The MT Højgaard Group generated an operating profit of DKK 122 million in H1 2015, compared with DKK 16 million in H1 2014. The improvement is a result of a sharper customer focus, healthy operations and consistent use of digitalisation tools. The Group revises its full-year guidance.
The MT Højgaard Group generated revenue of DKK 3.3 billion in the first six months of 2015, which was as expected and in line with the year-before period.
Recent years' extensive efforts to refocus the Group's business operations, management systems and organisation lifted the H1 2015 operating profit before special items to DKK 122 million from DKK 16 million last year.
The operating margin improved to 4.5% in the second quarter from 3% in the first quarter, for a H1 2015 margin of 3.8% against a mere 0.5% last year. The improvement in earnings was driven by the effects of the Group's turnaround and by the fact that customers have responded well to MT Højgaard's new approach to construction projects, i.e. earlier involvement and increased digitalisation.
“Clients are increasingly demanding our services as early as the initial idea phase, so they can make use of our extensive knowledge and experience. This is the phase where our VDC digital initiative (Virtual Design & Construction) really creates value for them, because we can model their entire project process. That gives our customers many more options to choose from before they commit to a specific solution, and they can see exactly how the final project will look on all parameters. The results and the customer feedback we've been getting so far makes me confident that we're on the right track,” says MT Højgaard President and CEO Torben Biilmann.
In addition to its sharper customer focus and the investment made in new digital tools, the Group has restructured its processes and organisation over the past couple of years to achieve greater flexibility and much stronger risk management.
The Group won new orders worth DKK 3.4 billion in the first six months of 2015, compared with DKK 2.6 billion last year. A number of other orders were also won in the first half of the year, but they had not yet been finalised by 30 June 2015. The order book had risen to DKK 6.6 billion at 30 June 2015.
Full-year guidance adjusted
Based on the indications received from the US Air Force that they wish to temporary extend their current contract with Greenland Contractors (67% owned by MT Højgaard) for the operation of Thule Air Base in Greenland after 30 September 2015, MT Højgaard expects to sign an interim agreement in the near future that will run into 2016. The anticipated effects of this agreement are reflected in the revised financial guidance for 2015.
MT Højgaard now expects a full-year 2015 operating profit of DKK 325-375 million, equal to an EBIT margin of approximately 5% (the previous guidance was 4-5%). The new guidance marks a slight upgrade from the previous FY 2015 EBIT guidance of DKK 300-375 million. The earnings are based on the expected revenue of around DKK 7 billion (previous guidance: DKK 7.0-7.5 billion).
The expected operating margin for 2016 remains at 5%.
Forward-looking statements are inherently subject to risk and uncertainty, and actual develop-ments may differ materially from the guidance provided. See the most recent annual report for a detailed description of risk and uncertainty factors.
The interim financial report for the second quarter of 2015 can be read here