Kværner ASA: Third quarter results 2018: results on plan, improved market outlook
23 October 2018 - Kvaerner's order intake doubled and the backlog increased 30 percent in the last quarter compared to the same quarter in 2017. The company now sees an improved market and customers with new prospects. The revenues were NOK 1.7 billion in the third quarter 2018, about the same as in the corresponding quarter 2017. The EBITDA result for the Field Development segment was NOK 90 million in the past quarter, versus NOK 262 million for the same quarter 2017.
The order intake in the third quarter 2018 was in excess of NOK 1.1 billion. This is almost twice as high as in the same quarter last year, when it was NOK 588 million. As per 30 September 2018, Kvaerner's order backlog was NOK 10.6 billion, up from NOK 8.2 billion at the same time last year.
"The third quarter was in line with our expectations, both in terms of project execution and financial results. On 28 July, we delivered the steel jacket for the Johan Sverdrup P1 platform, and on 24 September we reached mechanical complete on the Johan Sverdrup ULQ platform. Both these milestones were met on schedule and budget", says Kvaerner's CEO Karl-Petter Løken.
The third quarter results confirm Kvaerner's previous guiding for 2018. In a period where some recently awarded projects are not yet recognising margin and with less effects from milestones and incentives in other projects, this influences EBITDA and margins, as expected. Kvaerner maintains the financial outlook for 2018, with gross annual revenues above 7 billion and lower EBITDA-margins for the second half year compared to the first half. The EBITDA margin for the fourth quarter is expected to be somewhat lower than the margin for the third quarter.
In the third quarter 2018, Kvaerner's total revenues including jointly controlled entities (Field Development segment) were NOK 1 709 million, marginally lower than NOK 1 727 million in the same period one year ago. The corresponding EBITDA-margin was 5.2 percent in the third quarter this year, versus 15.1 percent in the third quarter last year. In the third quarter last year, the EBITDA margin was significantly affected by achieved incentives and project close-out activities.
Kvaerner has no interest bearing debt. Cash and bank deposits at the end of the third quarter were approximately NOK 2.9 billion.
All current projects in Kvaerner's portfolio are on track. While some of the significant contracts Kvaerner has won so far in 2018 will first start to yield effects on results next year, there is now a stronger market outlook. In particular, there is an increase in the number of medium sized prospects. It will take some time before the prospects are mirrored in new contracts.
Kvaerner expects in the short term to see customers decide the outcome of some few important prospects. During 2019, it is expected that several key prospects will pass important decision gates and move further towards project sanctioning and project execution.
"Kvaerner's strategy is that we over the next few years grow our activity from today's level, and we now see a market which supports this objective. The market in and around Norway will continue to be important for us, but we also want to expand our business in international markets", says Løken.
The third quarter 2018 presentation can be downloaded from www.kvaerner.com and the links below.
For further information, please contact:
Idar Eikrem, EVP & CFO, Kvaerner, Mob: +47 950 28 363, email: email@example.com
Torbjørn Andersen, Head of IR & Communications, Kvaerner, Mob: +47 928 85 542, email: firstname.lastname@example.org
Kvaerner is a leading provider of engineering, procurement and construction (EPC) services, and delivers offshore installations and onshore around the world. Kværner ASA, through its subsidiaries and affiliates ("Kvaerner"), is an international contractor and preferred partner for oil and gas operators and other engineering and fabrication contractors. Kvaerner and its approximately 2 700 HSSE-focused and experienced employees are recognised for delivering some of the world's most amazing and demanding projects.
In 2017, Kvaerner's Field Development segment had consolidated annual revenues of NOK 7.6 billion and the company reported an order backlog at 30 September 2018 of NOK 10.6 billion. Kvaerner is publicly listed with the ticker "KVAER" at the Oslo Stock Exchange. For further information, please visit www.kvaerner.com.
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