MTD Walkers records thumping Rs.1.45bn loss in 3Q

MTD Walkers PLC reported a massive loss for the quarter ended December 31, 2018 (3Q19), expanding the losses it had made in the previous quarters, as the construction major which is stuck in a debt trap is struggling to remain afloat as mounting losses eat into its equity.

The diversified construction group reported a net loss of Rs.1.45 billion for the quarter under review, up from a Rs.385.9 million loss reported for the same period last year, and Rs.1.1 billion loss made in the previous quarter. 

With the December loss, the group’s negative retained earnings surged to Rs.5.6 billion from Rs.1.2 billion a year ago and the shareholder funds have depleted to Rs.1.2 billion from Rs.6.4 billion a year earlier.  

As at December 31, 2018, MTD Walkers was sitting on a whopping Rs.26 billion debt pile, of which Rs.22 billion was short-term. The group further had Rs.8.5 billion of supplier credit. 
The group has Rs.18 billion receivables from projects and another Rs.1.0 billion each in cash and financial assets which can be converted into cash relatively easily. 

Last September the company deferred settlement of Rs.2.0 billion worth of debentures, and roughly Rs.1.1 billion is due again in September 2019 and the balance a year later. 

The group’s debt restructuring efforts this January by way of an asset transfer to its Malaysian parent came to an abrupt halt after eight local banks filed cases against the group obtaining enjoining orders against the move until it settles dues.  

On February 14, the Colombo Stock Exchange halted trading of MTD Walkers’ shares pending company clarification.
The group’s debt serviceability is also weakening due to depleting revenues.  The finance cost for the quarter was Rs.883.4 million, up from Rs.478.9 million a year ago. 
The group revenue halved to Rs. 2.2 billion in the December quarter from the same period a year ago, while the gross profit turned into a loss of Rs.606 million compared to a profit of Rs.238 million a year ago. 
The biggest blow to the group top line came from its civil engineering business. The segment’s revenue for the nine months ended December 31, 2018 fell by Rs.1.7 billion to Rs.6.7 billion. 

The group has interests in heavy engineering, marine engineering, trading, power generation and real estate. 

None of the business verticals in the group made a profit during the quarter review and instead its real estate business, which made a Rs.149 million operating profit a year earlier turned a loss of Rs.12 million.

Meanwhile, for the nine months, MTD Walkers group’s net loss widened to Rs.3.18 billion from a net loss of Rs.2.03 billion reported for the same period last year.

In the absence of a major debt restructuring process supported by banks and other suppliers, and the immediate or early settlement of dues to the company by its clients including the government, the revival of MTD Walkers could become extremely challenging.    

MTD Capital Bhd, MTD Walkers’ Malaysian parent, holds 90.78 percent stake in the company.