The Group improves its operating result compared to Q1 2013, and management's expectations for 2014 remain unchanged. The overall result is, however, adversely affected by DKK 195 million after losing an old offshore dispute that we are now seeking to appeal.
MT Højgaard's turnaround measures begin to kick in, and our financial results and the profitability of orders improve. In Q1 2014, it resulted in an operating loss of DKK 30 million as opposed to DKK 59 million in the first quarter of 2013.
Q1 revenue was DKK 1.5 billion, which is in line with the same period last year. The large order intake in the final months of 2013 is expected to impact especially revenue and financial results in the second half of 2014.
- The plan we have made is beginning to have an impact. Step by step we increase efficiency in all our activities, and as old contracts with poor profitability are being completed in the course of 2014, the financial results will gradually improve, says Torben Biilmann who joined MT Højgaard 1½ years ago.
Good order intake
The Group's order intake in Q1 represents a value of DKK 0.5 billion. Besides the current intake of new orders, the Group companies won a number of large single orders, e.g. a large PPP project in Vejle, yet another contract for The New University Hospital in Aarhus and a small offshore project, all of which will be entered in the order book in the second quarter of 2014.
- We are very careful to scrutinise all projects and make proper price calculations, and we do not enter into a contract for a project unless it has a sound risk profile and meets our earnings requirements. The market is generally in a positive trend which means that there are a lot of projects to bid on, and we have a good order intake, says Torben Biilmann.
The overall quality and risk profile of the order portfolio is strengthened step by step through a tight management of tenders, risks and project execution.
For 2014 as a whole, we expect an operating profit before special items of DKK 150-225 million, corresponding to earnings before interest and tax (EBIT) of 2-3%, excluding special items. In the first half-year, the financial result is expected to still be affected by old projects with low profitability.
The objective is still to reach an EBIT of 5% by the end of 2015.
The Group's results may still be affected by the outcome of disputes regarding certain old offshore projects. Management expects the majority of the outstanding cases to be decided this year. At present, these special items are expected to impact results negatively by DKK 195 million in 2014.
Our expectations about the future economic development are subject to risks and uncertainties which may cause the development to deviate considerably from expectations. For a description of risks and uncertainty factors, see the Group's most recent annual report.
The quarterly report is available here