MT Højgaard records increase in pre-tax margin

By focusing firmly on profitability MT Højgaard has delivered a sound profit of DKK 165 million for the first half – corresponding to a pre-tax margin of 3.8%.

Profit is only slightly down on last year, even though consolidated revenue was down 19% due to the general uncertainty prevailing among the business community. The level of activity in the second half is expected to be higher than in the first half, but lower than in 2008. The expectations concerning the pre-tax margin have been raised.

First-half profit before tax was DKK 165 million, only down DKK 11 million on the same period last year. First-half revenue was DKK 4.3 billion compared with DKK 5.4 billion last year. The decline of 19% is deemed to be less than the decline in the general market. And the pre-tax margin increased from 3.3% for the same period last year to 3.8% this year.

- Our financial performance is the result of our prioritisation of profitability over growth. In recent years, we have been keeping a much tighter focus on managing both time and profitability on projects – benefiting both our customers and ourselves, says MT Højgaard’s CEO Kristian May in a comment to the financial statements.

Gaining market share

MT Højgaard is enjoying a sustained good intake of new assignments, and the order book of DKK 9.7 billion at the end of the first half was ahead of the end of 2008, despite the fact that the construction sector is currently experiencing a steep decline.

- Our revenue is down on last year. But it is declining by less than the general market, so it would appear that we are gaining market shares compared with our largest competitors. Our customers, suppliers and other business partners attach importance to the fact that we acquaint ourselves with their wishes and needs; that we carry out our work properly; and that, as Denmark’s largest contractor, we have a sound financial foothold, says Kristian May.

The Group’s equity stood at DKK 1.5 billion at the end of the first half, equivalent to an equity ratio of 29%, and the Group’s financial resources amounted to DKK 1.3 billion, and interest-bearing net deposits stood at DKK 807 million at the end of the period.

Expectation concerning pre-tax margin raised

MT Højgaard expects full-year 2009 consolidated revenue of approx. DKK 9 billion as opposed to the previous outlook of approx. DKK 10 billion, but a higher pre-tax margin of approx. 3% as opposed to the previous expectation of between 2% and 3%. In the longer term, the Group has ambitions to achieve a pre-tax margin of around 5%.
The Group still expects the level of construction activity in Denmark in 2009 to be down on 2008. The commercial area is not expected to be able to make up for the decline in residential construction. The level of activity within refurbishment and upgrading, on the other hand, is expected to remain good, especially in the public sector. The civil works market is also expected to remain stable due to public sector investments in the transport sector.

As far as international activities are concerned, MT Højgaard is focusing particularly on profitable projects that match the Group’s skills and resources. This applies especially to foundations for offshore wind farms, an area in which MT Højgaard is among the most experienced in the world.

Financial highlights from financial statements

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DDk million	H1 2009	H1 2008	2008
Revenue	4.328	5.373	11.171
Operating profit (EBIT)	133	170	314
Profit before tax	165	176	359
Cash flows from operating activities	386	354	536
Equity	1.511	1.314	1.442
Interest-bearing net assets	807	402	513
Invested capital	783	925	1.010
Gross margin	7,4%	6,2%	6,3%
Operating margin (EBIT margin)	3,1%	3,2%	2,8%
Pre-tax margin	3,8%	3,3%	3,2%
Equity ratio	29,1%	26,6%	27,3%