Inflation and interest rates slow down construction and threaten jobs
OUTLOOK Finland’s construction industry has crumbled, as inflation and interest rates have polluted consumer confidence, discouraged real estate investors and even dragged down housing prices in Helsinki, reports Helsingin sanomat newspaper.
The Finnish Confederation of Business and Industry EK predicted on Thursday that the slowdown will test the profitability of construction companies.
“The views of construction companies are currently close to the levels during the financial and coronavirus crisis, both in terms of the economic situation and the outlook,” the release states. its financial review. “Production in the construction industry will decrease in the coming months. The pessimistic production expectations are also reflected in the industry’s employment. The number of personnel is expected to decrease in the coming months.”
Earnings reports and other industry announcements have already started to reflect the forecast.
SRV is one of Finland’s leading construction companies. announced Last week, it launched consultative talks on redundancies of up to 45 staff years and is considering temporary redundancies to adapt to a more challenging market environment.
managing director Saku Sipola said that the company expects the number of residential construction to decrease towards the end of the year. The market environment has already started to delay the start of expected construction projects.
“We expect inflation, rising interest rates and declining consumer confidence to cut demand at least through the coming winter,” he said. interim report.
In the second quarter of the year, SRV implemented a wide-ranging financing agreement, which effectively released interest-bearing net debt and, according to Sipola, prepared for an increasingly challenging environment. Last week, the company lowered its revenue guidance for the year from 800–860 million to 770–820 million euros and its profit guidance from 15–25 million to 17–23 million euros.
Finland’s largest construction company YIT warned on Thursday that apartment sales may be lower than expected this year, as growing interests and consumer prices continue to eat away at consumer demand.
managing director Markku Moilanen said that the company has defined several measures to overcome the looming recession. While it strives to improve the productivity of its operations and identify future growth opportunities, it also strives to make its operations more efficient and generate savings.
“We are disciplined in our cost management and we are looking to increase opportunities to increase efficiency in both the short and long term,” he said. interim report.
The company repeated its estimate that it will complete fewer apartments than last year, but the operating profit from continuing operations will exceed the 85 million euros recorded last year.
Lehto Group reported at the beginning of last month that it is preparing for growing market uncertainty by discussing with its personnel measures to achieve cost savings of approximately 80 person-years. According to it, the negotiations are part of the adaptation package, the purpose of which is to produce cost savings of up to seven million euros by 2023.
Rakennusteollisuus ry predicted in mid-October that construction would increase by two percent this year – thanks to earlier orders and strong housing construction – but would decrease by around two percent in 2023. The pace of construction has been slowing since the spring and is expected to accelerate towards the end of the year.
“Uncertainty is currently high and a recession is likely. The change is already visible in construction, even though it is a post-cyclical sector that reflects economic changes late. comment Aleksi RandellCEO of RT.
Aleksi Teivainen – HT