Third quarter results 2014

Transcription

1 Third quarter results 2014

2 Highlights Third quarter 2014 High operational activity H6 rig upgrade completed ahead of time Cooperation with KBR for Sverdrup Study awarded for Subsea on a Stick Order backlog of NOK 19.4* billion Subsequent events The Hebron GBS in place at the deep-water site. Dividend of NOK 0.64 per share distributed * Including incorporated joint ventures. 2

3 Key financials Revenues NOK million EBITDA NOK million 300 Net current operating assets NOK million Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q3'13 Q4'13 Q1'14 Q2'14 Q3' * Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 EBITDA margin 5.9% 4.6% 4.9% 10.1% 4.8% 3 * Reflecting 20 percent completion for one major project. Note: All historical figures restated after sale of the North American Construction business in Q

4 Order intake and -backlog Order intake NOK million Order backlog NOK million ~40% ~40% Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Note: All figures include incorporated joint ventures. 4 ~20% 0 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Estimated scheduling as of 30 September 2014: For execution in 2014 For execution in 2015 For execution in 2016 and later

5 Health, safety, security and environment One Lost time Injury Six serious incidents Total of seven recordable incidents Lost time incident frequency (LTIF) and Total recorded incident frequency (TRIF) Per million work hours and 12 months rolling averages 4,0 LTIF TRIF Highlights 3,0 Statistics improving all over 2,0 Focus on lessons learned as a part of improvement initiatives ,0 0,0 Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept

6 Operational highlights Hebron GBS slip forming at the deep-water site started HEBRON GBS NYHAMNA ONSHORE Mechanical installation work started on Nyhamna site Upgrade and reclassification of Transocean Barents completed ahead of schedule TRANSOCEAN BARENTS EDVARD GRIEG TOPSIDE E. Grieg topside construction and assembly proceeding as planned Transocean: well planned, good cooperation 6

7 Strategic review: Exploring new opportunities Optimisation or changes to value chain? Opportunities to further strengthen and develop Kvaerner Changes to geographical priorities? Changes to products & services portfolio? : Several key milestones Downstream businesses sold Full focus on oil & gas Solid order backlog established A range of successful project deliveries Summer 2014: Positive momentum Kvaerner: Recognised for predictability Improved cost base under implementation Jacket agreements prove competitiveness : Increased competition Several key projects awarded to competitors : Market changes Key projects put on ice due to cost level Major clients announce investment cuts Strong competition, pressure on margins 7

8 Third quarter financials Eiliv Gjesdal, Chief Financial Officer

9 Income statement Amounts in NOK million Q Q Q Restated YTD 2014 YTD 2013 Restated ¹ FY 2013 Total revenue and other income EBITDA Depreciation and amortisation (18) (17) (16) (50) (45) (63) EBIT Net financial income/(expense) (15) (16) (13) (50) (42) (96) Equity accounted investees, incl. impairments 0 (58) (3) (58) (25) (78) Profit before tax Income tax expense (49) (75) (47) (165) (117) (160) Profit from continuing operations Profit discontinued operations (12) (27) (17) (72) (30) 206 Net profit EBITDA margin 4.8 % 10.1 % 5.9 % 6.3 % 5.1 % 4.9 % Earnings per share (NOK) Basic and diluted EPS continuing operations Basic and diluted EPS total operations Note: Following sale of operations, the Downstream & Industrials segment has been classified as discontinued operations, with comparative figures restated. Revenues excluding incorporated joint ventures. 9

10 Upstream review Financials Very high activity level in Contractors Norway Projects with a relative wide margin range Orders Growth in existing contracts Revenues, EBITDA and EBITDA margin NOK million Order backlog and order intake NOK million Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 0 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 EBITDA-% 4.8% 4.2% 4.5% 8.2% 4.3% Revenues EBITDA Order backlog at the end of the quarter Order intake in the quarter Note: All figures include incorporated joint ventures. 10

11 Financial outlook Revenues and backlog by execution year (30 Sept 2014) NOK million Backlog at 30 September 2014 Jackets Contractors Norway Contractors International Concrete Solutions Q1-Q3 revenues Upstream revenues 2014 NOK ~17 billion EBITDA margin 2014 Slower impact from improvements Procurement growth Negative cost developments At least break even results in Jackets International business development EBITDA margin 2015 Improvements will depend on new awards with contribution in

12 Cash flow and working capital development Amounts in NOK million Q Q Q YTD 2014 YTD 2013 FY 2013 Cash flow from operating activities 102 (212) (386) (172) (88) 606 Cash flow from investing activities (17) (75) (72) (135) (133) 208 Cash flow from financing activities (14) (172) (7) (195) (189) (356) Translation adjustments Net increase/(decrease) in cash and bank deposits 73 (457) (465) (500) (388) 476 Customer pre-payments¹ of NOK 153 million Fluctuations in working capital must be expected Capital tied up in the Nordsee Ost project Net current operating assets (NCOA) Continuing operations (NOK million) - 0 (500) (1 000) (1 500) (2 000) Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 ¹ Invoicing in excess of cost and estimated earnings less amounts billed in advance but not received (on a project by project basis). 12

13 Balance sheet Amounts in NOK million Assets Total non-current assets Prepaid company tax Current operating assets Total cash and bank Retained assets on business sold Total assets Total equity Non-current interest bearing liabilities Other non-current liabilities Current operating liabilities Current tax liabilities Retained liabilities on business sold Total liabilities Total equity and liabilities Equtiy ratio 32 % 40 % 34 % 32 % Net cash Loan facilities of NOK 3 billion Maturity in

14 Way forward and closing remarks ENGINEERING PROCUREMENT CONSTRUCTION 14

15 In a period with challenging conditions, Kvaerner is in a market segment with several opportunities Drivers: Some examples Energy demand / oil price Political frame conditions Feasible prospects Customers free cash flow Industry cost level reductions Market : Some examples NCS / North Sea region Sverdup: Largest project in decades ~12 new major topsides awards within 2021 Oseberg Future Development and other Subsea on a Stick prospects Canada White Rose Bay du Nord Russia Studies: Ongoing and upcoming Several new projects considered, Kara Sea oil discovery supports interest 15

16 Cost improvements strengthens competitive power Status re reductions of cost base.. prove competitive power Total EPC savings 17% Improved rates with KBR Examples from the improvement plan E P C Other Reduced bulk prices from suppliers Reduced own hours due to increased efficiency Industrialised work processes: 5S at Stord Improved logistics and material handling Reduced prelim cost Optimized delivery model Improved project management Price Benchmark from ongoing projects confirms status: Eldfisk delivered on time and schedule Edvard Grieg on track to delivery on time and schedule Quality Delivery on time 16

17 Competitive power strengthened last 20 months Improvements through the value chain Cost reductions % 100% 100 E P C 83% Average cost development in typical recent and ongoing EPC projects from competitors Cost vs bid 0 Old cost base Engineering Procurement Construction New cost improvements improvements improvements base Bid price Management follow-up Transport time & delays Quality & cost issues Total cost 17

18 Summary Continued high activity Positive opportunities for offshore platform market Cost improvements strengthens competitive power Strategic Review process ongoing Solid balance sheet Sustained dividend policy HSSE core value and licence to operate Maintain and develop home markets International expansion Hands-on management 18

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20 APPENDIX 20

21 Balanced portfolio, solid platform for new contracts Value at award Eldfisk topside Edvard Grieg topside Aasta Hansteen compl. Nyhamna onshore Edvard Grieg jacket Martin Linge jacket Sverdrup jackets Hebron GBS Enping Phase II engineering Options NOK 5.5 B NOK 8 B Undisclosed NOK 11 B NOK 1.1 B NOK 1.2 B NOK 3 B USD 1.5 B Undisclosed Contractors Norway Jackets Concrete Solutions Contractors International 21

22 Revenue distribution continuing operations Share of revenues 2012 Percent Share of revenues 2013 Percent Share of revenues last 12 months Percent NOK 8.9 billion NOK 13.0 billion NOK 14.3 billion Contractors International Concrete Solutions Jackets Contractors Norway 22

23 Copyright and disclaimer Copyright Copyright of all published material including photographs, drawings and images in this document remains vested in Kvaerner and third party contributors as appropriate. Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction. Disclaimer This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Kværner ASA and Kværner ASA s (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as expects, believes, estimates or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Kvaerner s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation. Although Kværner ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kværner ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use. 23