MT Højgaard Holding A/S: Sound second-quarter results despite Covid-19 reaffirm the outlook for the year

The MT Højgaard Group had a sound second quarter with rising order intake, a growing order book and improved earnings. Second-quarter EBIT was DKK 41 million, up from DKK 23 million in the second quarter of 2019, despite small effects from the Covid-19 crisis. First-half financial performance matched expectations, reaffirming the outlook of a gradual improvement in earnings during the year. The outlook for 2020 is unchanged.

Summary of the first half of 2020 – MT Højgaard Group

• First-half revenue was down 8% to DKK 2,881 million, as expected, mainly as a result of a temporary decline in activity at Enemærke & Petersen following low order intake in the first half of 2019.
• EBIT was DKK 44 million, up from DKK 41 million in the first half of 2019. The operating margin increased to 1.5% from 1.3% in the first half of 2019, reflecting an improved gross margin and lower costs. The second-quarter 2020 operating margin was 2.9%.
• MT Højgaard Denmark reported an increase in earnings and moved into profit, despite lower revenue.
• Limited impact from Covid-19 in Denmark, with a few delays and postponements of projects and minor disruptions to operations. Internationally, Covid-19 led to some slowdown in order intake.
• Order intake grew by 20% to approx. DKK 2.9 billion in the first half, with a good mix of large, medium-sized and relatively small orders. Enemærke & Petersen and Scandi Byg recorded the highest growth.
• The total order book at the end of June exceeded DKK 6.6 billion – up 14% on a year ago.

Summary of the first half of 2020 – MT Højgaard Holding A/S

• First-half EBIT was DKK 24 million, compared with a loss of DKK 3 million in the same period in 2019.
• Net profit for the period was DKK 78 million, including a DKK 79 million contribution from discontinued operations (Lindpro A/S).
• First-half cash flows from operating activities increased to an inflow of DKK 265 million from DKK 30 million in the same period last year, mainly reflecting extended payment deadlines for A-tax (tax deducted from income at source), labour market contributions and VAT, but also improved operating profitability.
• Financial resources increased to DKK 912 million, from DKK 594 million at the beginning of the year. Lindpro A/S, which was sold on 31 March 2020, has been accounted for as a discontinued operation. Except for balance sheet and cash flows, all comparative figures for 2019 have been restated to reflect the effect of the sale.

Strategic update

• The implementation of the Group’s new strategy is going according to plan and the Board has today considered sub-strategies for the six business units. The focus in all business units is on improved profitability.
• In 2021, all the business units will have been hived off into independent companies.
• On 1 July, MT Højgaard International expanded its activities in Greenland by acquiring the company MATU, which is expected to contribute revenue of about DKK 25 million in 2021.
• Our strategic focus on sustainability is underpinned by growing demand for sustainable, certified buildings.

Outlook for 2020 reaffirmed

The MT Højgaard Group reaffirms the outlook of revenue of around DKK 5.9 billion and EBIT before special items of approx. DKK 125 million.

• MT Højgaard Holding A/S still expects revenue of around DKK 5.9 billion and EBIT before special items of around DKK 85 million.

The majority of the expected revenue has been contracted, but Covid-19 may result in postponed start-ups of contracted projects or delays in the signing of new contracts. The uncertainty resulting from Covid-19 is to some extent offset by new political initiatives designed to promote construction and civil works activity in both the private and public sectors.

- We still have a considerable task ahead of us if we are to raise the EBIT margin to 4% in 2022, but we are on the right track. Despite a relatively small effect of Covid-19, we achieved the expected improvement in earnings and order intake in the second quarter. We are making good progress with the execution of individual projects, the portfolio continues to become healthier and the optimisation of MT Højgaard is beginning to show results. There is still uncertainty in the market because of Covid-19, but unless greater restrictions are placed on our activities or contracted projects are postponed for longer periods, we are still expecting positive development to continue for the rest of the year, says President and CEO Morten Hansen, MT Højgaard Holding A/S.

Contact: Morten Hansen and Martin Solberg can be contacted on telephone .

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