YIT Oyj (YIT) Earnings Call Transcript

Good morning, ladies and gentlemen. My name is Essi Nikitin, and I'm heading the Investor Relations here at YIT. It's my great pleasure to welcome you all, both here in Sanomatalo and people following the webcast via this capital markets update regarding the data center market. Let's take a look at today's agenda. Our President and CEO, Heikki Vuorenmaa will start the presentations and talk about the execution of our strategy announced 2 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 why are these role and capabilities in the data center industry. And finally, our CFO, 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 to 2029, 2 years ago in November 2024. During the past 2 years, we have executed now the strategic priorities 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 vision 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. So we have a really interesting morning ahead of us. But now let's introduce our speakers of today. Starting from our President and CEO, Heikki Vuorenmaa. Heikki, welcome to the stage.

Yes. Thank you very much, Essi and introduce colleagues and other speakers, starting with Aleksi Laine. And Aleksi is our Head of our Infrastructure segment being with the company approximately 20 years. And within the Aleksi 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 CFO, recently joined YIT. He has extensive carrier in the several finance positions, and Erkka is going to tell more about how this is actually impacting YIT finances going forward. And like Essi said, so my name is Heikki Vuorenmaa President and CEO, the ones that I haven't met before. It's actually great to see, very many familiar faces today and be in the position to share more about what is data center industry growth actually is in Finland and how that is going to impact YIT's future in the coming years. But let's start with what YIT is today. So 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 a 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 IT professionals and actually continue to recruit more. In total, our sites today were more than 20,000 employees here in Finland. So 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. So we discuss data centers. And in some cases, we refer to that as a new long-lasting economical start in Finland, but we actually have seen a couple of those prior because YIT is not a start-up company. We have been on this business more than 100 years. We've been building the foundations of the Finnish society era. We have been supporting the transition of industrialization, developing to urbanization and now leading to focus on sustainable and digital human-centric environment that we all like to living. Our transformation as 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 well built. And I guess, introduced actually the strategy that we announced 24 on the capital markets, we have been delivering that with decisive steps. At the 24, we set out 3 strategic priorities. Since then, we have scaled our residential business and doubled the production volumes. We have delivered already 6 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 operations and all operation countries. There are several project examples that we have delivered ahead of schedule and on budget, most recently here in Helsinki, health care center here nearby in comp, which was more than 400 days ahead of schedule. And it wasn't 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. And 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. So 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 2 years already. In the '24, we were setting our outlying 4 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 focused 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. And even though this has impact to on all of our operating countries, we are still today discussing opportunities in Finland. And 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% to 20% annually according to aggregated data from several sources. This demand and the strong demand comes from AIand 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 gigawatts of planned capacity for deployments. And if we compare that today, it's actually by fartest in European -- kind of largest by far in European countries. And the constraints that are on this industry in relative terms, actually Finland has a fewer of those constraints compared to many other countries, and it's also creating the wonderful opportunity for us as the largest construction company. Let's double click more on Finland, those positive elements what we have here. And how we're seeing is that we have 4 -- several structural advantages to become a leading destination for those large-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, so additional energy is strong. So Finland has enough power to power the upcoming investments. Secondly, when we look at the electric transmission infrastructure, that is simply a world-class Fingrid has done excellent work over the years to build a strong and resilient network that is needed for this new economic area. And 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. And finally, something which is really important in today's world is that the Finland is secure and predictable society. It is making Finland attractive for the large-scale data center investments. And we see that the investments aren't just about to start because when we look the installed capacity that we have at the end of 2025 and compared 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 megawatts of operating capacity deployed in Finland as of 2025. Then when we take the data from the consideration of the Finnish industries, the announced capacity expansion of the data centers would reach over 5 gigawatts by end of 2029. Then we need to take another data point just to assess this opportunity, and let's use the fine connection agreements and that they announced in 2026 August, that reaches 5 gigawatts. By the way, this data doesn't yet include the Google's EUR 13 billion investment announced earlier this month. So this tells about the magnitude of the industry. This is a unique opportunity to Finland. And the cycle is just starting, and it presents unforeseen opportunity for the construction industry. But 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% of the current industry volumes what we have here. Direct employment impact data center construction up to 25,000 employees. And as all operational, create approximately 7,000 permanent jobs. So we talk about massive impact. And 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 '22. There is work obviously to ensure that all the competencies are in place. But we, as 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 potential funding for then the public services. So I keep repeating myself, but we are looking here a massive opportunity to society level. We haven't seen similar growth in construction industry in several decades. The question is that how do we can secure that this opportunity actually will materialize? If you 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 and critical also is that there is secured and availability of land for this type of investments. Our local presence is supporting global investors to navigate around visitors because it quite often requires the local knowledge and livery capabilities. So I would say before handing over to Aleksi to share how we are actually executing this project as 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. Finland is attractive development for the new economy. This will represent a significant opportunity for the construction industry up to EUR 15 billion until '29. But 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 pillar in Finland, we are in a good position to capture a large share of these future investors. As we are also the market leader, we need to carry the responsibility on ensuring that these investments are actually delivered on schedule and cheap budget. Our strategy has been to create 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, and I will let Aleksi now to deep dive into the YIT capabilities, tell much more about what is data center investment actually look like. Welcome, Aleksi.

Thank you very much. Heikki. So 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 the 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. 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 a leading service provider and also eventually, how we can further capture the growth opportunity, manage the risks and build sustainable growing business. But let me start by explaining what the data centers are actually all about. So large data center projects are actually systemic interaction 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 and at the same time, fleet market has become critical as every month of delay impacts our customers' ability to generate value from their investments. As the illustration here shows motor 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 really 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 1. 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 many and complex interfaces. And 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. And 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, co cloud operators and neoclouds. These customers are responsible of the -- 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, places and locations. Once the contractor gains customer's trust, the opportunity often expands 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 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 reoccurring construction demand over an extended period of time. Many of today's data center investments campuses develops rather than stand-alone facilities. Individual campuses ultimate -- 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. Experienced gain 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. So 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 increase important. So far, I've discussed data center projects are becoming more complex and why many investments are delivered as a 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 broader of the delivery chain, from early site development and infrastructure works all the way through the 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 1 organization. Capabilities gives us clear advantages and allow YIT to support customers from early site development and enabling infrastructure through the 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 value, then contractors focused on single scope alone, creating attractive growth opportunities as the market expands. Of course, broadened needs. 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 significant scale and over of the multiple phases. YIT brings experience from large industrial, infrastructure and complex construction projects requiring disciplined execution over extended periods. Scheduled certainty is also critical, as delays affect customers' broader investment program, making project management and delivery reliability increasingly important. In addition, in 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 help 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 the 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 3 different campuses with 5 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. So 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, product 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 example, additional phases at the side 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 customers' 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 IT. A data center project represents more than a value of a single contract, successful delivery recurring opportunities and increases the long-term value of the customer relationship. Let me now bring you to live a current example of this type of a project. Our track record with XTX demonstrates that successfully 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. So 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. So 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 a multiphase 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. And let me now hand over to Erkka to discuss what this means financially for YIT.

Thank you, Aleksi. So my name is Erkka Repo and I'm the CFO of YIT Group. As Heikki mentioned, I have recently joined the company and I have to say that it was 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 CFO, both in listed and non-listed companies. In my presentation, I'm 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. So 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 Mantsala in 2014. Today, we are working across 5 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 so why data centers are becoming increasingly important for us is already changing the composition of our contracting businesses. Data centers have grown in 1.5 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. And 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. So 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 business. 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 scheduled 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 multiphase compasses. 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. And over the past years, we have successfully reduced our project margin deviations and are now consistently delivering the planned project profitability. And 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 path into 3 illustrative revenue scenarios for YIT in 2029. I However, I want to emphasize that in all of the 3 different scenarios, the business grows very strongly. The difference is primarily in how quickly a data center investments can move from plants into construction. In the low case, power availability and grid expansion progressed more slowly than currently planned. Customer investments take longer-term planned to reach execution, 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. And as Aleksi explained earlier, YIT is well positioned for this type of scaling. While the exact base will depend largely on external conditions, the direction is clear. Data centers offer YIT a material credible 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 update ambition accrue 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. And 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, drivers provide IT 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 the major driver of our next phase of growth, both in revenue and profits. Thank you.

Thank you very much, Erkka, and thank you, Aleksi and Essi and let me invite you all back to the stage, as we are approaching the end of the tables here as well if there's -- thank you. And like as you promised in the start, so there will be an opportunity for Q&A. But before I let you ask all the great questions, let me just recap and summarize what we were sharing to you industry is really here, and it's built already today. When we talk about the opportunity, we see a massive opportunity. for construction industry addressable market up to EUR 15 billion through '29. Our market share in data centers today that is built approximately 30% as Alexis and IT being the largest construction company here in Finland is also the largest construction company in its field there. We continue to Three campuses. We have capacity already to deliver 6 campuses, so obviously, working on there with the customers. but also beyond. So continued recruitment and ensuring that we have the right team and capabilities. But not just in-house, I think it's good to say that we are taking a 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 forecast. The market is long term, it's really concrete. And for us, it's providing significant growth opportunities. But 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. [Operator Instructions]

Joona Harjama from OP Markets. 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, the projects? Or is the competition mainly local? How do you see it?

Yes, indeed, we see a local and global competition here. In the 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 [indiscernible]. 75% subcontracting share of the work. .

Okay. And finally, from me about the split between Infra Building Construction. Can you discuss a bit more on how you allocate revenues between Infra and Building Construction in these projects.

Very good. And yes, so we discussed we show that what's the revenue accumulation has. And like Erkka pointed out, so we are now dividing 50-50 to these 2 segments. .

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're 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 4 of our businesses we have, we talk about these 4 cylinders. Today, we are in a very nice position that 3 of the 4 cylinders are actually operating in a favorable market conditions, and we have a proven track record of delivering and the track record track is there. There's still kind of a question about the timing of recovery of residential Finland business, which is then obviously something that on a group level is also impacting on our financials.

Yes. And then on the data center market, so what kind of hockey stick are we looking at? Will the market spike, for example, next year and then taper for how do you see it between the years?

Well, if you 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 pointed out is that the growth and the opportunities, what we see here already in '27 is quite substantial, what has been announced across all the different players. Whether there is an opportunity to announce more and build it such a way that power availability and grid availability and projects are in a seamless execution. There might be even further upside there. But at the moment, we see that already '27 is a quite substantial year for the data center construction in Finland.

Okay. Then the percent market share now, is there possibilities to gain over that -- over the coming years.

We start from the perspective that we -- when we look at 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 and whether then we have more of the government to choosing us to do work that might lead or that is actually then impacting the market share.

Then finally, from me, continuing on what Joona asked. You showed the competitors, #2 and 3 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, so 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 kind of more experience in the data center industry can actually provide the fuller scope that our foreign companies. But anything, Aleksi, would you like to add there?

Yes. It's pretty much as you stated, Heikki. So probably you can know what the landscape is about from Finnish perspective. And as Hegistated also there are, to some extent, foreign players. But we also believe that, as Heikistated, that actually also the foreign investors, they actually have an urge to also work with local partners, and we are continuing that what works.

[indiscernible] from DNB Carnegie. Maybe a quick question on the already asked one just to elaborate, like 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 worse compared to the previous update? Or what -- could you provide some color on that?

I wouldn't change -- I wouldn't state that our view has changed on a contracting segment per se. If I go back in the time in '24 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 the year '26 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 will see that, that is just a matter of time. But we haven't kind of -- that hasn't really changed our view. If you look at our track record, we have been improving our profitability. I think Infra has been doing already solid profitability over several kind of 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 pointed out there, so the target is above 6%. So that's where we are heading.

And 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 provide -- could you open it up a bit? Is it the delivery constraint on your part? Or what does it then done?

Yes. So we had 3 of those. And the last one would be some limitation of that would impact on the industry. We believe that we are actually in a very good position to mitigate that part of the risk. So we see that the material risks are more on grid availability and power availability and the last 1 playing a smallest role in that 3 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 5 years, for example?

Well, it's a great question, and it's not like one labor market as such. So 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 colors has been paying off in order to kind of ensure that we have skilled and available team members on those projects. So it's not just about the numbers, but this is also race for talent and as well as the right competencies in the right area because these are -- 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 3 growing main cities. So that's the kind of, I would say, the puzzle that we are playing. But what plays on our hand is that how we are positioned across the Finland. We are still according to the kind of recent studies. So we are the #1 attractive employer for the university students. And of course, we continue to recruit and build on top of the 4,000 employees YIT that we are.

Anssi Raussi from SEB. A few questions left from me. First about this from EUR 13 million to EUR 15 million potential in the coming years. So was it based on 2.9 gigawatts?

Approximately there. And we look at from -- I think that there was one excellent analysis on what would be the potential market. And in that analysis, it was said like a EUR 30 billion would be roughly the roughly the market. But when we look at the addressable market for construction companies, so like Aleksi pointed out in the data center. So there is also the power generators. There's a transmission, there's kind of 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 kind of tried 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. So that's how we model it out.

That's clear. And then about your margins, if I continue on that. And if you look at the contracting segment total and I think your last 12 months revenue from data centers has been a bit less than 20% of these segments. And if adjusted EBIT margins are around 3% to 4%, have you seen some kind of maybe learning curve in this first data center projects? Or is it due to these other Infra and Building projects?