first quarter results 2013 - kvaerner
TRANSCRIPT
© Kvaerner 2013 07.05.2013
First quarter results 2013
1
© Kvaerner 2013 07.05.2013
Highlights
2
Record high order backlog of
NOK 31.6 billion*
Initiatives to improve competitive
position on-going
Semi-annual dividend of NOK
0.55 per share paid in April
EBITDA of NOK 103 million
* Including incorporated joint ventures.
Load out of the 22 300 tonnes Clair Ridge drilling
and production jacket at Verdal, Norway.
© Kvaerner 2013 07.05.2013
Key financials
3
15
9
85
67
12
5
10
3
42
0
50
100
150
200
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Revenues
NOK million
-71
7
-43
2
-84
0
-51
4
-85
-900
-800
-700
-600
-500
-400
-300
-200
-100
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
EBITDA
NOK million
Net current operating assets
NOK million
2 3
88
3 0
00
2 4
30
2 9
30
2 9
07
500
1 000
1 500
2 000
2 500
3 000
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
6.7% 2.8% 2.8%² 4.3% 3.5% EBITDA
margin
¹ Gain on sale of EPC Center Houston.
² EBITDA margin excluding sales gain.
¹
© Kvaerner 2013 07.05.2013
Backlog transformation last 12 months
4
Major project wins last 12 months:
10.8
31.6
0
5
10
15
20
25
30
35
Q1'12 Q1'13
2.9x
Order backlog* near tripled
NOK billion CONCRETE
SOLUTIONS
JACKETS
CONTRACTORS
NORWAY
ONSHORE
AMERICAS
Hebron GBS
Edvard Grieg jacket
Martin Linge jacket
Nyhamna onshore framework agreement
Edvard Grieg topside and offshore completion
Eldfisk hook-up and commissioning
Construction of Garrison Energy Center
* Including incorporated joint ventures.
© Kvaerner 2013 07.05.2013
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
2008 2009 2010 2011 2012 2013 2014 2015 andlater
Providing solid visibility
5
Historical revenues and backlog
NOK million
Backlog per 31 March 2013 incl.
incorporated JVs
Historical revenues
incl. incorporated JVs
© Kvaerner 2013 07.05.2013
Our yards are important assets
6
© Kvaerner 2013 07.05.2013 7
Concept FEED Engineering Procurement Construction Completion
Initiatives to improve competitiveness
Positioning
solutions for
which own
delivery model is
most competitive
Optimise share of
total engineering
hours from lower
cost countries
Develop
sustainable model
with engineering
sub-suppliers
Evaluate new
partners
Repetitive
business
Qualification
of new sub-
contractors and
partners
Supply chain
Sourcing from
Asia
Yard productivity
improvements
Further develop
low cost fabrication
partners
Optimise mix
between own and
outsourced
construction, i.e.:
COOEC, China
Poland
Further develop
current
capabilities
Leverage location
and North Sea
track record
Selectively
pursue
independent
completion jobs
Close
cooperation
between Norway
and International
Develop
cooperation with
new engineering
partners
New operating model to support focus on project execution, streamline
resource utilisation, facilitate new delivery models and lower cost
On-going initiatives throughout the value chain
© Kvaerner 2013 07.05.2013
First quarter operations
8
The first multidiscipline 800 tonnes module fabricated in Poland on its way to the Eldfisk field for offshore hook-up.
© Kvaerner 2013 07.05.2013
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar
LTIF TRIF
Health, safety, security and environment
9
Lost time incident frequency (LTIF) and Total recorded incident frequency (TRIF)
Per million work hours and 12 months rolling averages
Enforced pro-
activeness
throughout the
organisation
Started roll-out of
new HSSE
Leadership course
Increased security
focus
Highlights
3.0
0.8
Five lost time injuries and seven other injuries resulting in 12 recordable
injuries in the quarter
Four serious incidents, one of them a lost time injury
© Kvaerner 2013 07.05.2013
Operations
10
CONTRACTORS
NORWAY
CONTRACTORS
INTERNATIONAL JACKETS
ONSHORE
AMERICAS
CONCRETE
SOLUTIONS
UPSTREAM DOWNSTREAM &
INDUSTRIALS
Eldfisk: Final
assembly
progressing
E. Grieg: detailed
design and
procurement work
Nyhamna onshore:
Detailed
engineering
Re-evaluation of
Browse project
Pre-qualification
and study activities
Nordsee Ost:
Nearing final
fabrication phase
Completion of
Clair Ridge jackets
in Q2
Fabrication on-
going for E. Grieg
and M. Linge
Calpine Garrison:
mobilisation for
construction
Iron and steel
maintenance
projects on plan
Hebron GBS:
Rebar installation
in base slab is
proceeding
according to plan
Studies on-going
First quarter financials Eiliv Gjesdal, Chief Financial Officer
© Kvaerner 2013 07.05.2013
Income statement
12
¹
Note: Restated figures for previous periods are reflecting impacts from implementing IAS 19R Employee Benefits.
Revenues excluding incorporated joint ventures.
Amounts in NOK million Q1 2013
Q4 2012
Restated Q1 2012
FY 2012
Restated
Total revenue and other income 2 907 2 930 2 388 10 748
EBITDA 103 125 159 479
Depreciation and amortisation (16) (19) (15) (66)
EBIT 87 107 144 413
Net financial income/(expense) (21) (24) (1) (39)
Profit from associated companies and JVs (3) (6) (0) (7)
Profit before tax 62 75 142 367
Income tax expense (25) (20) (50) (130)
Net profit 37 55 92 237
EBITDA margin 3.5 % 4.3 % 6.7 % 4.5 %
© Kvaerner 2013 07.05.2013
Q1 2013: Upstream review
2 019
2 554
2 191
3 054
3 411
196 118 100 137 131
0
1 000
2 000
3 000
4 000
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
13
Order backlog and order intake
NOK million
Revenues, EBITDA and EBITDA margin
NOK million
Order backlog at the end of the quarter Order intake in the quarter Revenues EBITDA
Financials
Activity level in Norway increasing
Early cycle projects with limited contribution
Orders
EPC contract for Hebron GBS of
USD 1.5 billion
Nyhamna onshore framework agreement
adjusted to NOK 11 billion in total
EBITDA-% 9.7% 4.6% 4.6% 4.5% 3.8%
9 683
22 318 21 433 20 226
29 844
2 945
15 196
1 296 1 848
12 805
0
5 000
10 000
15 000
20 000
25 000
30 000
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
Note: All figures include incorporated joint ventures.
© Kvaerner 2013 07.05.2013
Q1 2013: Downstream & Industrials review
14
Order backlog and order intake
NOK million
Revenues, EBITDA and EBITDA margin
NOK million
Revenues EBITDA
Financials
Limited results expected until Longview
arbitration is concluded
Orders
Various smaller steel maintenance projects
496
689
442
261 244
3 6 46 7
-8 -100
300
700
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
1 130
702
358
1 039
1 799
381 234
148
981
933
0
500
1 000
1 500
2 000
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
EBITDA-% 0.5% 0.9% 10.4% 2.7% (3.1)%
Order backlog at the end of the quarter Order intake in the quarter
¹ Figures include net positive effect of NOK 42 million from divestment of EPC Center Houston operations in Q4’12.
Historical figures include EPC Center Houston.
¹
© Kvaerner 2013 07.05.2013
-2 000
-1 500
-1 000
-500
0
500
1 000
Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
Cash flow and working capital development
15
The EPC business is
cash positive through
negative working capital
Customer pre-payments¹
of NOK 208 million
Downstream &
Industrials: Capital tied
up in the Longview
project
Upstream: Capital tied
up in the Nordsee Ost
project
Net current operating assets (NCOA)
NOK million
Downstream
& Industrials
Upstream
Group
¹ Invoicing in excess of cost and estimated earnings less amounts billed in advance but not received (on a project by project basis).
Amounts in NOK million Q1 2013 Q4 2012 Q1 2012 FY 2012
Cash flow from operating activities (357) (293) (385) (748)
Cash flow from investing activities (21) (23) (39) (91)
Cash flow from financing activities (5) (190) 0 (481)
Translation adjustments 20 (75) 47 (29)
Net increase/(decrease) in cash and bank
deposits (364) (580) (376) (1 349)
© Kvaerner 2013 07.05.2013
Balance sheet
16
Q1 2013
Q1 2012
Restated
FY 2012
Restated
Assets
Total non-current assets 2 293 1 987 2 218
Prepaid company tax 93 184 91
Current operating assets 2 965 2 651 2 660
Other current assets - 20 -
Total cash and bank 705 2 043 1 069
Total assets 6 057 6 884 6 039
Total equity 2 308 2 533 2 195
Non-current interest bearing liabilities 471 462 469
Other non-current liabilities 175 229 172
Current operating liabilities 3 050 3 368 3 175
Current tax liabilities 52 292 28
Other current liabilities (0) (0) (0)
Total liabilities 3 748 4 351 3 844
Total equity and liabilities 6 057 6 884 6 039
Equtiy ratio 38 % 37 % 36 %
Net cash 284 1 642 650
Amounts in NOK million
© Kvaerner 2013 07.05.2013
Closing remarks
Photo:
Construction of the Hebron GBS on-going at the Bull Arm site, Newfoundland and Labrador.
17
© Kvaerner 2013 07.05.2013
Several opportunities ahead
18
North Sea
• New field development
projects to be let in
2014
• Opportunities for
completion and hook-
up projects
Arctic Russia
• Strong future market in
several areas
• Kara Sea exploration
drilling expected from
2014
Caspian
• Strong future market,
uncertain timing
• Development of delivery
model on-going
Asia Pacific
• Multiple opportunities
within next 24 months
• Robust delivery model
established
North America
• Gas fired power plant
market strong
• Steel maintenance
market healthy near-
term
Alaska & Canada
• Operators increasing
Arctic activities
• High potential in
Newfoundland and
Labrador
© Kvaerner 2013 07.05.2013
One example is the Johan Sverdrup field
development
19
Expected PDO in 2014 and first oil late 2018*
Current resource estimate of ~1.8 - 3.5 billion barrels*
Water depth around 110-120 meters
Example of Johan Sverdrup field topsides layout.
Source: www.lundin-petroleum.com
* Source: Statoil/Lundin Petroleum.
© Kvaerner 2013 07.05.2013
Summary
20
HSSE – core value and
licence to operate
Maintain and develop home
markets
International expansion
Hands-on management
Strong order backlog
Focus on project execution
Deliveries on time and quality
Improving competitiveness
Predictable dividend policy
© Kvaerner 2013 07.05.2013 22
APPENDIX
© Kvaerner 2013 07.05.2013
Executive Management Team
Corporate Management Team (“CMT”)
Chief Financial Officer
EVP Eiliv Gjesdal
Jackets
EVP Sverre Myklebust
President & CEO
Jan Arve Haugan
Business Support
EVP Jan Øyri
Onshore Americas
EVP Jim Miller
Contractors International
EVP Tony Allen
Contractors Norway
EVP Steinar Røgenes
Legal
SVP Henrik Inadomi
Strategic Business
Development
SVP Risto Neuvo
Concrete Solutions
EVP Bjørn Gundersen
23
© Kvaerner 2013 07.05.2013
Order intake and -backlog
24
0
2000
4000
6000
8000
10000
12000
14000
16000
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
Order intake
NOK million
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
Q1'12 Q2'12 Q3'12 Q4'12 Q1'13
Order backlog
NOK million
For execution in 2013
For execution in 2014 Upstream
Downstream & Industrials For execution in 2015 and later
31 635
~40%
~35%
~25%
13 725
Note: All figures include incorporated joint ventures.
© Kvaerner 2013 07.05.2013
The current EPC project portfolio
25
2011 2012 2013 2014 2015 Value at award
Mongstad TCM NOK 525M
Eldfisk topside NOK 5.5B
Nyhamna onshore NOK 11B
Edvard Grieg
topside NOK 8B
Nordsee Ost wind
jackets EUR 115M
Clair Ridge jackets NOK 1.7B
Edvard Grieg jacket NOK 1.1B
Martin Linge jacket NOK 1.2B
Sakhalin-1 USD 600M
Hebron USD 1.5B
Kashagan HUC USD 1.6B
V&M Star (MEP) Undisclosed
Calpine Garrison USD 100-120M
Contractors International Onshore Americas Concrete Solutions Jackets Contractors Norway
© Kvaerner 2013 07.05.2013
Revenue distribution
26
Share of revenues 2011
Percent
Share of revenues 2012
Percent
NOK
13.3 billion
NOK
10.7 billion
Contractors International Onshore Americas Concrete Solutions Jackets Contractors Norway
Share of revenues last 12 months
Percent
NOK
11.3 billion
© Kvaerner 2013 07.05.2013
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