Lemminkäinen reviews its strategy for 2016–2019: gradually moving from balance sheet strengthening to improved competitiveness and profitable growth

LEMMINKÄINEN CORPORATION STOCK EXCHANGE RELEASE 30 OCTOBER 2015 AT 8:05 A.M.

Lemminkäinen reviews its strategy for 2016–2019: gradually moving from balance
sheet strengthening to improved competitiveness and profitable growth

Lemminkäinen has 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 programmes extending over
governmental election cycles.

In Paving, Lemminkäinen seeks to improve its operational efficiency in all
markets through a more streamlined operating model and efficient processes.

In Building construction, Finland; the market outlook has weakened from the
previous year. Lemminkäinen 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 for the time being decided not to start
new development projects in building construction in St Petersburg. Ongoing
projects will be carried out as planned. Lemminkäinen continues negotiated
contracting in building construction as well as paving operations. In paving,
Lemminkäinen seeks growth in special works.

President and CEO Casimir Lindholm comments:

“We have fulfilled the requirements agreed with the financiers in May 2014
related to the strengthening of our balance sheet, which has improved our
financial situation significantly. The company’s balance sheet and cash flow
have improved and our operating capital has decreased from EUR 690 million to
EUR 485 million in the past 18 months”, says Lemminkäinen’s President and CEO
Casimir Lindholm.

“We have streamlined our business portfolio which has led to substantial write
-downs. Going forward, we will continue to assess our business portfolio.”

“During the coming years, Lemminkäinen’s target is to improve its
competitiveness in all business segments and to build a solid foundation to
enable profitable growth. We will implement best practices across segments and
country borders in order to utilise economies of scale.”

Strengthened balance sheet and improved competitiveness

The company will continue to strengthen its balance sheet structure and to
further improve its capital efficiency by focusing investments, by boosting
housing sales and releasing capital through improved internal processes and
procedures.

In order to react faster to the changes in the market and to better utilise
economies of scale, Lemminkäinen will renew the Paving segment‘s operating
model. During the strategy period, the paving operations will move from a
regional structure towards a more agile, customer and activity-oriented
organisation model. Furthermore, the mineral aggregates business will be led as
an individual business area. All project related infrastructure businesses, such
as earthworks, will be transferred from the Paving segment to the Infra projects
segment. All changes will be effective as of 1 January 2016.

The company will publish pro forma figures for 2015 according to the new
reporting structure during the first quarter in 2016. The 2015 financial
statement will be reported according to the current segment structure.

In building construction in Finland, Lemminkäinen continues to focus its
operations to the Helsinki metropolitan area and other urban growth centres.
Lemminkäinen aims to maintain a production volume that will enable profitable
business and positive cash flow in the Helsinki Metropolitan Area, and areas
around Turku, Tampere, Lappeenranta, Kuopio, Oulu, Lappeenranta and Vaasa.

Profitable growth

Urbanisation and investments to the energy sector increase the demand for
complex infra projects. By utilising Lemminkäinen’s expertise gained in the
Finnish market, the company aims to grow into one of the leading providers of
selected infrastructure business areas in Northern Europe. The Infra projects
segment seeks growth especially in Sweden and Norway where the market outlook is
attractive, as governmental infrastructure development programmes will continue
until 2020’s.

Lemminkäinen seeks growth especially in infra projects related to complex
transport infrastructure, heavy industry and power plants as well as heavy city
infra.

Financial targets

Lemminkäinen makes adjustments to its financial targets. Lemminkäinen aims at a
ROCE above 15%, which is equivalent to the present target ROI 18%. In addition,
an EBIT margin above 4% is a new target. The equity ratio target above 35%
remains unchanged.

Lemminkäinen’s financial targets are:

  · ROCE above 15% in 2019
  · EBIT margin above 4% in 2019
  · Equity ratio above 35% during 2016–2019

Lemminkäinen aims at a stable distribution of dividends, with at least 40 per
cent of the profit for the financial year distributed to the shareholders.

LEMMINKÄINEN CORPORATION
Corporate Communications

ADDITIONAL INFORMATION:
Casimir Lindholm, President and CEO
Tel. +358 2071 53304
casimir.lindholm@lemminkainen.com

Ilkka Salonen, CFO
Tel. +358 2071 53304
ilkka.salonen@lemminkainen.com

DISTRIBUTION:
NASDAQ OMX Helsinki
Key media
www.lemminkainen.com

Together with our customers we create conditions that make living, working and
travelling functional, safe and healthy. We operate in Northern Europe and
employ about 5,600 professionals. In 2014, our net sales were about EUR 2.0
billion. Lemminkäinen Corporation's share is quoted on NASDAQ OMX Nordic
Exchange Helsinki. www.lemminkainen.com