MT Højgaard Holding A/S: MT Højgaard Group meets expectations for 2019 and launches new strategy
MT Højgaard Group (MT Højgaard A/S including subsidiaries)
The MT Højgaard Group delivered the expected improvement in earnings in 2019, driven by lower costs, enhanced efficiency, higher quality of execution and significantly lower write-downs. EBIT before special items was a profit of DKK 83 million, compared with a loss of DKK 547 million in 2018, when provisions for remediation of MgO board cases depressed earnings by DKK 362 million. EBIT is expected to improve further in 2020, and a new strategy plan is designed to increase the EBIT margin to 4.0% in 2022.
- Revenue was DKK 6.9 billion, up 2%, as expected. Civil Works recorded a higher level of activity, while revenue in Construction and Services was in line with 2018.
- EBIT before special items was DKK 83 million, lifting the operating margin before special items to 1.2% from -8.1% in 2018. A profit of around DKK 75 million had been forecast.
- Reported EBIT was DKK 48 million compared with a loss of DKK 547 million in 2018. As previously announced, reported EBIT includes restructuring costs of DKK 35 million in the fourth quarter of 2019.
- Profit before tax was DKK 24 million compared with a loss of DKK 559 million in 2018.
- Equity increased to DKK 759 million, from DKK 393 million at the end of 2018. The solvency ratio increased to 18.0% from 10.1%.
- Operating cash flow exceeded expectations, amounting to an inflow of DKK 28 million compared with an outflow of DKK 142 million in 2018. The improvement reflected higher EBIT and sharpened focus on liquidity.
- The Group won new orders worth DKK 6.9 billion, while order intake in 2018 was DKK 7.0 billion. The order book remained unchanged at the end of the year, standing at DKK 7.2 billion.
- MT Højgaard reduced its operating loss considerably to a loss of DKK 140 million. As expected, earnings were still impacted by previously mentioned legacy projects that contribute low or no revenue during their completion. The majority of these projects were either completed in 2019 or will be completed in the course of 2020.
- Enemærke & Petersen, Scandi Byg and Ajos delivered EBIT of DKK 133 million, DKK 12 million and DKK 23 million respectively, thereby delivering sound results.
- After the reporting date, Lindpro’s Danish activities have been sold subject to approval by the Danish competition authorities (announcement from 6 February 2020). In addition, Morten Hansen has been appointed as President and CEO after three months as Acting President and CEO (announcement from 5 February 2020).
- The paramount goals for 2019 were to put MT Højgaard’s operations back on a healthy footing and ensure continuing momentum in Enemærke & Petersen, Scandi Byg and Ajos. These businesses improved, creating robust results, and we are also well on the way to turning things around in MT Højgaard. We have not yet completed the task of optimising, but MT Højgaard is winning and executing healthier projects and now has a healthy order book. And with the paradigm shift in autumn 2019, where we organised ourselves in a new way, putting projects firmly in focus and cutting 130-140 salaried employee jobs, we took an important step towards creating a leaner, profitable MT Højgaard, says President and CEO Morten Hansen.
MT Højgaard Holding A/S (the whole Group incl. the parent company MT Højgaard Holding A/S)
MT Højgaard Holding’s 2019 results exceeded expectations. EBIT before special items was DKK 18 million, and operating cash flows were an inflow of DKK 123 million. Pre-tax profit was DKK 94 million. MT Højgaard Holding’s financial statements for 2019 differ from those of the MT Højgaard Group because the MT Højgaard Group did not become wholly-owned by MT Højgaard Holding until 5 April 2019, after the merger of Højgaard Holding A/S and Monberg & Thorsen A/S. In connection with the merger, assets and liabilities were determined at fair value, and MT Højgaard Holding’s results for 2019 were affected by purchase price allocation as well as transaction costs and administrative expenses.
Outlook for 2020 and financial targets in new strategy
The number one priority in 2020 will be to improve earnings in MT Højgaard and create the basis for further improvements in profitability in the years ahead in the Group. EBIT in the MT Højgaard Group and MT Højgaard Holding will be identical in 2020, with the exception of amortisation of intangible assets and modest administrative expenses in the holding company.
- Revenue is expected to be around DKK 6.5 billion (DKK 5.9 billion excl. Lindpro A/S).
- The MT Højgaard Group is expected to deliver EBIT before special items and excl. Lindpro A/S of around DKK 125 million.
- MT Højgaard Holding is expected to deliver EBIT before special items and excl. Lindpro A/S of around DKK 85 million.
- A new strategy – Sustainable >22 – is designed to provide long-term improvements in EBIT on relatively stable revenue. The target is an EBIT margin of 4.0% in 2022.
- The Group will be organised into six independent business units all on equal footing. These six units are MT Højgaard Denmark, MT Højgaard International, MT Højgaard Project Development, Enemærke & Petersen, Scandi Byg and Ajos.
- With Sustainable>22 we are focusing on the core areas in which the Group has in-depth capabilities, critical mass and sound contribution margins. We will expand our positions of strength in the areas of sustainable construction, refurbishment, project development, partnerships, the field of civil works, and projects in Greenland and the Faroe Islands. Outside these core areas, we will be working together with external partners, so that we can always put together the strongest possible team. Clear roles, responsibilities and expectations are vital to ensure profitability and competitiveness, and that is why we are moving as many tasks as possible out to the business units, so that decisions are made as close as possible to the market and customers, says Morten Hansen.
Contact: Ann-Louise Elkjær, Vice President Communications and HR, +45 2033 8693, ale@mth.dk
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