The financial woes at MTD Walkers PLC further deepened as the construction giant suffered a heavy blow to its bottom line during the three months ended September 30 (2Q19) as the company lost over a billion rupees in earnings on heavy borrowing costs and losing revenues.
MTD Walkers reported Rs.1.1 billion in negative earnings for the quarter, unchanged from a year earlier, on revenues of Rs.3.0 billion, down 20 percent year-on-year (YoY).
The construction major has unfortunately become a victim of the delayed and non-payment of dues by government to mega construction projects and the generally poor sentiments in the country’s construction sector.
As the receivables accumulated, the company had to borrow to fund its working capital to pump money into its ongoing and future projects.
But the debt has accumulated to a level where the company’s revenue is barely sufficient to service such debt.
The group’s rating was downgraded twice this year by ICRA Lanka Limited on deteriorating profitability and higher leverage.
On September 21, ICRA downgraded the company rating to B- with a Negative outlook from BB-, which was only revised in May.
As the company was struggling to retire a section of its Rs.3.0 billion debenture due this September, the company obtained the consent of debenture holders to defer the repayment of the debenture by two more years in return for a higher yield.
By end of September 30, 2018, MTD Walkers had Rs.4.2 billion in long-term debt and Rs.23.6 billion in short-term borrowings. Meanwhile, Rs.22 billion is due from trade and other receivables. The ICRA Lanka rating report in September said the company is to receive Rs.6.0 billion from the Urban Development Authority (UDA) for three housing development projects, which had already been handed over upon completion.
These were due to be paid six months after the completion of the projects by the UDA.
The group’s equity dropped to Rs.2.8 billion by the end of September 2018 from Rs.6.9 billion a year ago due to losses accumulating to a whopping Rs.4.1 billion, which wiped off the owners’ equity.
Meanwhile, for the six months ended September 30, 2018, the group reported negative earnings of Rs.1.7 billion on revenues of Rs.5.6 billion, which was down by 19 percent YoY.
The group has interests in civil engineering, heavy engineering, marine engineering, trading, power generation and real estate.
Except for trading, every other business segment has fared weaker than the previous year.
Malaysia-based MTD Capital Bhd has 90.78 percent stake in MTD Walkers.
The company’s share ended 20 cents or 1.60 percent weaker at Rs.12.30 on Friday.