SRV's strategy 2024-2027 - Sustainably profitable
We seek to build a lifecycle-wise environment by listening to our customers and other stakeholders. Our approach is encapsulated in our customer promise: "By listening, we build wisely."
The company’s strategic objectives are to increase shareholder value, provide an excellent customer experience, be a desired employer and mitigate climate change. To ensure the achievement of these objectives, we will focus on five strategic priorities:
- A portfolio that is optimised for market conditions and risk management
- Lifecycle-wise construction
- Customer work that produces value
- Efficiency and digitalisation
- Corporate culture, people and expertise
The long-term financial objectives will be achieved through the continuous optimisation of business operations
SRV aims to continuously optimise its portfolio for market conditions and risk management in order to reach its long-term financial objectives. At the end of 2023, the company’s project portfolio is strongly focused on cooperative business premises contracts. Going forward, the company intends to pursue profitable growth by increasing the share accounted for by housing construction and especially by housing and business premises construction based on in-house project development in a controlled manner, as follows:
- SRV will bolster its leading position in cooperative project management contracting and alliance projects
- The share of revenue accounted for by housing construction will be increased to 30-40%
- The relative share of the portfolio accounted for by business premises based on in-house project development, residential development projects and residential developer contracting projects will be raised to 30-40% of revenue.
Our aim is to build SRV into a sustainably profitable company. We will steer our profitability by tapping into market opportunities and engaging in prudent risk management. The key factor in risk management is the careful selection of projects. We also proactively manage our risks by diversifying our portfolio geographically, by intended use and contract type, and by limiting the amount of capital tied up in projects.
Geographically, the company will continue to focus particularly on growing urban areas in Finland. In cooperative contracting, SRV seeks to be the leading company nationwide. In renovation, the company is pursuing growth through cooperative implementation models, particularly in association with key customers.
Long-term financial objectives
The company’s operations are guided by the following long-term financial objectives that it aims to achieve
by the end of 2027:
- Operative operating profit of at least EUR 50 million (earlier 6%)
- Revenue > EUR 900 million (earlier EUR 900 million)
Taking into account that SRV aims to pay dividends of 30-50% of its annual result, in line with its dividend policy, the company’s outlook and capital needs remain unchanged.
Megatrends as drivers of our strategy
Climate change and the scarcity of natural resources affect everywhere. The prices of energy and raw materials are rising and the basis of decision-making is sustainability - new metrics arise from the requirements of energy efficiency and the circular economy. New technologies and climate change have a strong impact on construction and the real estate industry. Properties must be sustainably built and adaptable, regardless of whether they are viewed from the perspective of energy efficiency, circular economy or preservation of economic value.
More and more of us want to live in cities, because with jobs and services, life there is perceived to be easier. We all have to find a home in the city as well - in that case, buying a new property is often a good solution. At the same time, when the ease of services and meeting people succeed smoothly in an urban environment, the possibility of compact living and using public transport are also essential from the point of view of curbing climate change.
Our society is in transition. Digitization creates a framework for the success of changes. It challenges us to question the existing methods of operation and to recreate them, even more functional and flexible. The solutions brought by digitalization have increased the use of various services in our everyday life.
Future perspectives
Lifecycle wisdom is our answer to the biggest questions of the future. To how we make this life with its homes, workplaces and common spaces more sustainable and cleaner - also for future generations. By acting in a life-cycle wise way, we promote the benefit of both people and the environment, and equally financial well-being. Because we believe that a better, cleaner future is built on these.
Sustainability
SRV's most important themes of SRV’s sustainability efforts compiled into a responsibility program based on the ESG framework. SRV's goal is to ensure that the sustainability efforts support the realization of strategic goals as well as possible and gives the business more resources to cope in an increasingly demanding operating environment.
SRV's business operations consists of housing construction, office construction and infrastructure construction in Finland's largest growth centers, i.e. the capital region and the regions of Turku, Tampere and Oulu. Business premises construction consists of project management and alliance contracts and lifecycle projects for clients as well as self-developed projects. Housing construction consists of self-founded and self-developed housing projects, and construction contracts for customers. SRV's infrastructure construction consists of urban environment infrastructure solutions.
Our business operations
In accordance with the company's strategy, SRV's business premises construction consists of project management and alliance contracts, lifecycle projects and self-developed projects. In lifecycle projects, SRV is responsible for both construction and building maintenance for the agreed service period for a separate service fee. A self-developed business premises project refers to a project developed by SRV, which SRV sells to an investor before the start of construction, and where SRV bears the risk of construction and leasing. Renovation services are also part of business premises construction, and SRV's own building technology services and energy and lifecycle services are seamlessly involved in the construction of business premises.
In accordance with SRV’s strategy, the company’s housing construction consists of residential development projects and developer-contracted housing projects in Finland’s strongest growth centres, and particularly in the Helsinki Metropolitan Area. In addition, SRV selectively carries out housing construction projects for public and private sector clients.
A developer-contracted project is based on in-house project development: SRV designs, builds and sells residential units to consumers.
SRV bears the sales and construction risks. A residential development project is also based on in-house project development, but is sold to an investor before construction begins. SRV typically bears the financial risk and and the project is recognised as income according to the degree of completion. These are construction projects of external customers, where SRV acts as the main contractor.