SRV Yhtiöt Oyj, a leading Finnish construction company, has demonstrated resilience in the face of economic headwinds, as evidenced by its latest interim report for January to September 2024. The company reported a stable operative operating profit of EUR 4.5 million, with a notable 25% increase in revenue compared to the same period last year, amounting to EUR 183.5 million.

Despite the challenging market conditions, characterized by high interest rates and subdued demand for new construction, SRV's strategic focus on cooperative contracting has helped maintain a strong order backlog of EUR 1,180 million. This backlog primarily consists of cooperative and competitive contracts, which are relatively low-margin but also low-risk.

The company's strategic focus on cooperative contracting, a segment known for its low margins but reduced risk, has been pivotal in sustaining its revenue growth. The increased volumes in alliance and project management contracting in business premises and infrastructure construction positively impacted the operative operating profit.

CEO Saku Sipola highlighted the company's strong balance sheet, with an IFRS 16 adjusted gearing of -6.0%, and a low number of unsold completed residential units, which reduces the need to offer significant discounts in a low-demand market.

Looking forward, SRV's strategy involves pursuing growth in higher-margin projects, including business premises development and developer-contracted housing projects. However, the current lack of consumer and investor demand has delayed the start of these projects.

In conclusion, SRV's strong order backlog and strategic focus on low-risk projects provide a solid foundation for navigating the current market challenges. However, the company's ability to pivot towards higher-margin projects will be crucial for future profitability as market conditions improve.