Third-quarter revenue was down, and earnings were seriously impacted by the accounting provision for the MgO board cases and further write-downs on a major civil works project.
MTH GROUP’s revenue was DKK 1.6 billion in the third quarter, down from DKK 2.0 billion in the same period last year due to low order intake in 2017. The Group’s operating result before special items was a loss of DKK 459 million, compared with a profit of DKK 65 million in the third quarter of 2017. EBIT was seriously impacted by the accounting provision made to cover the Group’s potential liabilities on construction projects on which MgO boards were used, see announcement of 17 September 2018. MTH GROUP also made a further write-down on a major civil works project, which depressed the financial statements for the first nine months of the year by DKK 130 million in total.
MTH GROUP grew third-quarter order intake to DKK 1.4 billion, from DKK 1.2 billion in the same period last year, and the order book stood at DKK 9.0 billion at the end of the quarter, corresponding to an increase of DKK 2.0 billion since the end of 2017.
On 26 October 2018, the commitment from Knud Højgaards Fond to inject up to DKK 650 million in subordinated loan was implemented in two signed loan agreements between Knud Højgaards Fond and MT Højgaard A/S, so the drawdown right is in place. So far, these facilities have not been drawn down. In addition, Knud Højgaards Fond and Monberg & Thorsen A/S have just waived repayment of the subordinated loan totalling DKK 150 million provided in May 2018. Including the waived subordinated loan of DKK 150 million and the undrawn subordinated loan of DKK 650 million in equity, this gives an equity ratio for MTH GROUP of 26% at the end of the quarter.
- The owners have demonstrated their commitment to long-term support for the company and their confidence is crucial in order for us to be able to adapt efficiently to the reality in which we find ourselves, says MTH GROUP’s new CEO, Anders Heine Jensen.
Outlook 2018: Revenue maintained, EBIT lowered
Following the further write-down on the previously mentioned major civil works project and a revised estimate of the earnings potential in the fourth quarter, a breakeven result is now anticipated for the fourth quarter. Accordingly, the Group has lowered its full-year EBIT outlook to a loss of around DKK 550 million compared with the previous outlook of a loss of around DKK 400 million. Full-year revenue is expected to remain unchanged at around DKK 6.8 billion, primarily based on the current order book.
Anders Heine Jensen says:
- A predicted operating loss of over DKK 0.5 billion is totally unsatisfactory and clearly shows that we face a challenge. We are working at high pressure to adapt MT Højgaard and the Group. We must choose projects with care in order to reduce risk and eradicate large write-downs. This calls for a new way of working and organising ourselves.
- We must find out what constitutes the solid core of MT Højgaard and the entire Group. We must focus on the segments where we have reasonable contribution margins and can exploit our knowledge and skills so that we can deliver quality projects to our customers – on time. The solid core must be strengthened, and non-core activities will be disposed of or phased out.
The interim financial report is available at mthgroup.eu/finance.