Kværner Reports Robust Performance
Growing order intake and activity level in a challenging market. Kvaerner (KVAER.OL)'s order intake in the second quarter was NOK 5 674 million, an increase from NOK 5 360 million in the same quarter last year. The company has also continued the high activity level with revenues for the quarter of NOK 3 125 million, an increase of 9 percent from the corresponding quarter last year. Kvaerner has a positive net cash position, a situation that is a particular strength in the current market. The Board has revised the dividend policy to reflect that retaining a solid balance sheet and cash position is a priority.
Kvaerner has a portfolio of projects in different phases and with a relatively wide margin range under execution. In addition, international business development costs, low capacity utilisation in Jackets and restructuring costs are putting pressure on margins.
Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) were NOK 109 million in second quarter 2015, up from NOK 101 million in the previous quarter. In the second quarter in 2014, the EBITDA were NOK 289 million, significantly influenced by one project passing 20 percent completion in that quarter, on top of the positive effect from final close out of a historic project. The EBITDA margin was 3.5 percent in the second quarter 2015, an improvement from 2.9 percent the previous quarter.
"We will maintain our focus on predictable project execution, and we take further actions to increase profitability. We continue to see some selected prospects of interest within our segments, and we make further steps to improve of our competitiveness. The core asset is that our people have proven expertise and experience to execute complete project deliveries with the lowest total price," says Jan Arve Haugan, President & CEO of Kvaerner.
In July 2015, the credit facility of NOK 3 billion was successfully refinanced. Kvaerner also maintains a robust cash situation. Net current operating assets (NCOA) were negative NOK 483 million at quarter end, compared to NOK 541 million at the end of the first quarter 2015. The equity ratio was at 35 percent as of 30 June 2015, up from 34 percent at 31 March 2015.
Despite demanding market conditions and fierce competition, Kvaerner's order book grew by NOK 1 902 million during the second quarter from NOK 15 840 at the end of first quarter 2015. Order intake in the quarter include Kvaerner's share of the NOK 6.7 billion contract in joint venture with KBR for the EPC delivery of the Johan Sverdrup ULQ platform topside. Together with other orders and growth in existing project portfolio, this brought the total order backlog to NOK 17 742 million at the end of the second quarter.
While the oil and gas industry is going through a challenging period, Kvaerner has taken several measures to stay on its strategic course and come through this period in a stronger position. The high activity level gives positive manoeuvring speed. The ongoing initiatives for lower cost and better productivity support the competitive delivery model. Simultaneously, the solid order backlog provides visibility for the coming years.
"In a demanding market where many struggle, we will take advantage of our solid foundation and continue to build a stronger competitive position. Kvaerner will maintain a strong financial structure to ensure the necessary robustness through this challenging cycle. This focus is also emphasized in today's announcement that the Board has revised the dividend policy to reflect that retaining a solid balance sheet and cash position is a priority", says Haugan.
The Board of Directors have proposed a dividend distribution of NOK 0.15 per share to be paid in October 2015.
