the order book on a healthy level, we have continued our focused tendering efforts on projects in which we can deliver the most value for our customers. In infrastructure segment, our underlying performance stabilized, yet the profitability is still on very modest level. Our portfolio continues to carry certain legacy projects which impact negatively to our overall performance.
During 2022, we have had a good accomplishment in alliance projects, delivering the solutions to our customers within the budget and ahead of the schedule. On the property development side, there were no major transactions during 2022. The comparative period was supported by a positive impact from the sale of Lestijärvi Wind Farm. Our profitability was also impacted during Q4 by an impairment related to a development project.
The fair value of YIT's partly owned Mall of Tripla remained.
Here we have the key performance indicators of the year for continuing operations. As Heikki already mentioned, the adjusted EBIT improved both in absolute and relative terms significantly. Our net debt increased, which reflects our investments for the future and ensures future profits as well. The earnings per share increased clearly and amounted to EUR 0.28. Our board of directors proposes to the AGM a growing dividend of EUR 0.18. These are the highlights of the fiscal year, but let's then have a look at the overall financials a bit closer. Here we have the order book development on the left-hand side, The order book decreased slightly from last year and from the previous quarter.
The order book decreased somewhat in infrastructure, but remained relatively stable in the other segments. When taking into account our selectiveness in the market, the order book remained on a strong and healthy level. I think it's again a good evidence of our competitiveness in the market. The healthy order book will safeguard our volumes and profits going forward in the unstable market conditions. Our revenue decreased-
Can you still hear us? There was a small disturbance, but I will continue. The revenue decreased driven by the housing and property development, while we also achieved growth in business premises. The housing revenue decrease was due to the lower number of apartment completions and lower sales. Our top priority and the target has been profitability improvement instead of increasing volumes, and despite of the lower revenue, we delivered the clear EBIT improvement in 2022. Let's have a look at the adjusted EBIT. We were able to improve our absolute EBIT significantly despite the lower revenues as I mentioned, especially in housing. In the big picture, the underlying performance was stable in all segments. Actually, all segments gained benefits from the executed fixed cost reductions.
Heikki already mentioned that in total, the fixed cost savings amounted to over EUR 20 million compared to the last year, mainly driven by the more efficient operating model that we launched in the beginning of the year. As we look at the adjusted EBIT improvement from segment breakdown perspective, the improvement compared to year 2021 was heavily driven by the infrastructure. There were project write-downs in the comparison period, which of course impacted the improvement, also the underlying profitability improved in the segment. The main source for EBIT improvement was the project management and decreased project deviations or project margin deviations. In business premises, the increase was mainly due to the two self-developed projects recognized already in the second quartile of the year.
One of them was in Bratislava, Slovakia, the Pradiareň, and the other one in Turku, Finland. Those had a positive impact on the earnings of business premises in year 2022. In housing, the adjusted EBIT decreased due to the lower volumes as the profitability improvement in 2022. Moving on to the balance sheet side and cash flow and capital employed development. The development reflects our investments to the future earnings and this is according to our strategy as communicated earlier as well. During the year, we continued to invest in plots in growing cities of Finland and CEE countries and grew our landbank further.
We started up self-developed project in housing and property development, The project will be completed during the years 2023 and 2024. Thus ensures our profits going forward as the market picks up again. Also, our number of completed unsold apartments increased due to the challenging market situation and muted demand for the apartments. It is very important to note that more than 80% of the apartments are in capital regions or at university towns in Finland and Central European countries. Meaning that they are very current products to be sold as the demand recovers again. As we have communicated, we are taking a bit more cautious approach to new investments and startups, This was already reflected in Q4 cash flow, which was EUR 40 million positive. EUR 40 million positive.
If you have a look at the net debt structure and the net debt which increased during the year, that was mainly driven by the cash flow development I just described. It is very important to note here that our net debt structure and the low financial risk profile that we have is illustrated on the left-hand side in terms of the gross debt. Our net debt, excluding the IFRS 16 items and the housing company loans, is approximately EUR 130 million. Adjusted net debt EUR 130 million approximately. That was also decreased from the Q3.
Also, as I mentioned earlier, we have a valuable inventory of apartments to be sold when the demand picks up again, and this will again support our cashflow generation and net debt development. If we have a look at the maturity structure of our debt portfolio. We can argue that it's a healthy structure and a maturity. As normally, we proactively manage our debt portfolio and evaluate our options for the refinancing well in advance. All in all, our balance sheet remained strong during the year, and it allows us to execute our strategy going forward. As mentioned, the increase in net debt is related to the growth investments to plots and construction volumes, and it is also visible, of course, in the gearing development as well.
As already Heikki mentioned, though, it is good to note, that the sale of the Russian operations in Q2 already had a negative impact on the gearing and our equity ratio. After the transaction, the development has been stable during the year. Our solid balance sheet supports us, as we navigate through the unstable market environment. To summarize, the improving performance drove our earnings growth. By already made investments and solid order book, we are well equipped to continue executing our strategy. Thank you. Now back to you, Heikki.
Thank you, Tuomas. Let's take a look then a little bit on the market, how we see 2023 to be. It's have been postponed. On the investor side, demand has also weakened as rising interest rates is increasing yields and financing costs for the projects. In the Central Eastern Europe, the market was supported, especially by the private sector demand for new business premises. Headwinds caused by uncertain macroeconomic outlook are expected to persist in the short term. Cost inflation in some construction material showed signs of leveling off and the workforce availability improved. Infrastructure market in Finland, the public sector demand remained at a moderate level with several projects in the planning and bidding phase. Private sector demand is driven by industrial construction and the transition towards renewable energy.
The increased cautiousness in the overall market could lead to postponements of some upcoming projects. In Sweden, the market remains active, yet the competition for project remains intense as well. Let's double-click a little bit on the housing market and same time zoom out to take a look at the big picture in the light of apartments under construction and unsold pipeline. As mentioned before, the number of unsold complete apartments increased to the 794, of which more than 80% are in the capital regions or university towns in Finland and Central Eastern Europe. Percentage share of the sold apartments under construction is at 60%, which is in historical perspective within the standard range. Like Tuomas mentioned, we've taken the prudent approach to the new consumer startups to react on these market changes.
We continue to have typical level of promotional campaigns to support the sales. On the consumer apartments completion side, we see, we plan to have approximately 3,000 units this year, of which 1,500, or 50%, in the Central and Eastern Europe. This is reflecting well our strategic ambitions to react growth from the region. In addition, we have 3,400 units under construction for investors that will be recognized over the time. Over to you, Tuomas.
Thank you, Heikki. YIT expects its group-adjusted operating profit for continuing operations to be lower than in 2022, which was EUR 110 million. In housing, the demand outlook remains muted in the short term. In business premises and infrastructure, the underlying operational performance is expected to improve, but certain legacy low-margin projects will still affect infrastructure's performance. YIT's performance will be supported by the increased efficiencies from the transformation program that we just launched. It's good to note that the developments in housing markets may have an impact on the outlook, and the rising interest rates may have a negative impact on the fair value of our investments. Back to you, Heikki.
Thank you, Tuomas. Let's talk about topics that are on our own hands as we today announced the new program to generate further efficiency gains. The program target is to support our short-term profitability while also increasing our long-term competitiveness. We expect the main part of these operating expense savings comes from the IT, facility expenses, operating model changes, as well as other indirect costs. Additionally, we continue to increase our efficiency in the procurement, project management, and productivity. These cost savings will come on top of the cost savings that we already have achieved by the end of 2022. We expect to achieve more than half of the planned run rate cost savings during this year. As a summary, we continue to take decisive actions to generate further efficiency gains and improve our profitability.
We focus on maintaining our capability to invest while we navigate through the challenging market. We are very committed to continue our journey towards the carbon-neutral company, and we see the future growth potential in it. Thank you.
Thank you, Heikki, and thank you, Tuomas. Operator, we are now ready for the questions.
The next question comes from Mika Karppinen from Danske Bank. Please go ahead.
Hi. Good morning. This is Mika from Danske. Could you comment on the EBIT margin development in the housing business in Q4? Was there something exceptional compared to previous years in mix or something else? Has it improved despite the lower sales?
Yes. Thank you, Mika, for the question. I can answer that. In Q4, in our housing segments, we had a large number of completions, with actually pretty good reservation and sales rate, both in Finland, but especially in the CEE countries. This was supporting our Q4 earnings in the housing segment.
Okay. If I continue with the unsold inventory, it clearly increased. What kind of measures are you planning to take to reduce those inventories?
Yes. As we see, the increase in the inventory has been actually developing during the year, which is, of course, related to the market demand, but which we have been seeing decreasing. We have been monitoring the inventory pretty closely and looking our options. Of course, the main thing that we have been doing is supporting our sales with the marketing campaigns and so on. That's the main mean to accelerate the growth as the sales. We have also looked at the several other options and looking at them now going forward as well.
Basically what we see that our inventory is very current, and we have good apartments in the inventory. When the market picks up again, so we have very good products to be sold. This is basically what we are doing. Is there other questions? I think we are experiencing some challenges in the line. Can you hear us?
Hi, this is Mika. Can you hear me? I lost sort of your answer to my last question.
Did you hear my answer at all?
No.
Okay. We seem to have technical problems on the line. I'll answer it again. I'm not sure if the other ones have heard it already. Your question regarding the inventory of completed unsold apartments.
Yes.
Yes, we are monitoring closely the inventory levels. The main mean for supporting the sales is the marketing campaigns and other sales supporting actions. These have been carried out throughout the year. Also we are looking, of course, the other probable options all the time and also going forward. But it's good to know that our inventory consists of good products and current in the current locations. As the market then picks up again, so we have very good products to be sold ready in our inventory.
Okay, good. Thank you. That's all for me.
Thank you.
It seems that we are having some technical difficulties. We apologize. If you have any further questions, you can contact Via this IR.
If I may suggest so we can still be on the line for 2 minutes if you have any further questions. We seem really to have technical problems on the line. Again, if you have any further questions, so we are happy to take them. We will wait 2 minutes on the line, so please feel free to ask.
Okay. Once again, we seem to have technical problems, in the line, so if you can hear us, so we are still here and, happy to take some questions if you have any.
The next question comes from Robin Nyberg from Carnegie Investment Bank. Please go ahead.
Hello. Robin Nyberg from Carnegie here. Probably you have already answered this one, I also had some issues with the line here. You reported quite strong profitability in the housing segment. Could you please give some details what was the main driver behind the very strong margin despite the lower sales there?
Yes. Thank you, Robin, for the question. This came through already earlier, but I'll answer again, so probably everybody can hear it now. It is true that the housing segment's profits in Q4 were strong. The main driver behind is a large number of completions in Q4 with the good reservation and sales rates both in Finland and CEE countries, especially a couple of good completions in CEE countries with the good sales rate boosted the EBIT for the Q4 in housing segment. Probably you didn't hear it.
The main driver for Q4, strong EBIT for the housing segment was driven by the large number of completions, both in Finland, and CEE countries, especially in CEE countries, large completions with good sales rates boosted the EBIT for Q4.
Okay. Thank you. Could you give us any indication of the level of startups, outlook for this year?
As mentioned already, so we are taking, of course, the cautious approach to the startups and looking very closely to the market. The cautiousness being that we are actually demanding a higher level of reservations or pre-reservations before making any startup decisions this year. This will have an impact on the startup volumes during the year. Of course, now the outlook is somewhat muted in the short term, this increases our cautiousness in the short term. We are looking at the market very closely.
Thank you. My last question. Have you seen any indications that apartment sales in January would have picked up from the level in December?
We have been seeing some positive indicators in the market regarding the web traffic on our sites, but also the showing of the apartment. There has been more traffic on those as well now during January. There are good, let's say good indicators in CEE countries already that the market demand would probably pick up. Those are just early indicators that we see now. As mentioned, looking very closely at how those will develop.
Maybe one final, if I may. You highlight in the infra segment some legacy projects. Could you please elaborate on the potential risks size of those projects?
Yes. As we have been communicating already back in 2021 and during the last year, we have some of those legacy projects in infrastructure segment. Some of them have been started up several years ago, or most of them actually have been started years ago. We have been taking a lot of measures to improve the profitability of those projects as well. When we are talking about infrastructure projects, some of them are also pretty long or taking long time to complete. This is something that we will carry on a bit going forward as well.
We are not, we are not disclosing any size of the risks, but as mentioned, so already back in 2021 in Q4, so, we made pretty significant write-downs concerning those legacy projects already.
Okay. Thank you. That's all from me. Thanks.
Thank you, Robin.
I hand the conference back to the speakers for any closing comments.
Thank you. We once more apologize for the technical issues on the line. We will be publishing a recording of the webcast on our website later today. Looking forward, YIT's first quarter results will be published on the third of May. Thank you, and have a great day.