First quarter results 2016
© Kvaerner 2016 03.05.2016
Highlights First quarter 2016 Construction start Sverdrup topside
Improvements yielding results Longview settlement Flexibility through strong balance sheet
Subsequent events Photo: Statoil
Framework agreement with Statoil for upgrading of the Njord A platform
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Njord A was originally delivered by Kvaerner in 1997. Photo: Lundin Norway
HSSE results No lost time injury Four serious incidents Close to 2.8 million worked hours in the quarter Lost time incident frequency (LTIF) and Total recorded incident frequency (TRIF) Per million work hours and 12 months rolling averages 4,0
LTIF
TRIF
3,0
2,0
1.9
1,0
0.2 0,0 Apr
3
May
June
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July
August
Sept
Oct
Nov
Dec
Jan
Feb
Mar
Key financials Adjusted EBITDA¹ NOK million
Revenues NOK million 4 000
Net current operating assets NOK million
150
3 000
-639
-200
-483
3 500
-541
200
148
178
-1057
-600
-800 106
109
50
101
1 000
2 228
2 577
2 858
1 500
100 3 125
3 525
2 000
-1143
-400 2 500
-1 000 500
4.8%
Q1'16
Q1'16
6.9%
Q4'15
Q4'15
5.2%
Q3'15
Q3'15
3.5%
Q2'15
Q2'15
EBITDA 2.9% margin
-1 200 Q1'15
Q1'15
Q1'16
Q4'15
Q3'15
Q2'15
Q1'15
0
¹ As from Q3 2015, adjusting impact related to embedded derivatives in jointly controlled entities closely related to Kvaerner’s operating activities. 4
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Order intake and backlog Order intake NOK million
Order backlog NOK million
6 000
18 000
5 000
15 000
4 000
12 000
3 000
9 000
2 000
6 000
1 000
3 000
12 054
~50%
~50%
519 0
0 Q1'15
Q2'15
Q3'15
Q4'15
Q1'16
Note: All figures include scope of work of jointly controlled entities. . © Kvaerner 2016 03.05.2016 5
Q1'15
Q2'15
Q3'15
Q4'15
Estimated scheduling as of 31 March 2016: For execution in 2016 For execution in 2017+
Q1'16
Operational highlights
Photo:A/S Norske Shell
Nyhamna – Installation and completion phase
Sverdrup riser platform jacket roll-up
Hebron – Mechanical outfitting
First steel cut for Sverdrup ULQ topside
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© Kvaerner 2016 03.05.2016
First quarter financials Idar Eikrem, Chief Financial Officer
Income statement Q1 2016
Q4 2015
¹ Q1 2015
2 228 106 81 (21) 60 (34) 26 (10) 16 202 217
2 577 178 177 (20) 156 25 0 182 (54) 128 18 146
3 525 101 101 (18) 83 (5) 77 (25) 53 84 137
12 084 536 574 (81) 493 86 (0) 579 (241) 337 56 393
Adjusted EBITDA margin
4.8 %
6.9 %
2.9 %
4.4 %
Earnings per share (NOK) Basic and diluted EPS continuing operations Basic and diluted EPS total operations
0.06 0.81
0.48 0.55
0.20 0.51
1.26 1.47
Amounts in NOK million 1
Total revenue and other income Adjusted EBITDA 2 EBITDA Depreciation and amortisation EBIT Net financial income/(expense) Equity accounted investees Profit before tax Income tax expense Profit from continuing operations Profit from discontinued operations Net profit
FY 2015
Revenues excluding Kvaerner’s scope of work of jointly controlled entities. ² As from Q3 2015, adjusting impact related to embedded derivatives in jointly controlled entities closely related to Kvaerner’s operating activities. 1
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Field Development review Financials EPC projects awarded after Q1 2015 not yet recognising margins – Projects will start recognising margins during 2H 2016 Revenues NOK million
EBITDA NOK million 250
5 000 4 173
202 3 794
4 000
200
3 615
166
3 334
2 785
3 000
150
2 000
100
1 000
50
0
125
Q1'15
Q2'15
123
0 Q1'15
Q2'15
Q3'15
Q4'15
Q1'16 EBITDA-%
Note: Field Development was previously named Upstream. All figures include Kvaerner’s scope of work of jointly controlled entities. 9
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2.9%
3.3%
Q3'15 4.6%
Q4'15 6.1%
Q1'16 4.4%
Cash flow and working capital development Amounts in NOK million 1
Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities Translation adjustments Net increase/(decrease) in cash and bank deposits
Fluctuations in working capital must be expected Capital tied up in the Nordsee Ost project Capex for new cranes of NOK 135 million in Q1
Q1 2016
Q4 2015
Q1 2015
FY 2015
700 (138) (4) (1) 557
566 3 (51) (1) 518
98 (15) (10) 3 76
1 183 (50) (786) 6 352
Net current operating assets (NCOA) – Continuing operations (NOK million) 0
-500
-1000
¹ Cash flow from operating activities includes Longview settlement, USD 70 million, cash received in first quarter 2016. 10
© Kvaerner 2016 03.05.2016
Q1'16
Q4'15
Q3'15
Q2'15
Q1'15
Q4'14
Q3'14
Q2'14
Q1'14
Q4'13
Q3'13
Q2'13
Q1'13
Q4'12
Q3'12
Q2'12
-1500
Balance sheet Amounts in NOK million
31.03.2016
31.12.2015
31.03.2015
Assets Total non-current assets Prepaid company tax Current operating assets Total cash and bank Retained assets of business sold Total assets
1 748 1 477 2 117 5 342
1 715 1 740 1 560 633 5 649
1 895 73 3 446 1 284 567 7 265
Equity and liabilities Total equity
2 465
2 550
2 444
Non-current interest-bearing liabilities Other non-current liabilities Current operating liabilities Current tax liabilities Retained liabilities of business sold Total liabilities Total equity and liabilities
173 2 620 26 58 2 877 5 342
180 2 797 73 49 3 099 5 649
490 181 3 986 118 46 4 820 7 265
Equity ratio Net cash
46 % 2 119
45 % 1 562
34 % 796
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Market and outlook
Customers start to consider new projects based on lower cost Kvaerner is attractive based on improved cost & proven predictability
Slide 12
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Initiatives completed / initiated:
Improvements yields concrete effects Joint industry improvement initiatives
Reducing internal costs by NOK 250 mill (2015-2016)
New operating model Reductions to capacity and administration Refined and leaner organisation Most Norwegian operations in one unit
15% improved cost base by 1Q 2015
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More effective execution model
Dialogue re new step changes with selected clients
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Results in record-tough market:
3 large jackets = 89% of the Johan Sverdrup jackets 1 of the market’s largest topsides: Johan Sverdrup ULQ Competitive fabrication: MSF + clusters to Stord and Verdal Competitive on Modifications: Njord A
Pursuing selected prospects, leveraging strengths CONCRETE SOLUTIONS
STEEL JACKET SUBSTRUCTURES
PLATFORM TOPSIDES
ONSHORE OIL AND GAS PLANTS
Market leader globally
Market leader, Europe
Leading position, Norway + international
Market leader, Norway
Expect to see outcome of contract awards through 2016 and 2017 Some few but important prospects of moderate size: Completion, HUC, Decommissioning Greenfield / brownfield EPC for offshore platforms and onshore facilities Arctic projects, including demand for engineering and project management
Selected prospects in new markets are being considered
Kvaerner relevant for customers based on reduced costs and value-adding solutions 14
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Concluding remarks
Predictable execution of existing projects
HSSE – core value and licence to operate
Pursuing specific contract opportunities with expected decisions in 2016 and 2017
Maintain and develop home markets
Continue to strengthen competitiveness
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Develop global delivery model for Norway and abroad Hands-on management
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