My name is Tommi Järvenpää. I am Head of YIT's IR, and Ilkka Salonen, our CFO, is here with me today as well. We will first hear a short introduction by Ilkka, and then after that, we will be taking questions. When you have a question, then use the raise hand function so we can control the event slightly better. Please note that the call will be recorded as well, and the recording will be published on our website after the call. With this, Ilkka, go ahead.
Yes. Good morning, everyone. This is Ilkka Salonen. Unfortunately the themes is actually locked, so I am not sure, can you see my picture over there? Let us go for the Q2, and how the business has progressed during the last month compared to what we were thinking about one and a half months ago. In the big picture, what comes to the market as well as what comes to the YIT, the things has progressed pretty much as expected, as forecasted. No major deviations over there. Of course, let us say internally, the big topic is that Markku Moilanen, our new CEO, started in the beginning of April. As Markku has stated, there are three areas. One is improving the project management, which we have started already in late last year. But then two other topics on the table at the moment. One is the operating model.
That is the work which is going on. The other one is the infrastructure strategy work, which is going on. We decided to start with the infra strategy. Of course, later this year, we will review the whole group strategy. If you look at for the COVID situation, the disease is still over here, as we all know. However, in Finland, the situation has improved during Q2. Actually, probably the most challenging period in our operations in Finland was in the beginning of this year. That has also improved a lot. At the moment, the COVID situation not impacted so much what comes to our business. Of course, in the investor side as well as the tenant side even the activity has returned over there. The decision-making is slower than it was before the COVID period.
Three topics on the group level: project management, infrastructure strategy, and operating model. If we shortly look at about the segments. If we start with the Housing Finland and CEE. Yes, the market has continued to be on the good level as expected, and it is easy to see also from the public media that the demand for apartments has continued in Q2 as well. The same story in Russian housing business as well as in not only Finland, but also in Baltic and CEE countries. Even the market has been partly closed down in CEE countries. The demand on those side has continued to be very good. That is good although the COVID has been over here. Then if you look at the Housing Finland and CEE side, and if you look at the profile for this year, it is good to look at that.
Due to COVID last year, we stopped the startups of the projects, and now we can see that this year, especially in Q3, where actually the number of completions is extremely low. Of course, that has an impact for our quarter-based result. On the other hand, the Q4 is once again very strong when it comes to the completions. In Russian market, the market is solid. The demand over there has continued to be on the good level. The good point over there is that it seems that the reduced mortgage interest rate ceiling or the subsidy of the Russian state continues after June as well, as it was initially planned to be closed in the end of June. But at the moment, it seems that it will continue after June as well. Of course, that will support the market and the demand as well.
In business premises side, the public demand has continued to be in a very good level. If we look at then internally and what comes to the project management, that has the work over there start to be seen. Now we have actually roughly about a year stabilized about the business premises business area for the segment. You can see that in the operations, but of course it takes time before we are in the level over there, which is the desired level where we want to be in that business area. But Tomek has made a good job over there to really take that to lead. In infra project side, there is also a lot of activities. Internally if we look at, Antti Inkilä took the interim position over there in the beginning of April.
It's pretty much in the same situation that the business premises was one year ago. It starts to stabilize about the business and especially when it comes to project management and procedures over there to really take that to lead. There we have appointed a new head of segment, Mr. Pasi Tolppanen, he will start in late summer. At the same time we are looking our infrastructure strategy right now. The end result is, as Markku said already in Q1, that we continue to work in infra projects, infrastructure side, because that's an extremely important part of the urban development side. We see that we have opportunities over there to really make that a profitable business in the desired level. Then apartments and properties. Over there we have also had an appointment. Ilkka Tomperi will start as a segment head in the beginning of August.
In that area or the business area, actually, nothing special over there in Q2. As mentioned already after Q1, when it comes to investors and tenants, yes, the activity has returned, but the decision-making takes longer than previously. In the group level, the good topic when it comes to balance sheet and the liquidity was that we were able to refinance the bond portfolio in the end of Q1. So the EUR 300 million creates a good base and really changed our maturity structure. Of course, after that, we have worked with our revolving credit facility, which is expiring actually in the second half next year, but that's more or less like a normal standard procedure to manage about the maturity structure. But in a big picture, yes, healthy balance sheet and good liquidity in the group level.
That was my short introduction when it comes to the YIT review, where we are and where we are going for.
All right. Thanks, Ilkka. Now we are ready for the questions. As a reminder, please use the raise hand function if you'd like to ask a question. Robin will be the first one.
Yes, good morning. Starting with the Housing Finland business, consumer demand has been very strong. Could you comment about the price level for new apartments? How has that developed recently? Second question is that how much do you expect startups to grow in Finland?
Yeah, let's say that in the pricing side nothing special over there. Of course, the market as it is, it's supporting some sort of natural price increases. It's good to notice that there are certain raw materials in the market where we have seen inflation as the global market prices has increased, just like, for example, steel and wood. That has also driven the, let's say, price increases in the housing side. Then what comes to the startups, what we have stated is that we are targeting to increase clearly our startups during this year compared to last year when it was, of course, on a lower level.
All right. Then moving to Housing Russia. There you have had margins have stayed above 10% in the previous two quarters. So are there reasons why the margin should be below that 10% in the near term? Or do you expect a very good performance?
It is doing a good performance over there. And actually in Russian market, it is also the pricing over there is the dynamic, meaning that it is almost daily-based pricing, which is the standard procedure among the Russian developers. The thing which is good to remind is that in Q4 last year, we had one plot sale over there. So to really make straight line from the previous two quarter is not probably the right way, but it is doing a solid, good business over there.
All right. Thank you. I will jump into the line. Thank you.
Thank you.
Thank you. The next question comes from Simon.
Yes. Hi. My question is, in terms of the prices we've seen internationally on lumber, steel, concrete, delivery problems, and all of those issues, which has been quite significant also in Q2, have you had any impacts of this in any of your operations in terms of the prices? Are we going to see those price increases hitting your books later on? Can you please elaborate a bit on especially those raw material prices that has been rallying so much in Q2?
Yeah. If you look at the probably the two topics in our side is the steel as well as the wood. Because the proportion of wood is still quite marginal. Steel is more important. Of course, concrete as well. We started to see that one already in the end of last year, in the beginning of this year, and started to mitigate that one in some areas. It is easy one, as you are able to price that one for projects where you have your index-based triggers over there. The fully fixed price, of course, a number of those ones have been agreed already before the prices increased. But in the rest, yes, we make the mitigations over there.
In the big picture, not so major impacts over there, but yes, you can see in some projects that there is dive what comes to the raw material pricing. We are with that one every day.
Has it impacted existing production more, or is it more in future tenderings in terms of your sub-suppliers, et cetera? I am just wondering in terms of trying to make a forecast because the prices like on steel has rallied so much. It could actually have impacted your figures if it is not hedged and you have to buy spot. That is why I am just wondering.
Yeah.
How you buy your steel and what we see an effects in Q2, for instance.
Yeah. For your question that the existing ones or for the coming quarters and for the coming projects, it is the latter one.
Okay. Thank you. If you have just Are you buying your steel directly yourself or using sub-suppliers with fixed contracts and passing it more slowly through your operations that way?
It's actually there is not only one source where we buy, and it varies also based on the project type. Sometimes we are using the wholesalers in the local level, but also in the steel side, we are also operating in the international market.
Okay. Thank you. I'll go back in the line. Thank you.
Thank you.
Thank you. Next question come from Anssi.
Thanks, guys. I will follow up on the raw materials. Looking at your business in contracting side, how much is fixed price-based contracting and how much is business where you have, as a matter of fact, indexed the cost into the contract? What is the split, roughly?
To put it that in the fixed contract, which is usually the competition or price competition contract type where we have decreased actually our proposal over there, but we still have that one. That is, of course, impacting the order price increases are impacting there where we are less or let's say that we are not impacting the same way is the projects which are alliance type of projects or where we have the index in the pricing. Then it is of course the third one is the housing or the development in the housing side where we sell for the consumers where the price is actually tied, at least for those ones who have been sold the apartments in the very beginning of the project.
The exact figures is stated those ones, but it is easy to look at that how much we have the alliance type of where actually the alliance partners are covering that one and how much we have then the, let's say, price competition projects where we have the fixed contracts over there.
Okay. Clear maturity is basically fixed price.
It's a certain way to fixed price if you look at the housing for the consumers. But over there, you also can make the pricing or increase the pricing for the apartments when the project is going on. So there is certain type of element to impact for the price increase over there as well.
Good. Little bit on the dynamics and if we take example steel, prices started to rise early last summer, and we saw price increases in steel heavy building material firms coming through early this year during Q1. So how long will it take, as a matter of fact, for those prices to be transferred into your project prices, and your execution? Is it second half of 2021 or how should we read the situation?
Yeah, that is the good assumption. The second half of this year. If you look at about the market expectation for the steel price, I've seen those graphs a number of times, but you probably know better than we what comes to the market prices. Yeah, second half this year is most likely that you will see the biggest impact.
Okay, good. Last question is related to different inputs. There has been a scarcity in logistics, scarcity of different materials out there. Now that, as a matter of fact, market is turning around and construction activity in your key market in Finland is probably increasing quite soon. So we will see also scarcity of workforce. So have you seen any impacts of these coming through yet, or is it business as usual as of now, but kind of this is a risk that you need to handle in the future?
It's pretty much the business as usual. If you look at once we start for the project, of course, over there, the organization has to be established. So once we start the project we have already the internal organization ready for that one, and then it's more what comes to the subcontracting side. I would say that the scarcity is pretty much business as normal. If the demand is increasing in the construction as it seems, the scarcity is probably in the subcontracting side and of course to get the right skillful employees and keep them in YIT. But in the big picture, probably the scarcity is in the subcontracting side. Especially in the COVID time, that is also having impact on that side.
Okay. Are you seeing any tightness there or business as usual?
It still has a business as usual, but that is definitely the area where the market might come more tight later this year.
Okay. That's all from me. Thank you very much.
Thank you.
Thanks. Any further questions? Looks like there's no further questions. Oh, there's one from Matthias.
Yes. Hi, guys. Still one question touching the Mall of Tripla. What kind of development have you seen there? Any development in rents and tenants there? How do you describe that then? A further question there for the yields, valuation yields. Have you seen them coming up in shopping centers?
Yes, if you look at first of all the Tripla mall, if you look at the number of visitors over there during the last month, it has been even in March this year, April this year, it was higher than last year in the bottom, which was actually in April and May last year. But the number of visitors was not in the level where we were in September, beginning of October last year. Of course, it is lower than what was in the initial business plans. If you look at the tenants and the rent levels and so on, there hasn't been any major changes over there, also there are new tenants coming to the Tripla. The major question over there is how fast actually the society will return to the, let's say, normal mode.
And we are looking forward and expecting that people wants to be together in one place is definitely Mall of Tripla. So that is quite promising. Then what comes to the yields. The yields increased last year. In Q1, they were stable, and also at the moment it is stable. Then it's probably more the question then once the society starts to live again what is the demand for shopping centers like Mall of Tripla. We believe that there is a good place for people to make shopping, but also spend time together with friends and families. But in the big picture, tenant side, no major changes. What comes to the rent level, no major changes. Number of visitors was lower in March, April, May, than it was last September, but clearly higher than the year before.
And I'm definitely willing to say that what are the visitor statistics from the last week when the market started a little bit open and weather in Finland was extremely nice.
Okay. Thank you very much.
Thanks, Matthias.
Thanks, Matthias.
Any more questions? All right. Looks like there's no further questions anymore. Thank you everyone for participating, and see you in the Q2 results day.
Good. Thank you.
Thank you.
Thanks. Bye bye.