Welcome to MT Højgaard Holding Q1 2026 presentation. This call will be recorded. During the first part of the call, all participants will remain muted. Afterwards, there will be a question and answer session. To ask a question, please press five star on your telephone keypad. I would now like to introduce your speakers, CEO Rasmus Untidt and CFO Dennis Nørgaard. Please go ahead.
Thank you. Thank you for joining our presentation of MT Højgaard Holding's Q1 results today. I'm Rasmus Untidt, and I'm CEO. I'm joined by CFO Dennis Nørgaard on today's call. We will cover the highlights of the quarter and add some details on the order portfolio before moving on to the outlook and taking your questions. Let's have a look at the main points for Q1 on slide 2, please. Spring has finally arrived after a long and cold winter period. The harsh weather conditions dampened activity in both business units and impacted revenue and earnings in the quarter. We were pleased to see both units reallocate resources between projects and work scopes to mitigate the impact of the tough winter and deliver good project execution on a difficult backdrop. This enabled us to report robust results with solid contributions from MT Højgaard Danmark and Enemærke & Petersen.
While the activity level could have been higher on existing projects, we noted positive developments in our order portfolio. Firstly, we converted previously awarded contracts into firm orders during the quarter. This means that revenue and earnings will materialize from these projects in the coming quarters. Secondly, we grew the order portfolio by 33% from Q1 last year, laying a strong foundation for the years ahead. We also made good progress on our strategic priorities. Enemærke & Petersen continued the positive traction and improved earnings after solid project execution. During 2025, steps were taken to streamline the business, and the process of consolidating all activities in Western Denmark in Haderslev has essentially been completed in Q1. We are now taking the next step as we have decided to transfer the ownership of [NemByg] from Enemærke & Petersen to MT Højgaard Danmark during 2026.
Finally, we are pleased to report that the wind up of our international activities has been completed. We have closed the divestment of Arssarnerit in Greenland, which was announced in December. Based on the performance in Q1, we are maintaining guidance for the full year. We'll comment on the outlook later. Let's turn to slide 3, please. This slide provides an overview of the activity and revenue across our strategic focus areas in the quarter. We have added further detail in our quarterly report and here with an overview of the order intake and order book across areas. Our two business units have built strong capabilities in these key areas, and we have been working actively to ensure a more balanced distribution of revenue.
This has resulted in an improved balance, which was relatively stable this quarter, despite an 18% decline in revenue to DKK 2.2 billion. 20% of group revenue came from civil engineering and infrastructure this quarter, the new build business remained the large area, accounting for 48%. The refurbishment activities generated 30% of revenue. Exactly one-third of group revenue was generated in construction partnerships and collaboration projects across the three business areas. This includes multi-year partnerships with large developers and projects with early involvement. The order intake increased in all three business areas in the first quarter, with new builds most significantly impacted by the large contracts with the Danish Defence and accounting for 55% of the group order intake. The large contract impacted the balance in our order book.
We will continue to pursue our ambition of increasing the share of civil engineering and infrastructure projects. All three areas remain attractive. We are well-positioned to win projects in the coming years. Please turn to slide 4, please. Our total order portfolio grew by 33% since Q1 2025 and remained around the record high level of DKK 24 billion on par with in 2025. Final unconditional orders increased to DKK 14.7 billion in the quarter after the conversion of previously awarded projects into firm orders. In addition to the accommodation buildings for the armed forces, such orders included four projects for Energinet under an existing framework agreement concerning the expansion and then renovation of the electricity grid. Enemærke & Petersen also had the final go-ahead on the large refurbishment of 972 housing units in Folehaven in Valby.
At the same time, the contribution from awarded but not yet contracted orders increased to DKK 4.7 billion. These are typically phased contracts, such as the order for two new metro stations in Nordhavn. Future assignments and partnerships contributed with an estimated value of DKK 4.2 billion. These assignments are part of the partnership scope, but they haven't been contracted yet. Joint ventures held orders worth DKK 0.5 billion at the end of the quarter. The strong order portfolio enables our business units to plan for the longer term and optimize the use of their resources. It provides a strong foundation and buffer going forward. Let's have a slightly more detailed look at this on slide 5. This slide provides an illustrated overview of the phasing of our order portfolio in the coming five years. The business units have been awarded several multi-year contracts.
Some of these are now beginning to materialize into firm orders. Production will be spread over a period of three to five years or even longer. As activity picks up on these large and well-prepared projects from 2027 and 2028, we will see significant contribution to revenue supporting our focus on improving quality of earnings. We are basing this on good experience with similar projects where early involvement, close cooperation, and thorough preparation ensures lower execution risk and improved forecast. This allows the business units to plan ahead and remain attractive for specialists and key personnel over time. All in all, the multi-year projects form a solid foundation for our order book and efficient execution in the years to come. I'll now hand over to Dennis for a closer look at the business units. Please turn to slide 6, please.
Thank you, Rasmus. Before we cover the figures for Q1, I want to share a longer-term perspective on developments and focal points in our two business units. Looking at MT Højgaard Danmark and Enemærke & Petersen over a five period, both companies have generated solid growth and reported positive earnings throughout the period, with an average EBIT margin of around 4%. After a successful turnaround in MT Højgaard Danmark, and despite the ongoing streamlining in Enemærke & Petersen, both businesses are well run and hold great potential. The team in MT Højgaard Danmark has built a robust and profitable business and focuses now on increasing the top line and leverage the well-functioned machine. In Enemærke & Petersen, focus is on earnings ahead of growth. After years of stable and solid profitability, a few challenging projects have had an impact on earnings recently.
Several steps have already been taken to improve processes and execution with a view to return to historic earnings levels. With this introduction, please turn to slide 7 for an update on the quarter in MT Højgaard Danmark. The activity level in MT Højgaard Danmark was impacted by the harsh winter in Q1, resulting in delay of work on some projects. This had an impact on revenue, which declined by 22% to DKK 1.2 billion in the quarter. We still expect revenue to materialize, but the tough winter entails phasing of activities to later in 2026. In addition, the order book still includes multi-year projects with modest revenue generation in the start-up phase. In relation to good projects with a long time horizon, MT Højgaard Danmark completed the transformation of an industry building in Dalum from an old paper mill to 20 modern housing units.
MT Højgaard Danmark developed the project and collaborated closely with Raunstrup, who constructed the 20 units. Despite the revenue decline, MT Højgaard Danmark maintained solid earnings and delivered an EBIT margin of 3.3% based on strong execution in ongoing projects. The order intake doubled to DKK 2.8 billion, with a significant contribution from the signing of a final contract for the construction of 31 new accommodation buildings for the Danish Defence at 11 locations across the country. On this background, the business unit grew the order book by approximately 25% to DKK 8.3 billion. Let's continue with Enemærke & Petersen on slide 8. Revenue was 10% lower at DKK 958 million in Enemærke & Petersen in the Q1.
The activity level was impacted by the prolonged winter and phasing as some projects approached completion, while others were in the startup phase. Enemærke & Petersen continued the positive development with a 68% improvement of earnings, resulting in an EBIT of DKK 32 million. We were pleased to note that solid project execution and less impact from the challenged projects enabled the business unit to deliver a 3.3% EBIT margin. The efforts to return to a proper profitability level are still progressing well. Enemærke & Petersen reported strong order intake with an increase of 87% from Q1 last year. This was driven by the final contract on the Folehaven refurbishment project and orders for other social housing associations as well. The order book grew 25% to DKK 6.5 billion at the end of the quarter. Let's continue with comments on the Q1 result.
Slide nine, please. As mentioned in the comments on each business unit, revenue was impacted by lower activity in the winter impacted Q1. Group revenue was down 18% to DKK 2.2 billion. This had an impact on gross profit, which came to DKK 163 million for a margin of 7.6%. Still a decent level, but below the strong 8.1% delivered in the comparison quarter. EBIT remained solid at DKK 67 million, with a modest positive contribution from joint ventures in the quarter, compared with a negative impact from write-downs last year. The EBIT margin was 3.1% against 3.8% last year.
Net financials were neutral in Q1 against an expense of DKK 7 million in Q1 last year, as interest income was higher in this quarter. Our continuing operation generated net profit of DKK 52 million against DKK 71 million last year. The loss from discontinued operation was reduced to DKK 10 million after tax. We have now completed the wind up of our international activities, and we do not expect additional losses going forward. Net income came to DKK 42 million against DKK 58 million in Q1 last year. The lower earnings and changes in working capital impacted our cash flow from operations in the quarter, which I will come back to later. Cash flow to investments was an outflow of DKK 32 million and impacted by the last earnout payment related to the divestment of Ajos back in 2021.
Cash flow from financing came to an outflow of DKK 93 million and was affected by dividend payment of DKK 77 million and repayment of leasing debt. The comparison quarter was impacted by a large repayment on the subordinated loan from the Knud Højgaards Fond, which has been repaid in full during 2025. Please turn to slide 10. The lower earnings and sizable changes in working capital driven by the development in ongoing projects had a significant impact on some of the key figures and ratios we're tracking. On this background, cash flow from operations was an outflow of DKK 36 million against an inflow of DKK 39 million last year. We remain focused on improving working capital in both business units to return to the good track we've been on recently. Despite a decline this quarter, the return on invested capital was still solid at 32%.
We are still focused on capital allocation and we maintain our disciplined approach going forward. Our balance sheet remains strong, and the net interest bearing debt is still a deposit of DKK 168 million at the end of the quarter. I will now hand back to Rasmus Untidt for comments on the outlook for 2026. Slide 11, please.
Thank you, Dennis. While the year came off to a slow start in terms of revenue, we still expect a stabilization within the range of DKK 10 billion-DKK 10.5 billion for the full year. The business units are focused on ensuring good project execution and intensifying efforts to catch up on postponed work across projects in collaboration with customers. The large phase contracts in our order portfolio are still seen to generate limited revenue during 2026 as we gear up for production from 2027 and 2028. The earnings outlook is maintained as well. We have seen a limited impact of the conflict in the Middle East on raw material prices and cost in our business units until now. We are monitoring the situation and assessing how to mitigate any potential impacts.
Operating profit is still projected between DKK 400 million-DKK 450 million, with a stable contribution from Højgaard Danmark and improved performance in Enemærke & Petersen. We still have a solid business, a basis for lifting net profit in 2026 with lower financial expenses and the international wind up completed. With that, we have reached the end of the presentation. Let's turn to slide 12 and the Q&A session. Operator, please go ahead.
Thank you. The first question is from the line of [Anders Bretzman ]from Danske Bank. Please go ahead.
Yes, thank you very much, and good morning, Rasmus and Dennis, and thank you for taking my questions. I have a couple questions. The first one is on the revenue decline of 18% in Q1 year-over-year. Are you may be able to quantify a bit how much of that decline was weather-related versus what was just structural basing?
Yeah, sure. I would say it's of course difficult to give an exact number because it's depending, but our internal estimates is in the range of, let's say, 200-250-ish, impacted by the weather.
Thank you very much. That's super clear. Given that the revenue coverage for the full year now stands at 78% versus 85% a year ago, what gives you the confidence that the full year guidance range of DKK 10 billion-DKK 10.5 billion range is achievable?
We are still in the market, and we see a lot of interesting opportunities in the market, and we are pursuing them. We are still, as of now, confident that we will reach our guidance of DKK 10 billion-DKK 10.5 billion.
Thank you, Rasmus. Going on to the results from Enemærke & Petersen in Q1, looks solid. What should one expect for the coming quarters? I mean, I know you talk about a return here to historic levels on profitability. Does that mean we are looking into a performance resembling that of 2022-2023, with margins close to 4%, or should we aim higher than that? What do you currently expect?
I would say I would look at the last 3 quarters and see the progressing, and also expect that it's not because we are focusing too much on the top line also, as we alluded to before. I would say 2022 is four years ago now, so I would say focus on the last 3 quarters and see if we can continue the path. That's at least our focus.
It sounds reasonable. I was wondering maybe if you could just share a few words on the ongoing process with the Nordhavn Tunnel project. How's the dialogue going with the developer and when do you expect any updates to the project?
Yeah. Thank you. It's Rasmus. Nordhavn Tunnel or North Harbor Tunnel, we have a close collaboration within the joint venture with Besix and a good dialogue with the Danish Road Directorate. Currently, we're working on optimizing the project and limit the time delays. As some of you might noticed last week we reached a new milestone with the reopening of the Kalkbrænderiløbet . That was a really good milestone. Alongside the execution of and discussion, there is an ongoing constructive dialogue with the Danish Road Directorate on where it will end up. As soon as we have anything concrete, we will communicate that. Discussions are pending.
Okay. That's very clear. Do you have any expectation of a conclusion coming here in 2026? I mean, does the full year guidance assume any sort of write-down for JVs on EBIT?
No. Dennis here just to comment on that one. First of all, we will never, let's say, not take in the future, write-down if we know it. Right now, no expectations as currently recognized in the report.
Okay. Thank you very much. Thanks a lot, guys. Have a safe week.
Yeah.
As a reminder, please press five star to ask a question. As there are no further questions, I will hand it back for any closing remarks.
Thank you. Thank you for taking the time to participate today, and please get in touch if you have any questions after this session. Have a nice day. Thank you.