Source January–December 2024 Financial statement release, published on 6 February 2025:
"Our business developed well even though the market remained challenging. Our revenue increased by about 22 per cent year-on-year, totalling EUR 745.8 million. Our operative operating profit improved to EUR 10.3 million. In the fourth quarter, our operative operating profit also increased from the comparison period thanks to higher revenue in both business and infrastructure construction. This trend was driven by our excellent performance in project management across the organisation, which was also reflected in record-high customer satisfaction.
Considering the state of the market, the result is reasonable, although it still falls short of our target due to delays in the development of our strategic project portfolio. Due to the current lack of consumer and investor demand, in 2024 we were not able to launch any of our planned development or developer-contracted projects.
Our order backlog remained robust and was EUR 1,052.8 million at the end of the year. In the fourth quarter, the projects transferred to our order backlog included the service block to be built for the City of Helsinki in Kruunuvuorenranta. This project will be executed as a project management contract with a total value to SRV of approximately EUR 60 million, of which EUR 45 million was recognised in the order backlog in December. In addition, previously won contracts and projects under preliminary contracts that have not as yet been recognised in our order backlog totalled around EUR 689 million at the end of the year. After the review period, we decided to start the building of our first developer-contracted residential project after a break of over two years: Asunto Oy Espoon Niittykummun Neuvokas in Espoo. The reservation rate for its 53 lifecycle-wise residential units has developed well. The startup of a new owner-occupied apartment building is a step towards our strategic objective of stepping up our residential construction. In December, we also signed a deal for a housing company that owns a plot zoned for residential construction in Niittykumpu, Espoo. Market-financed residential units with a total floor area of about 4,600 square metres can be built on this plot.
At the same time as we seek to start up higher-margin projects in line with our strategy, we ensure that the company remains on a strong footing: the balance sheet is in good shape, IFRS 16-adjusted gearing is -6.0 per cent and the company has not committed a significant amount of its own capital into completed but unsold housing units, of which there were few at year’s end, a total of 95.
With a transaction carried out in December, we finally concluded our divestment of Russian business operations. Our proactive efforts to exit Russia began in 2022. After the sale of our last asset in Russia – a 50 per cent stake in the Pearl Plaza shopping centre in St. Petersburg – to CP Invest Limited, SRV no longer has any assets or business in Russia.
The controllability of our projects improved over the course of the year, and this was positively reflected in many of our activities. I’m extremely pleased with our excellent performance in customer satisfaction in the review year. NPS (B2B) for customer satisfaction was 78 at the end of December, testifying to exceptional development: we have succeeded in our goal of including our customer promise – “By listening, we build wisely” – as a guideline in all that we do. One example of our successful customer work during the year comprises the two apartment buildings we completed for eQ in September: As Oy Hippoksenkatu 44, with 52 units in Kissanmaa, Tampere, and Asunto Oy Espoon Anna Sahlsténinkatu 15, with 86 units in Perkkaa, Espoo. In the handover phase, both projects had an NPS of a perfect 100. In addition, these projects were completed as zero-error handovers. The work motivation of our knowledgeable personnel has remained excellent during difficult times. Thanks to interesting projects and well-developed business, the eNPS for our personnel rose to 29.
The company is in a strong position and we are prepared to pursue profitable growth, but the delayed market upswing continues to put the brakes on the strategic restructuring of our project portfolio and thereby on significant improvements in profitability. We do not expect the market to turn around in the first half of the current year, but I believe that the situation will gradually improve and that oversupply will dissolve in the autumn and the last months of the year in the case of both owner-occupied and rental housing. We are constantly on the lookout for new growth opportunities in project development and plot acquisitions. The market is heading in the right direction, but it remains difficult to predict when the turnaround will happen and how vigorous it will be. We are prepared for rapid changes in different customer segments if several market players deem that the time is right to start investing. Building costs are at their lowest in the cycle, the affordability and availability of financing are improving, the oversupply of housing is levelling out and rents are beginning to creep up, which makes this a highly attractive market for property investors who are able to see the potential for return, say, five years down the line. The first signs of this starting to happen are already there.
I want to thank all our customers and stakeholders – and especially our staff – for a productive year in 2024."
Saku Sipola
President and CEO
SRV Group Plc