The views of construction companies are close to the levels seen during the financial and coronaviruses crisis in terms of both the cyclical situation and outlook, it said in its economic review. In the coming months, production in the construction industry will decrease. Employment in the industry is also reflected by the pessimistic production expectations. Staff numbers are expected to decline in the coming months. Earnings reports and other announcements from the industry have started to reflect the forecast.
SRV, one of the leading construction companies in Finland, announced last week it will start consultative negotiations about shedding up to 45 person-years of jobs and mull over temporary lay-offs to adapt to what is expected to become a more challenging market environment.
The volume of residential construction will decline toward the end of the year, according to CEO Saku Sipola. The market environment has started delaying the commencement of expected construction projects.
Inflation, growing interest rates and weak consumer confidence will cut into demand at least during the winter ahead, he stated in the interim report.
In the second quarter of the year SRV carried out a broad-based financing agreement, relieving itself of net interest-bearing debt and bracing itself for the increasingly challenging environment, according to Sipola. The company lowered its revenue guidance for the year from 800 860 million to 770 820 million euros and lowered its profit guidance from 15 25 million to 17 23 million euros.
Home sales may fall short this year, as rising interests and consumer prices continue to gnaw away at consumer demand, according to YIT, the largest construction company in Finland.
Markku Moilanen said that the company has identified a number of measures to be able to overcome the looming downturn. It wants to improve the productivity of its operations and identify future growth opportunities, but it also wants to improve operational efficiency and generate savings.
He said that we are disciplined in our cost management and will pursue further opportunities to increase efficiencies in the short and long term.
The company stated that it will complete fewer residential units than last year, but that the operating profit from its continuing operations will surpass the 85 million euros posted last year.
Lehto Group reported early last month that it is preparing for growing market uncertainty by discussing measures to generate cost savings equivalent to 80 person years with its staff. It said the consultations are part of an adaptation package designed to create cost savings of up to seven million euros for 2023.
The Confederation of Finnish Construction Industries RT predicted that construction will increase by two per cent this year on the back of earlier orders and strong residential construction, but in mid-October it was predicted to decrease by about two per cent in 2023. The pace of construction is expected to accelerate towards the year-end, as the pace of construction has declined since spring.
There is a chance that a recession is imminent, and the uncertainty is high. The change is already visible in construction, even though it is a post-cyclical sector that reflects economic changes belatedly, said Aleksi Randell, the managing director at RT.