Kværner 4Q 2014 Results

Stable margins, positive development of competitive power. The high activity level in Kvaerner (KVAER.OL) continued in the fourth quarter. Revenues for the full year reached a record high of NOK 17.5 billion, including Kvaerner's share of jointly controlled entities. Simultaneously with the execution of parallel projects, the company implemented several measures to reduce cost level and improve competitiveness ahead of bids for key contracts in 2015. Earnings before Interest, Taxes, Depreciation, Amortisation and Impairment (EBITDA) for the quarter were NOK 175 million, compared with NOK 180 million in the same period 2013.

Operating revenues for the fourth quarter amounted to NOK 3 591 million, compared with NOK 3 939 million for the fourth quarter 2013. Revenues for the full year increased by NOK 985 million to NOK 13 945 million versus NOK 12 960 million for 2013. Revenues including incorporated joint ventures were NOK 17 531 million, an increase of 9 percent from NOK 16 091 million for the full year 2013. The EBITDA result for the year amounted to NOK 829 million, resulting in an EBITDA margin for the year of 5.9 percent. Goodwill impairment of NOK 266 million related to business area Contractors International recognised in the quarter following the company's impairment test.

In line with the company's dividend policy, the Board of Directors proposes to pay a dividend of NOK 0.67 per share in April 2015.

The results for 2014 mirrors that Kvaerner has had a particular high activity level on several projects in parallel. In addition to utilising the full capacity of our own organisation, we have had a record high number of contract staff and subcontractors assisting us in the execution of this workload. Going forward, we are aiming for an annual activity level of NOK 10 - 11 billion. Kvaerner worked hard in 2014 to improve the results from projects started in a different market situation compared to what we see today. On top of this, claims related to past projects have been settled. In total, these factors have all contributed to a positive development for the results last year, says Jan Arve Haugan, President & CEO of Kvaerner.
 
Order intake in the fourth quarter 2014 was NOK 1 274 million, versus NOK 1 925 million in the fourth quarter 2013. The order backlog was NOK 16 451 million at the end of 2014.

The work to execute the existing order book will mainly be executed this year and in 2016. Hence, Kvaerner's order book provides a good foundation and momentum for further efforts to increase productivity and improve the cost level. Through 2014, we identified opportunities to cut costs for new projects. The signing of the EPC contract for the steel jacket substructure for the Johan Sverdrup Riser Platform on 20 January 2015 shows that Kvaerner documented that these improvements are implemented. We are not stopping there. Already from the start of 2015, we are taking further, concrete steps in cooperation with our customers to reduce costs and increase competitiveness, says Haugan.
 
Kvaerner's markets are currently volatile, but the company see a fundamental, long term demand for offshore platforms and onshore facilities with requirements which fits well with Kvaerner's strengths. Some few, key contracts with a good match with Kvaerner's capabilities are expected to be awarded during 2015.

Even if the long term market fundamentals seem positive, there are only a few important contracts to bid for in 2015. Hence, it is of great importance to us to win key bids in 2015, to enable a continued sound development of Kvaerner as a leading EPC contractor, Haugan concludes.

The full report and presentation can be downloaded below and at www.kvaerner.com.