Good morning, ladies and gentlemen. My name is Essi Nikitin, and I am heading the investor relations here at YIT. It is my great pleasure to welcome you all, both here in Sanomatalo and people following the webcast, to YIT's capital markets update regarding the data center market. Let us take a look at today's agenda. Our President and Chief Executive Officer, Heikki Vuorenmaa, will start the presentations and talk about the execution of our strategy announced two years ago and the opportunity the rapidly growing data center investments will bring to our country. After Heikki, Head of Infrastructure segment, Aleksi Laine, will talk about YIT's role and capabilities in the data center industry. Finally, our Chief Financial Officer, Erkka Repo, will conclude with the financial impacts for YIT.
After the presentations, you will have the possibility to present questions to Heikki, Aleksi, and Erkka, both here at Sanomatalo and the audience attending remotely via teleconference line. We launched our strategy for 2025- 2029 two years ago in November 2024. During the past two years, we have executed the strategic priority set for the period. Today, we give an update on the progress of delivering our strategy and dive deeper into the growth opportunity that data center construction offers. The data center market in Finland is experiencing strong growth as Finland is emerging as one of the most attractive locations for data centers in Europe. YIT has systematically invested in its capabilities in this growing sector, built extensive expertise and references in delivering demanding data center projects, and established a position as Finland's leading data center builder.
In today's presentations, we will discuss the market outlook and key growth drivers, dive deeper into the data center construction projects, and elaborate on how YIT is positioned to benefit from the continued expansion of the data center market. We have a really interesting morning ahead of us. Now, let us introduce our speakers of the day, starting from our President and Chief Executive Officer, Heikki Vuorenmaa. Heikki, welcome to the stage.
Yes. Thank you very much, Essi, and let me actually take this opportunity to introduce colleagues and other speakers. Starting with Aleksi Laine. Aleksi is our Head of our Infrastructure segment, been with the company approximately 20 years. Within Aleksi's organization, we have the digital infrastructure division, and Aleksi is going to present what we actually are capable to do as YIT today. Then Erkka Repo. Erkka is our Chief Financial Officer, recently joined to YIT. He has extensive career in the several finance positions, and Erkka is going to tell more about how this is actually impacting YIT financials going forward. Like Essi said, my name is Heikki Vuorenmaa, President and Chief Executive Officer, the ones that I have not met before.
It's actually great to see very many familiar faces today, and be in the position to share more about what this data center industry growth actually is up in Finland, and how that is going to impact YIT's future in the coming years. Let's start with what YIT is today. YIT is the largest construction company in Finland. Our revenue is at EUR 1.8 billion, which over 60% comes from our contracting businesses. We have strong balance sheet. We have assets worth more than EUR 1.5 billion, and that is giving us a comfort to operate in this industry. Our profitability continues on increasing trend. We employed today over 4,000 YIT professionals and actually continue to recruit more. In total, our sites today work more than 20,000 employees here in Finland. That tells a bit about the scale we operate. Our position is really strong.
We are operating across the whole country with our own workforce to ensure that all of the projects that we are doing are delivered on time and on budget. We discuss data centers, and in some cases, we refer that as a new long-lasting economical start in Finland, but we actually have seen a couple of those prior. YIT is not a startup company. We have been on this business more than 100 years. We've been building the foundations of the Finnish society to modern era. We have been supporting the transition of industrialization developing to urbanization, and now leading the focus on sustainable and digital human-centric environments that we all like to live in. Our transformation, or the offering as a company has also transformed over these times. It has kept ourselves relevant to serve our customers and deliver to the promise tomorrow we'll build.
I guess to introduce actually the strategy that we announced 2024 on the capital markets, we have been delivering that with decisive steps. In 2024, we set out three strategic priorities. Since then, we have scaled our Residential CEE business and doubled the production volumes. We have delivered already six consecutive quarters of growth in our Infrastructure segment. We have continued to improve the profitability of our Building Construction segment and improved our work safety across all the operation and all operation countries. There are several project examples that we have delivered ahead of schedule and on budget, most recently here in Helsinki, a healthcare center here nearby in Kamppi, which was more than 400 days ahead of schedule. It was due to the fact that we actually find opportunities during the project execution to deliver the work more efficiently. The project deviations are under control.
What is most important over these years and the times is that the employee engagement is in steady increase, and we receive continuous positive feedback from our customers. This execution track is giving us the confidence as we are now turning to the next major growth opportunity. We have been preparing for this growth opportunity more than two years already. In 2024, we were setting our outlying four megatrends that were driving our industry during our strategy period. All of these megatrends continues to be valid. We've seen the urbanization to continue. We have seen the increasing requirements for security and resilience and evolution of the green transition across all operating countries. But today we are focusing on the digital transformation and its global needs. The new economy of data and digital solution needs are record level global investments to AI infrastructure.
Even though this has impact on all of our operating countries, we are still today discussing opportunities in Finland. What makes Finland so attractive in this macro picture? Finland is actually capturing massive share of the data center investments in Europe. If you look on a global level, the demand is growing 10%-20% annually according to aggregated data from the several sources. This demand, the strong demand comes from AI, cloud, and digitalization needs. So the needs for us to use our phone and the digital tools we have in everyday use. Finland has about 2.9 GW of planned capacity for deployments, and if we compare that today, it is actually by far largest in European countries. The constraints that are on this industry, in relative terms, actually Finland has fewer of those constraints compared to many other countries.
It is also creating the wonderful opportunity for us as the largest construction company. Let us double-click more on Finland, those positive elements, what we have here. How we are seeing is that we have several structural advantages to become a leading destination for those larger scale data center investments. I think firstly, Finland has already had a long period of time, a vision that the renewable energy is the right selection for the future societies to build on. Maturity of the electricity in the grid is CO2-free, and availability of the current electricity, as well as the future pipeline for investments to additional energy, is strong. So Finland has enough power to power the upcoming investments. Secondly, when we look at the electricity transmission infrastructure, that is simply a world-class.
Fingrid has done excellent work over the years to build strong and resilient network that is needed for this new economic era. The decision that Finland has taken over several years to build cities that rely on district heating solutions and energy efficiency buildings is actually now paying off. This, added to the unique climate that we Finnish are not always so proud of, meaning that we have available of cold air quite often here, is actually making this investment environment really attractive. Finally, something which is really important in the today's world is that Finland is secure and predictable society. It is making Finland attractive for the large scale data center investments. We see that the investments are just about to start.
Because when we look the installed capacity, what we have at the end of 2025, and compare to what are the future plans ahead, we see that this is just a fraction that has been implemented. So currently, we have a little less than 400 MW of operating capacity deployed in Finland as of 2025. Then when we take the data from the Confederation of Finnish Industries, the announced capacity expanse of the data centers would reach over 5 GW by end of 2029. Then we need to take another data point just to assess this opportunity, and let us use the Fingrid connection agreements, that they announced in August 2026, that reaches 5 GW. By the way, this data set does not yet include the Google's EUR 13 billion investment announced earlier this month. So this tells about the magnitude of industry.
This is a unique opportunity to Finland, and the cycle is just starting, and it presents unforeseen opportunity for the construction industry. What is the opportunity? When we assess this opportunity, we are looking up to EUR 15 billion addressable market for the construction industry companies through 2029. This would be more than annual 10% on top of the current industry volumes, what we have here. Direct employment impact data center construction up to 25,000 employees. As all operational, it creates approximately 7,000 permanent jobs. So we talk about massive impact. When we look amount of employment, this would actually directly compensate, or the same amount of loss of employment that the residential sector left, as the volumes declined starting on 2022. There is just work obviously to ensure that all the competencies are in place.
We, as a YIT, feel that we are in a best position to secure the skilled labor for our sites. There are additional regional benefits that are often provided to cities outside of the capital area. So on top of the increasing employment comes obviously the green district heating solution, tax revenues, and the potential funding for then the public services. I keep repeating myself, but we are looking here a massive opportunity to society level. We haven't seen a similar growth in construction industry in several decades. The question is that how we can secure that this opportunity actually will materialize?
If we look Finland as a whole, and we talk about the unique elements that Finland has to attract these type of investments, we can also say that Finland is a really well-functioning society, where there is a public and private cooperation to handle this growth. How do we do that? The grid investment activity obviously needs to support the pace of scaling the industry development needs. The power and infrastructure to grow hand in hand to maintain the good power availability for all the sectors as well as private consumers. Economical and political investment environment should, we believe that it will maintain favorable. Critical also is that there is secured and availability of a land for this type of investments.
Our local presence is supporting global investors to navigate around these factors because it quite often requires the local knowledge and delivery capabilities. I would say before handing over to Aleksi Laine to share how we are actually executing this project as a YIT, let me recap the key messages from the start. The data center investments wave is here, and we are actually building it already. Investments to the AI and cloud services are increasing on the global level. Finland is attractive environment for the new economy. This will represent a significant opportunity for the construction industry, up to EUR 15 billion until 2029. It will also continue several years beyond that point. Additionally, this will catalyst further supporting investments to energy production, recovery, storage, transmission, and more.
And as the largest construction company and the leading data center builder in Finland, we are in a good position to capture large share of these future investments. As we are also the market leader, we need to carry the responsibility on ensuring that these investments are actually delivered on schedule and to budget. Our strategy has been to create the long-term partnerships with balanced commercial terms that is focusing to support the industry growth but also the growth of the society. Thank you very much for your attention. I will let Aleksi now to deep dive into the YIT capabilities and tell much more about what this data center investment actually look like. Welcome, Aleksi.
Okay, thank you very much, Heikki. As Heikki presented, my name is Aleksi Laine, and I work as a head of segment for YIT Infrastructure. I've had the privilege of working with the company for 19 years, serving our great customers with my dear colleagues. I'm super excited to be here today to share with you what YIT as a company can provide in the data center market. As Heikki has shown, the data center market is hugely attractive opportunity. I'm going to show you now how YIT can capitalize on this opportunity and present from our perspective, how our great experts in YIT can harness our wide capabilities to generate value for the data center customers, how we can strengthen our position as leading service provider, and also eventually, how we can further capture the growth opportunity, manage the risks, and build sustainable growing business.
Let me start by explaining what the data centers are actually all about. Large data center projects are actually system integration projects rather than traditional construction contracts. They require expertise that we as YIT have had for decades as the biggest construction company in Finland. As data centers are becoming significantly larger and more complex, at the same time, speed to market has become critical as every month of delay impacts our customers' ability to generate value from their investments. As the illustration here shows, a modern data center relies on multiple interdependent systems and is much more than a building. It combines civil works, electrical infrastructure, cooling system, automation control, security systems, and customer-provided technology into one operating environment. The challenge is rarely in any of the single work packages.
The challenge is making all these systems work together on schedule and ready for commissioning starting from day one. Ultimately, the customers are not buying a building. They are buying a reliable delivery of a fully performing facility. As a result, customers increasingly value partners that can manage complexity, integrate multiple scopes, and provide delivery certainty. This raises the barrier of entry and favors companies with broad integrated delivery capabilities like YIT, with proven experience in managing complex interfaces. Importantly, these capabilities matter because the market is increasingly concentrated around a relatively small number of strategic customers who place significant value on trusted delivery partners. A data center construction market, it's not a fragmented market. A relatively small amount of strategic customers account for a significant share of future investments. Winning a trusted position with these customers provides access to substantial long-term growth.
The market is increasingly driven by a relatively small number of hyperscalers, AI owners, colo operators, and neo-clouds. These customers are responsible of some of the largest current and future investments, both in Finland and across Europe. Importantly, these customers do not select partners project by project only based on price. They build preferred supplier relationships and increasingly seek trusted partners capable of successful delivery of multiple projects, phases, and locations. Once a contractor gains customers' trust, the opportunity often extends beyond a single project into repeat assignments, broader scopes, and future campuses. As a result, the market access depends less on the number of customers and more on the quality of the customer relationship. YIT already serves all of these customer groups today, and winning and retaining key strategic customers can provide access to a significant share of the long-term recurring business.
Importantly, these customers rarely build one facility alone. They typically develop entire campuses over multiple phases. That creates the recurring growth dynamic that I will explain next. Large data center campuses are often developed through repeatable phases, creating the potential for recurring construction demand over extended period of time. Many of today's data center investments campuses develops rather than standalone facilities. Individual campuses can ultimately consist of multiple buildings and supporting infrastructure delivered over several years. Campus developments are frequently structured in the phases, allowing capacity to be added progressively as the demand develops and investment decisions are made. Experience gained from earlier phases can support improved efficiency, smoother execution, and continuous optimization in the subsequent phases, as well as into new projects, benefiting both the customers and YIT.
Each completed phase creates valuable project-specific knowledge that can be leveraged to improve efficiency, support value engineering, and strengthen execution in the future development phases. Winning the first phase often positions a contractor to participate in the future phases, making the initial project potentially far more valuable than a single contract award. The campus development model can create long-term revenue visibility through recurring opportunities, making customer relationship and project delivery performance increasingly important. So far, I've discussed why data center projects are becoming more complex and why many investments are delivered as long-term campus programs rather than individual projects. The next question is: how much of this value is YIT actually able to capture? The answer is that YIT can participate across a broad share of the delivery chain, from early site development and infrastructure works, all the way through to building delivery and commissioning.
YIT's integrated delivery model allows us to support customers on a broad share of the data center life cycle, creating customer value through faster delivery and more efficient execution. Unlike many other contractors that focus on a single discipline, YIT combines the project development, infrastructure, civil works, building construction, MEP, and commissioning capabilities within one organization. These capabilities give us clear advantages and allow YIT to support customers from early site development and enabling infrastructure through to building delivery and commissioning. The ability to coordinate multiple scopes helps reduce interface risks, improve project execution, and support faster project delivery. For the customer, the benefits are quite simple: fewer interfaces, fewer handovers, faster delivery, and ultimately lower total project costs. Because data centers are system integration projects, customers increasingly value partners that can take responsibility across the multiple parts of the delivery chain.
As a result, YIT can participate in the larger share of the project and we add value than contractors focused on single scope alone, creating attractive growth opportunities as the market expands. Of course, broad capabilities only matter if they match what the data center customers actually need. Let me explain that next. YIT's core capabilities are truly aligned with the requirements of the modern data center delivery. This matters because they create a strong foundation for winning and enable successful delivery of complex data center projects for the most demanding customers in space. Large scale data centers require coordination of multiple contractors, technical systems, and stakeholders. YIT's experience in integrated infrastructure, building construction, MEP and technical scope is directly relevant to this challenge. Data center campuses are delivered at the significant scale and over multiple phases.
YIT brings experience from large industrial infrastructure and complex construction projects requiring disciplined execution over extended periods. Schedule certainty is also critical as delays affect customers' broader investment programs, making project management and delivery reliability increasingly important. In addition, success is ultimately measured through commissioning and operational readiness rather than construction completion alone. Our experience from technically demanding projects support this type of delivery model. Finally, successful delivery also requires strong local capabilities, as Heikki mentioned. Our understanding of local stakeholders, supply chains, market conditions helps support efficient project execution. As a result, many of the capabilities that have traditionally differentiated YIT in infrastructure and in industrial construction are increasingly relevant in the data center market as well. YIT has established a leading position in Finland's active data center markets with an approximately 30% market share.
That position provides us a foundation to benefit from the continued market expansion and future campuses. We have successfully delivered and are currently delivering projects for leading data center customers operating in Finland. We are currently working with three different campuses with five projects under construction, and we have established teams in place to double this amount and we are scaling our capacity. The company has developed experience across multiple delivery models, project phases, customer types within the sector. Existing reference projects have strengthened our understanding of customer requirements, technical delivery, and project execution in the data center environment. The growing project portfolio provides a strong foundation for further expansion. YIT has already translated its capabilities into market share, customer relationship, project experience, creating a strong platform for future growth.
A successful first project can create a platform for long-term customer relationships spanning over multiple phases, broader scopes, and future campuses. This allows YIT to utilize its capabilities both for the benefit of the current customers and in serving future customers. The relationship starts with the successful delivery. The first project gives us the opportunity to demonstrate execution capability, delivery reliability, and an understanding of the customer requirements. A successful delivery creates opportunity for further assignments. These include, for example, additional phases at the same site and new projects while developing our overall capability within YIT. Experience from earlier phases will support the continuous improvement. Project-specific knowledge, established working practices, and value engineering will contribute to more efficient delivery in subsequent phases and other projects as well. The scope of the relationship will expand over time.
Depending on the customer's needs, our role may grow from an individual construction package to a broader responsibility across infrastructure, building, MEP, and commissioning. Capabilities and experience developed on one campus are also relevant for future sites. This creates the potential to replicate this delivery model with the same customer in new locations while strengthening our overall capabilities as YIT. A data center project represents more than a value of a single contract. Successful delivery creates recurring opportunities and increases the long-term value of the customer relationship. Let me now bring you to life a current example of this type of a project. Our track record with XTX demonstrates that successful delivery leads to repeat assignments, broader responsibilities, and long-term collaboration with the customer. Our experience shows that successful project delivery can create opportunities for future cooperation beyond the initial contract.
In the case of XTX, relationship has progressed through multiple project phases, demonstrating confidence in our delivery capabilities and project execution. Each phase has strengthened our understanding of the customer requirements, project environment, and delivery expectations. The XTX example demonstrates how a single project can evolve into a broader and long-term cooperation model with the customer. Our proven track record shows that successful delivery can create repeat business, broader scopes, and long-term customer relationships, increasing the value beyond the initial project award. Let me wrap up. You have seen from my section that our position is built on execution. YIT has the capabilities, market position, and customer relationships needed to capture long-term growth in the data center market. We already work with many of the leading customers and have built a market-leading position. Market growth is concentrated around a manageable number of strategic customers and long-term campus developments.
We have shown that our data center projects are becoming larger and more complex, increasing the importance of integrated delivery capabilities. Our capabilities are strongly aligned with the requirements of a modern data center delivery, and we continue to scale our capacity as the demand grows. Taken together, we see a market with strong long-term growth drivers, customers investing through multi-phase campuses, and attractive opportunities to deepen customer relationships. We as YIT, we are not preparing for the opportunity. We are already participating in it and scaling with it. Combined with our strong capabilities and market position, this gives us confidence that data centers will be an increasingly important contributor to YIT's future growth. Thank you. Let me now hand over to Erkka to discuss what this means financially for YIT.
Thank you, Aleksi. My name is Erkka Repo, and I am the Chief Financial Officer of YIT Group. As Heikki mentioned, I have recently joined the company, and I have to say that what a magnificent time to join YIT when the market growth looks very interesting. As my background, I have had several senior finance roles in UPM and have been Chief Financial Officer both in listed and non-listed companies. In my presentation, I am going to go through first that the data centers are already a proven business for YIT.
Secondly, that we are expecting the data centers to grow very significantly for us over the next coming years. And thirdly, that the data center growth is a significant driver for us in doubling the YIT group growth target to 10% that we announced today. You have now heard why the market is attractive and why YIT is well positioned to capture the opportunity.
What does this mean for YIT financially? First, it is important to establish where we stand today. Data centers have already generated more than EUR 200 million of revenue for YIT over the past 12 months. We are showing the data center revenue in both of our contracting businesses, 50% in building construction segment and 50% in infrastructure segment. We have been active in the sector for more than 10 years, starting with our first project in Mäntsälä in 2014. Today, we are working across five active data center sites and are in a credible starting position for the next phases as we continue to scale in this fast-growing market. On the next slide, I will put this growth into the context of our broader contracting businesses and show why data centers are becoming increasingly important for us.
The strong growth we have just discussed is already changing the composition of our contracting businesses. Data centers have grown in one and a half years by EUR 200 million to represent about 17% of the combined revenue of our infrastructure and building construction segments. Furthermore, our data center business is performing above the strategic profitability target of more than 6% EBIT margin for the contracting segments. In addition, this is done with a negative capital employed that is typical for our contracting operations. For us, the attraction of the data center market is the combination of growth and solid, good profitability. Going forward, we see substantial opportunities to continue scaling up. Our current data center order book is already more than twice the revenue generated over the past 12 months, and we see the sizable growth starting next year.
From that base, our ambition is to grow the data center revenue to about EUR 1 billion by 2029. We expect to double the business again compared to the current order book level. Not only are the data centers growing quickly, but they are becoming a structural part of YIT's contracting businesses and paving a credible path to materially higher revenue, and as importantly, to reaching the EBIT margin target of our 6% in our contracting businesses. Of course, increasing the scale of this business also requires disciplined execution. The next question is how we manage that growth and deliver predictable outcomes. As we scale this business, it is important to recognize that large data center projects are different from traditional construction projects. They involve international customers, international contract frameworks, highly schedule-critical delivery, and large contract values. That means execution matters.
Success is not only about building the facility, but ensuring it is commissioned and ready for the customer to deploy capacity on schedule. This is where our strong governance comes in. We are selective in the long-term partnerships that we want to create in this industry. We work with different type of projects, but we prefer partnering with our customers and subcontractors in large multi-phase campuses. We have deep expertise in FIDIC and other international contract frameworks. To enable fast delivery of the projects and the scale-up of the industry, it is important to have a balanced sharing of risks and rewards between the parties. We have also demonstrated our capability by successfully commissioning one of Finland's first large-scale data center.
Over the past years, we have successfully reduced our project margin deviations and are now consistently delivering the planned project profitability. Finally, these projects also benefit from the negative working capital profiles we typically have in the contracting businesses. Overall, we believe that YIT has the capabilities, governance, and financial discipline required to deliver predictable outcomes in this market. Let's now turn to the potential scale of the opportunity. We have translated the potential market development paths into three illustrative revenue scenarios for YIT in 2029. However, I want to emphasize that in all of the three different scenarios, the business grows very strongly. The difference is primarily in how quickly data center investments can move from plans into construction. In the low case, power availability and grid expansion progress more slowly than currently planned.
Canvas customer investments take longer than planned to reach execution, and delivery constraints limit the pace of development. Even in that low case environment, we see the data center revenue reaching about EUR 700 million in 2029. In the base case, power availability develops as expected, customer investment activity continues, and projects move forward under normal delivery conditions. Today, our base case, we see a credible path to about EUR 1 billion of revenue in 2029. The high case illustrates the upside if infrastructure is built out faster, customer investment remains strong, and more sites become construction-ready within the period. In that environment, data center revenue could be about EUR 1.3 billion in 2029. Reaching that level would naturally require further scaling of the delivery resources. As Aleksi explained earlier, YIT is well-positioned for this type of scaling.
While the exact pace will depend largely on external conditions, the direction is clear. Data centers offer YIT a material profitable and scalable growth platform. Given the scale of the data center opportunity and the momentum we are already seeing in the market, we have today announced an increase in our growth ambitions. The most significant change in our group growth target, which is doubled to at least 10% annual growth rate from our base year of 2024 through 2029. In building construction and infrastructure, we are raising our growth targets to at least 6% and at least 15%, respectively. All other targets will remain as is. We are confident that the data center growth will also support us reaching our group profitability target of over 7% EBIT margin, as well as the EBIT margin targets of over 6% in building construction and infrastructure segments.
Let's now bring these elements together and illustrate what the data center opportunity and our updated ambition could mean for YIT's revenue profile through 2029. Let me bring the story together. We start from about EUR 1.8 billion of revenue in 2024. Looking ahead, we see continued growth from our existing portfolio, especially in Residential CEE. It is also worth noting that this illustration does not require a meaningful recovery in the Finnish residential market, which could provide us additional upside. The largest new growth contributor is the data centers. In our base case, the data centers are expected to contribute about EUR 1 billion of additional revenue by 2029. Beyond data centers, we also see additional growth opportunities across our contracting businesses driven by the long-term megatrends, such as the energy transition and increasing infrastructure and defense investments.
Taken together, these drivers provide YIT a credible path to more than EUR 3 billion of revenue by 2029. The key message is simple. Data centers are already a proven business for YIT and a major driver of our next phase of growth, both in revenue and profits. Thank you.
Yes, thank you. Thank you very much, Erkka, and thank you, Aleksi and Essi. Actually, let me invite you all back to the stage as we are approaching the end of the presentation. I don't know if we are getting more tables here as well. Thank you. Like Essi promised in the start, there will be an opportunity for Q&A. Before I let you ask all the great questions, let me just recap and summarize what we were sharing to you this morning. The growth of the data center industry is really here, and it's built already today. When we talk about the opportunity, we see it's a massive opportunity for construction industry. Addressable market up to EUR 15 billion through 2029. Our market share in data centers today that is built approximately 30%, as Aleksi shared.
YIT, being the largest construction company here in Finland, is also the largest construction company in its field there. We continue to scale up three campuses. We have a capacity already to deliver six campuses, so obviously working on there with the customers, but also beyond. We continue the recruitment and ensuring that we have the right team and capabilities. Not just in-house. I think it's good to say that we are taking responsibility to also ensure that the supply chain capabilities are there, so that we have enough team and enough capabilities as we are executing this and delivering the promise that we are then making to our customers. The market is long-term, it's really concrete. For us, it's providing significant growth opportunities. Hey, here we are all set and I think time for questions.
It is indeed time for questions. We'll take questions both from the audience here at Sanomatalo and from the teleconference line. Let's take first questions from the audience here. Please raise your hand if you have a question, and the microphone will be brought to you.
Hi. Joona Harjama from OP Markets. Thank you for the presentation. I have a few questions. Starting about the competition, how much you compete with foreign companies in these projects? I mean, how much do, for example, hyperscalers bring their own international trusted partners to projects, or is the competition mainly local? How do you see it?
Yes, indeed. We see a local and global competition here. In a case of, let's say, global competition, many of them still require local, actually, execution capabilities to make that happen. In that situation, the global company can be more as a general contractor, so let's say project management layer, and then looking for local execution capabilities. Of course, our preferred position and capabilities we have is to be provider or the general contractor for the companies and support, not just on delivering local boots on the ground, but actually ensuring the execution of the whole project.
Great. Thanks. Then another one on the operational side. On sites, how much do you subcontractors in data center projects if compared to traditional projects in infra and building construction?
Of course, I'll let Aleksi answer soon, but of course, it differs quite a bit from site to site. But yeah.
Yeah. Great question. It depends on the scope, but I would say in general, it's roughly around 65%-75% the subcontracting share of the works.
Okay, and finally from me, about the split between infra and building construction. Can you discuss a bit more on how you allocate revenues between infra and building construction in these projects?
Very good. We discussed, we show that what's the revenue accumulation has, and like Erkka Repo pointed out, we are now dividing 50/50 to these two segments.
Thanks. That's all from me.
Thank you.
Thank you for the presentation. This is Atte Jortikka from Inderes. I would firstly ask that why are you so shy with the profitability target? You are moving towards higher profitability in your contracting, so why no change in the profitability target for the group?
Thank you for the great question. If you still look four of our businesses we have, we talk about these four cylinders. Today we are in a very nice position that three of the four cylinders are actually operating in a favorable market conditions, and we have a proven track record of delivering, and the track is there. There is still a question about the timing of recovery of a residential Finland business, which is then obviously something that on a group level is also impacting on our financials.
And then on the data center market, so what kind of hockey sticks are we looking at? Will the market spike, for example, next year and then taper off, or how do you see it between the years?
If we look a year ago, and we would be discussing a year ago about the same opportunity, and what we look at today, I think it's almost doubled easily, the market outlook. I think what Erkka Repo pointed out is that the growth and the opportunities, what we see here already in 2027, is quite substantial, what has been announced across all the different players. Whether there is an opportunity to announce more and build in such a way that power availability and grid availability and projects are in a seamless execution, there might be even further upsides there. At the moment, we see that already 2027 is a quite substantial year for the data center construction in Finland.
Okay. Then 30% market share now, is there possibilities to gain over that over the coming years?
We start from the perspective that when we look our customer to eyes and say that we are doing this in the partnership and we are committing to deliver, we need to know that we have all those capabilities in place. Whether then we have a more of the customers to choosing us to do the works that might lead or that is actually then impacting the market share.
Finally from me, continuing on what Joona asked. You showed the competitors number two and three there. What kind of competitors are these other full scope contractors? Are they someone who haven't been in the market, let's say, 10 years ago, or are these sort of new players?
I think broadly speaking, like mentioned there, we've seen not just the local companies, but also the foreign companies kind of competing with us here, and especially the one that has more experience in the data center industry can actually provide the fuller scope that are foreign companies. Anything, Aleksi Laine, you would like to add there?
Yeah. It's pretty much as you stated, Heikki. Probably you can know what the landscape is about from Finnish perspective, and as Heikki stated also, there are, to some extent, foreign players. But we also believe that, as Heikki stated, that actually also the foreign investors, they actually have an urge to also work with local partners, and we are continuing that work.
Kaitapari from DNB Carnegie. Maybe a quick question on the already asked one, just to elaborate. Regarding your updated targets and the margins within them, you mentioned that, I think previously, that the data centers generally are slightly higher margin business than your legacy businesses. Does that imply that your view has changed within, for example, the Finnish construction market here, to the worst compared to the previous update? Could you provide some color on that?
I wouldn't state that our view has changed on a contracting segment, per se. If I go back in the time on 2024 and what was the expectation of the Finnish residential market recovery at that point in time, I believe that many players, including us, were expecting the market recovery to actually take place a bit earlier. We are still kind of approaching at the year end of 2026, and Finland seems to be the only country in Europe that yet hasn't recovered from almost kind of a whole European residential kind of a downturn that there has been. That being said, obviously, we've seen that that is just a matter of time. But that hasn't really changed our view. If you look our track record, we have been improving our profitability.
I think Infra has been doing already a solid profitability over several quarters now, and the building construction profitability has been on the continuous improvement track there that is supporting also on our view. And like Erkka Repo pointed out there, the target is above 6%. So that's where we are heading.
Thank you. Then another. Within the different growth cases you highlighted from data centers, you mentioned delivery constraints as one of the variables affecting the growth. Could you open it up a bit? Is it a delivery constraint on your part, or what does it depend on?
Yes. We had three of those, and the last one would be some limitation that would impact on the industry. We believe that we are actually in a very good position to mitigate that part of the risks, so we see that the material risks are more on grid availability and power availability, and the last one playing a smallest role in that three of those elements that we were highlighting.
Fair enough. And last question: how do you view the employee markets? You mentioned that it probably currently is quite good given the more difficult situation here in Finland within the construction market. But could you view it as becoming a bottleneck going forward within the next five years, for example?
Well, it's a great question, and it's not like one labor market as such. There are differences. For example, we are by far the largest construction company in the northern part of Finland. We have been employing a long time already a lot of our own employees, and our strategy actually to employ our own blue collars has been paying off in order to ensure that we have skilled and available team members on those projects. It's not just about the numbers, but this is also race for talent, as well as the right competencies in the right area, because if you look on the residential business, typically that is built in the larger cities, and now we are talking about areas that are outside of, let's say, the three growing main cities. That's the, I would say the puzzle that we are playing.
What plays on our hand is that how we are positioned across the Finland, we are still according to the recent studies, we are the number one attractive employer for the university students. Of course, we continue to recruit and build on top of the 4,000 employees YIT that we already have today.
Yeah.
Yes, Anssi Raussi from SEB. Thank you for the presentation. A few questions left from me. First, about this from EUR 13 billion-EUR 15 billion potential in the coming years. Was it based on 2.9 GW?
Approximately there. I think that there was one excellent analysis on what would be the potential market, and in that analysis, it was said like EUR 30 billion would be roughly the market. But when we look the addressable market for construction companies, as Aleksi Laine pointed out in the data center, there is also the power generators, there's the transmissions, there's electrical components that typically are not included in the construction company scope. It might be included, but typically those are not included. And that we try to exclude as an addressable market to make it, let's say, more viable that what actually us or any other construction company player in this industry can see as a construction addressable market size. That's how we model it out.
That is clear. Thanks. About your margins, if I continue on that, if we look at the contracting segment total, I think your last 12-month revenue from data centers has been a bit less than 20% of these segments. If Adjusted EBIT margins are around 3%-4%, have you seen some kind of maybe learning curve in these first data center projects, or is it due to these other infra and building projects?
Definitely learning curve has been there, and it is good that we have had that learning curve already for a couple of years now.
That is clear. Finally, maybe about the timing of these projects in terms of P&L impact and cash flows. What is the timing and what kind of advance payments you have, if you could talk about that.
Yeah. Varies contract by contract, but Erkka pointed out there, this is a typical contracting contracts that we are operating under the negative networking capital. If you go to Aleksi's part of the presentation and how the accumulation of the costs actually happens throughout the project, you can see that in the early part, site works and info works are generating a smaller part of the buy when actually the MEP work starts. The MEP work starts only when you have the frames and structures up and running. That is also quite illustrative how the projects are developing during the construction phase, and also how the costs or the revenues and cash flows are then generated.
And one more question continuing on that. Are we talking about maybe in a ballpark of 10% advance payments because these are such a huge project?
Varies by contract by contract. But let me use another data point. If you look today, we are disclosing on every single quarter how much we have a negative capital employed per segment, and roughly speaking, it has been about 10% or so, give or take, on both of the segments now.
Do we have more questions from the audience? Yes, there.
Yes. Ari Järvinen, MK & A Advisory . Thank you for the presentations. A couple of questions related to the EUR 15 billion CapEx opportunity by 2029. It is related to access to power mainly. Could you elaborate a little bit, what kind of assumptions do you have there related to the availability of the electricity grid? Because I see the Fingrid as the gatekeeper. Do they make some selection already on who is getting access to the grid, and do you foresee some changes from maybe politicians change this process? We have elections coming next spring, and I think it is going to be a hotly debated issue, availability of electricity. What kind of thoughts do you have on that side of things?
Of course, what comes to Fingrid is in the best position, obviously, to talk about that. But when we know what has been shared, how the grid investments are progressing, and what is the existing plan, that is something that we can use as a basis how the market will look like. We do recognize that there is obviously, and I think it is good that there is a lot of discussion and conversation around this new investment wave. What we see and what we believe is that firstly, as this is executed in a good tandem with the investments, as grid investments and as well as the power investments, this is supporting greatly the Finnish economy going forward.
I would say that the public discussion is still ongoing, but this is a point that this comes more across that we see that, we actually, as a functioning society, has all those capabilities in place to manage this growth. Build the additional investments and as well as additional industries that this will for sure generate.
Svante Krokfors from Nordea. Thank you for the presentation. A couple of questions. The first one regarding the risks which are out of your control, so to say, how would you look at the biggest, I guess politics is quite important there, but also labor availability, where will you get all the blue-collar workers and also, under politics, probably also power generation and grid investments. How would you rank the risks from which are outside of your control?
On the labor availability, I would say that there we have actually quite a lot, something that we can control. Because our philosophy is that we actually assess all of this before we start the work. So that we know that we have our own capabilities, but on top of that, we have committed subcontractors and the partners that what we are doing there on site. Like Aleksi kind of illustrated there, the best way is actually to execute with the same team a repeatable project because it actually shortens the faster time to market and provides total lowest cost also for our customers. Those risks that are definitely outside of our control are the political grid investments or geopolitical risks. Those we then need to mitigate from our perspective, and it might accelerate or slow down the market.
We need to ensure that all the projects we take are solid and something that we can deliver.
Thank you. The second one regarding the contract structures on data center projects. Can you highlight the biggest differences when it comes to other contracts and I guess especially the downside risks when it comes to, we understand that the margin assumption is higher, but I guess the risks are also especially relating to possible delays.
Yeah, there are several types of contracts, obviously. I think we have, like Aleksi pointed out, so we are executing different type of contracts, and every contract then has different type of upsides and downsides. I think for us it's important that those are balanced. But anything Aleksi you would like to point out from your perspective-
Yeah
Of the experience on this?
Regardless whether if it is like, for example, an international contract framework, the framework itself isn't a risk. As Heikki pointed out, usually the risks are related to tight schedules, and that's something that we mitigate with the prudent, very detailed pre-planning of the project. Then there's additional topics like the partners and subcontractors and so forth.
Yeah.
Okay. Thank you.
Do we have more questions? Yes.
Yes, Anssi from SEB again. Just continuing on Svante's question about this project risks. Are you able to hedge yourselves against that kind of risks which are not maybe related to you? For example, if there's not enough of substations available or whatever, and also do you have positive risks if you can execute ahead of schedule or does it matter because the next step is in time anyways? Or how do you see that?
No, of course, we cannot take risks about substations or something that is not on our hands. So, in a starting point, it is something that we need to have a good dialogue with our customers that that is the case. And, of course, then we say that it is to be balanced. And the customers are valuing time to market, and that is something that is also, when we make our customers successful, we are also successful. And the success comes fastest time to market.
Yeah. Thanks.
Atte Jortikka from Inderes. Last one from me. When you win the first phase of a contract, how good of a visibility you have for the start of the second or the third phase of the whole data center project?
Do you want to take this one?
Yeah. Thank you for the question. The straightforward answer is obviously that it depends on customer by customer, but we are in, I would say, constant dialogue with the customers to understand their needs and development plans when it comes to building their campuses or locations.
And maybe building on what Aleksi said is that, of course, the same questions about delivery constraints, what comes with the skilled team, talented labor, our customers are also recognizing those. So it is increasingly important to also have a dialogue and discussion that how we secure that those multi-phases projects are actually delivered over the several years. So that is something that is present all the time.
And investment decisions are done phase by phase, right?
Typically so.
Thank you.
There is a question.
Hello, it is Ari again. One more from me. I could be a little bit ahead of the time here, but if the life cycle of NVIDIA AI chip could be like three or four years, let us say something like that. When they are going to be replaced by the end of this decade, is it going to be so that some foreigner comes and just changes the chips, or do you expect to have some technical maintenance and service work related to those kind of updates? Because they are very expensive probably in the future as well.
It is a great question, and we consider that as a future upside that we are still not yet today discussing because we are just about to start this investment cycle. Is it the three years, five years? But obviously the technology goes forward, so there might be some upgrade needs. There might be something to be maintained. It is no stranger business for us. We actually do quite a lot of facility maintenance businesses upgrades in building construction segment. As of now already, we have that in a part of our business portfolio. But of course, today it is more about launching new projects and getting the sites up and running. But further upside there in the future.
Thank you. It looks like we do not have any more questions, and actually, we do not have any additional questions from the teleconference line either. We thank you all for participating and wish you a great rest of the day.
Thank you very much.
Thank you.