Strategy

Strategy for 2016–2019

In October 2015, Lemminkäinen reviewed its strategy for 2016–2019. The company seeks to continuously improve its performance and increase shareholder value through focus on the balance sheet, more competitive operating models and profitable growth in Infra projects in northern Europe.

The company estimates that the outlook for Infra projects is good especially in Norway and Sweden where there are long-term government programmes extending over election cycles. In Paving, the target is to improve competitiveness in all markets through a more streamlined operating model and more efficient processes. In Building construction, Finland, the company continues to focus its operations to urban growth centres. In Russia, the economic situation remains unstable. In order to maintain its moderate risk level, Lemminkäinen has decided not to start new residential development projects for the time being in Russia, but will continue negotiated contracting in building construction. In paving, the company seeks growth particularly in special works in Russia.

Lemminkäinen also made adjustments to its financial targets. At the end of 2019, the company aims at a ROCE above 15%, which is equivalent to the earlier target ROI of 18%. In addition, an EBIT margin above 4% at the end of 2019 is a new target. The equity ratio target above 35% remains unchanged.

Financial target Target Actual 2015 Actual 2014 Actual 2013
Previous: Return on investment*, % 18% over cycle
(15% at the end of 2016)
10.2 13.5 -9.4
New: Return on capital employed**, % 15% at the end of 2019 5.3 4.5 -10.8
New: EBIT margin, % More than 4% at the end of 2019 2.0 1.8 -4.4
Equity ratio***, % At least 35% 40.6 37.1 27.3
Dividend policy, % At least 40% of the profit for the financial year 38.5**** 0 0

* Includes the effect of discontinued operations

** Calculation: Operating profit, rolling 12 months / (Total equity (quarterly average) + interest-bearing liabilities (quarterly average)) x 100

*** Equity ratio, if hybrid bonds were treated as debt: 12/2015: 28.6% and 12/2014: 24.6%.

**** Board of Directors’ proposal for the AGM.