© Kvaerner 2014 28.10.2014
Highlights
2
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
Dividend of NOK 0.64 per share distributed
* Including incorporated joint ventures.
Key financials
180
180
170
289
194
0
50
100
150
200
250
300
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Revenues
NOK million
-570
-1 266
-1 162
-624
-515
-1 400
-1 200
-1 000
-800
-600
-400
-200
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
EBITDA
NOK million
Net current operating assets
NOK million
3 080
3 939
3 489
2 861
4 004
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
EBITDA
margin
5.9% 4.6% 4.9% 10.1% 4.8%*
© Kvaerner 2014 28.10.2014
For execution in 2014
Order intake and -backlog
4
0
1 000
2 000
3 000
4 000
5 000
6 000
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Order intake
NOK million
0
5 000
10 000
15 000
20 000
25 000
30 000
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Order backlog
NOK million
19 353
~20%
~40%
Note: All figures include incorporated joint ventures.
Estimated scheduling as of 30 September 2014:
2 801
For execution in 2016 and later
For execution in 2015
0,0
1,0
2,0
3,0
4,0
Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept
LTIF
TRIF
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
Statistics improving all
over
Focus on lessons
learned as a part of
improvement initiatives
Highlights
1.70
0.20
© Kvaerner 2014 28.10.2014
Operational highlights
6
Hebron GBS slip forming at the
deep-water site started
Mechanical installation work
started on Nyhamna site
Upgrade and reclassification of
Transocean Barents completed
ahead of schedule
E. Grieg topside construction and
assembly proceeding as planned
HEBRON GBS
TRANSOCEAN BARENTS
EDVARD GRIEG TOPSIDE
NYHAMNA ONSHORE
Transocean:
“well planned, good
2011-2014: 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
2012-2013: Increased competition
Several key projects awarded to
competitors
2013-2014: Market changes
Key projects put on ice due to cost level
Major clients announce investment cuts
Strong competition, pressure on margins
Strategic review: Exploring new opportunities
Optimisation or
changes to
value chain?
Changes to
geographical
priorities?
Changes to products
& services portfolio?
Opportunities to further strengthen
and develop Kvaerner
Third quarter financials
Eiliv Gjesdal, Chief Financial Officer
Income statement
¹
Note: Following sale of operations, the Downstream & Industrials segment has been classified as discontinued operations, with comparative
figures restated.
Amounts in NOK million
Q3 2014
Q2 2014
Q3 2013
Restated
YTD 2014
YTD 2013
Restated
FY 2013
Total revenue and other income
4 004 2 861 3 080 10 354 9 021 12 960
EBITDA
194 289 180 653 456 636
Depreciation and amortisation
(18) (17) (16) (50) (45) (63)
EBIT
176 272 165 603 411 573
Net financial income/(expense)
(15) (16) (13) (50) (42) (96)
Equity accounted investees, incl. impairments
0 (58) (3) (58) (25) (78)
Profit before tax
161 198 148 494 344 399
Income tax expense
(49) (75) (47) (165) (117) (160)
Profit from continuing operations
112 123 101 330 227 239
Profit discontinued operations
(12) (27) (17) (72) (30) 206
Net profit
100 96 84 258 197 445
EBITDA margin
4.8 %
10.1 %
5.9 %
6.3 %
5.1 %
4.9 %
Earnings per share (NOK)
Basic and diluted EPS continuing operations
0.42 0.46 0.38 1.23 0.85 0.89
© Kvaerner 2014 28.10.2014
Upstream review
10
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
EBITDA-%
4.8%
4.2%
4.5%
8.2%
4.3%
Revenues
EBITDA
Note: All figures include incorporated joint ventures.
25 657
22 809
19 698
21 512
19 358
1 603
1 925
1 291
5 372
2 809
0
5 000
10 000
15 000
20 000
25 000
30 000
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Order backlog at the end of the quarter
Order intake in the quarter
4 100
4 667
4 153
3 812
4 981
197
197
187
312
212
0
1 000
2 000
3 000
4 000
5 000
Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Financial outlook
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
Backlog at 30 September 2014
Contractors International
Jackets
Concrete Solutions
Contractors Norway
Revenues and backlog by execution year (30 Sept 2014)
NOK million
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 2015
© Kvaerner 2014 28.10.2014
(2 000)
(1 500)
(1 000)
(500)
-Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14
Cash flow and working capital development
12
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)
¹ Invoicing in excess of cost and estimated earnings less amounts billed in advance but not received (on a project by project basis).
0
Amounts in NOK million
Q3 2014
Q2 2014
Q3 2013
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
2 2 1 2 22 19
Net increase/(decrease) in cash and bank
deposits
73 (457) (465) (500) (388) 476
Balance sheet
Loan facilities of NOK 3 billion
Maturity in 2016
30.09.2014
30.06.2014
30.09.2013
31.12.2013
Assets
Total non-current assets
2 088 2 137 2 267 2 150
Prepaid company tax
95 60 130 93
Current operating assets
4 422 2 363 3 808 3 121
Total cash and bank
1 045 972 681 1 545
Retained assets on business sold
769 744 - 916
Total assets
8 420 6 275 6 886 7 825
Total equity
2 663 2 511 2 348 2 511
Non-current interest bearing liabilities
485 483 477 479
Other non-current liabilities
184 184 201 170
Current operating liabilities
4 937 2 987 3 838 4 387
Current tax liabilities
110 61 22 56
Retained liabilities on business sold
40 50 - 223
Total liabilities
5 757 3 764 4 538 5 315
Total equity and liabilities
8 420 6 275 6 886 7 825
Equtiy ratio
32 %
40 %
34 %
32 %
Net cash
563 493 256 1 069
© Kvaerner 2014 28.10.2014
Way forward and closing remarks
14
ENGINEERING
PROCUREMENT
CONSTRUCTION
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
© Kvaerner 2014 28.10.2014
Cost improvements strengthens competitive power
16
Status re reductions of cost base…..
Benchmark from ongoing projects confirms status:
•
Eldfisk delivered on time and schedule
•
Edvard Grieg on track to delivery on time and schedule
…prove competitive power
Price
Total EPC
savings
Examples from the improvement plan
E
P
C
Other
17%
Improved rates
with KBR
Quality
Delivery on time
✓
✓
✓
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
Competitive power strengthened last 20 months
0
100%
Old cost base Engineering
improvements
improvements
Procurement
Construction
improvements
83%
%
New cost
base
E
P
C
Total cost
Quality &
cost issues
Transport
time &
Management
follow-up
Cost reductions
Bid price
Cost vs bid
Improvements through the value chain
100
Average cost development in typical recent
and ongoing EPC projects from competitors
© Kvaerner 2014 28.10.2014
Summary
18
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
© Kvaerner 2014 28.10.2014
20
2014
2015
2016
2017
2018
2019
Value at award
Eldfisk topside
NOK 5.5 B
Edvard Grieg topside
NOK 8 B
Aasta Hansteen compl.
Undisclosed
Nyhamna onshore
NOK 11 B
Edvard Grieg jacket
NOK 1.1 B
Martin Linge jacket
NOK 1.2 B
Sverdrup jackets
NOK 3 B
Hebron GBS
USD 1.5 B
Enping Phase II
engineering
Undisclosed
Balanced portfolio, solid platform for new contracts
Concrete Solutions
Contractors Norway
© Kvaerner 2014 28.10.2014
Revenue distribution – continuing operations
22
Share of revenues 2012
Percent
Share of revenues last 12 months
Percent
Share of revenues 2013
Percent
NOK
8.9
billion
Contractors International
Concrete Solutions
Jackets
Contractors Norway
NOK
14.3
billion
NOK
13.0
billion
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.
