Technip's Fourth Quarter and Full Year 2012 Results

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Technip's Fourth Quarter and Full Year 2012 Results

2012 Objectives Achieved; 2013 Revenue and Profit Expected to Grow

PARIS--(BUSINESS WIRE)-- Regulatory News:


Technip (Paris:TEC) (ISIN:FR0000131708):

2012 RESULTS

  • Robust order intake, revenue and operating margins in 4Q 2012
  • Backlog at €14.3 billion, of which €6.0 billion in Subsea
  • Full year revenue of €8.2 billion
  • Full year operating margin1of 10.0%
  • Net income of €540 million
  • Recommendation to raise 2012 dividend by €0.10 to €1.68 per share

FULL YEAR 2013 OUTLOOK2

  • Group revenue growing 11% to 16% to between €9.1 and €9.5 billion
  • Subsea revenue growing to between €4.3 and 4.6 billion, with operating margin around 15%
  • Onshore/Offshore revenue growing to between €4.7 and €5.1 billion, with operating margin between 6% and 7%

On February 19, 2013, Technip's Board of Directors approved the audited full year 2012 consolidated financial statements.

                         
€ million (Except Diluted Earnings per Share)   FY 11   FY 12   Change   4Q 11   4Q 12   Change
Revenue   6,813.0   8,203.9   20.4%   2,014.3   2,300.5   14.2%
EBITDA3   883.5   1,016.6   15.1%   274.0   289.0   5.5%
EBITDA Margin   13.0%   12.4%   (58)bp   13.6%   12.6%   (104)bp
Operating Income from Recurring Activities709.5821.715.8%208.2237.514.1%
Operating Margin10.4%10.0%(40)bp10.3%10.3%(1)bp
Operating Income   693.8   812.2   17.1%   197.2   235.0   19.2%
Net Income507.3539.76.4%149.5147.0(1.7)%
Diluted Earnings per Share4 (€)4.414.502.1%1.281.21(5.5)%
Dividend per share5 (€)   1.58   1.68   6.3%            
Order Intake7,97511,6492,2392,975
Backlog   10,416   14,251   36.8%            
 

Thierry Pilenko, Chairman and CEO, commented: "Technip's performance was in line with our objectives throughout 2012, including the fourth quarter. Full year group revenue grew by 20% and operating profit by 16%, giving an operating margin again stable at 10%. Our backlog grew to €14 billion, whilst remaining diversified by geography, market segment and project type, which we hold to be a critical success factor in our industry. The projects we delivered and won in 2012 reflect our focus on offering our clients differentiating technologies, and on securing involvement in projects early in their life-cycle. To support our growth, we have invested in talent worldwide - Technip now employs 36,500 people compared to 31,000 a year ago - and in new assets, acquisitions and alliances.

Subsea operating margin in 2012 was in line with our objective, at 15% on revenue, which grew ahead of plan by 36%. The Global Industries integration progressed well, and we were able to win many important projects for the two "G" vessels for 2013 and beyond. Overall, this acquisition is delivering what we expected. The alliance with Heerema confirms our leadership in the Subsea market worldwide, giving our clients access to the broadest range of skills from upstream engineering to all types of pipelay and construction assets. Our investments in assets and flexible pipe technology give us a strong position, for example, in deepwater developments in areas such as Brazil.

Onshore/Offshore operating margin was at the top end of our expectations at 7%. We were able to convert early stage involvement in projects at FEED and conceptual phases into larger EPC scopes in places such as the Middle East, Latin America and Eastern Europe. We completed the acquisition of Stone and Webster Process Technologies in August giving us a foothold in the North American downstream market and have since formed a worldwide unit focusing on onshore technologies. We have also strengthened our position in new areas such as Floating LNG, where we confirmed key relationships with major clients.

Furthermore, we have pursued the development of Technip into a more diversified and international group, including at Board level with the appointments made in 2012 and those to be proposed at our next AGM. Upon their ratification, our twelve-member Board will comprise five women and seven men, from seven different nationalities, and reflecting key markets.

Technip starts 2013 with a substantial, profitable backlog of business to execute. We believe our markets, whilst competitive and never immune to general economic conditions, remain robust and growing. Our clients continue to focus on replacing and raising production from increasingly challenging areas and reservoirs. They seek long-term relationships with contractors that are capable of developing and deploying the right technologies and who can embrace national content and local execution. Upstream investments should grow at a double digit rate and several very large oil and gas offshore developments should be sanctioned in the next couple of years. Downstream will be particularly active in petrochemicals, notably in North America.

We will continue to be selective about the projects we take on so as to ensure reliable execution and delivery to both clients and shareholders. We will pursue our capex program, with a focus on delivering our current commitments.

On this basis, we expect to grow revenue and profit at Technip again in 2013 in both our segments. We expect full year operating margins of around 15% in Subsea. This target reflects on the one hand our robust, growing Subsea backlog, but also the dilutive effect of the revenue contribution from recently-won multiyear projects and the substantial start-up costs for both new vessels and manufacturing plants. We target Onshore/Offshore operating margins in line with our long-term expectations at 6 to 7%.

Accordingly, confident in our strategy, our backlog, and our potential for profitable growth, we propose to Technip's General Shareholders' Meeting an increase of 10 eurocents in the dividend, to €1.68 per share, in line with our practice of regularly increasing the payout to shareholders."

1 Operating income from recurring activities divided by revenue.
2 Based on the year-to-date average exchange rates.
3 Operating income from recurring activities before depreciation and amortization.
4 As per IFRS, diluted earnings per share are calculated by dividing profit or loss attributable to the Parent Company's Shareholders, restated from financial interest related to dilutive potential ordinary shares, by the weighted average number of outstanding shares during the period, plus the effect of dilutive potential ordinary shares related to the convertible bonds, dilutive stock options and performance shares calculated according to the "Share Purchase Method" (IFRS 2), less treasury shares. In conformity with this method, anti-dilutive stock options are ignored in calculating EPS. Dilutive options are taken into account if the subscription price of the stock options plus the future IFRS 2 charge (i.e. the sum of annual charge to be recorded until the end of the stock option plan) is lower than the average market share price during the period.
5 Recommendation of Technip's Board of Directors to be approved during the Annual General Shareholders' Meeting (AGM) on April 25, 2013.

I. PROJECT PORTFOLIO

1. Fourth Quarter 2012 Order Intake

During fourth quarter 2012, Technip's order intake was €2,975 million. The breakdown by business segment was as follows:

         
Order Intake (€ million)   4Q 2011   4Q 2012
Subsea   1,216.0   914.1
Onshore/Offshore1,022.62,061.0
Total   2,238.6   2,975.1
 

Subsea order intake included several small and medium-sized contracts on several continents, notably the second phase of the Total E&P Angola GirRI project, which was awarded after the successful completion of the first phase in 2012. In the Americas, we were awarded several projects involving our leading assets and expertise: the G1200 vessel will notably lay 30'' pipeline on the South Timbalier Block 283 Junction Platform project, which will be the largest lines she has installed to date, and work on Starfish field in Trinidad and Tobago for BG International Ltd.

Onshore/Offshore order intake comprised several commercial successes for both offshore production units and onshore downstream activities. We were awarded our first tension leg platform project by Sabah Shell Petroleum Company for the Malikai project in Malaysia. As consortium leader, we were chosen by Total E&P Norge for a contract covering engineering, procurement, fabrication, transportation, hookup and commissioning of the topsides for the Martin Linge platform in Norway. We also signed an EPC contract with BASF in Germany for the expansion of a chlorine plant, a project on which we also carried out the FEED. Other awards included notably an engineering and procurement contract for an ethylene production plant in the USA.

The main contracts announced since October 2012 and their approximate value, if publicly disclosed, are listed in annex IV (b).

2. Backlog by Geographic Area

At the end of fourth quarter 2012, Technip's backlog rose to €14,251 million, compared with €13,518 million at the end of third quarter 2012 and €10,416 million at the end of fourth quarter 2011.

Backlog by geographic area is set out in the following table:

         

Backlog by Geographic Area
(€ million)

   

Sept. 30,
2012

   

Dec. 31,
2012

Europe, Russia, Central Asia3,4074,339
Africa1,1811,207
Middle East1,7891,578
Asia Pacific2,8413,030
Americas4,3004,097
Total   13,518   14,251
 

3. Backlog Scheduling

Approximately 50% of the backlog is estimated to be scheduled for execution in 2013.

             

Estimated Backlog Scheduling as of
December 31, 2012 (€ million)

   Subsea   Onshore/Offshore   Group

2013

   3,242   3,842   7,084
20141,6822,8204,502
2015 and beyond1,1261,5392,665
Total   6,050   8,201   14,251
 

II. FOURTH QUARTER 2012 OPERATIONAL & FINANCIAL HIGHLIGHTS

1. Subsea

Subsea main operations for the quarter were as follows:

  • In the North Sea, offshore operations were completed on Vigdis NE field development in Norway. Projects such as Goliat in the Barents Sea progressed and newer projects such as Greater Stella Area development in the UK and Bøyla field development in Norway ramped-up,
  • In the Americas:
    • Venezuela: works continued on the Mariscal Sucre Accelerated Development,
    • Brazil: the first batch of flexible pipes was delivered for Guara & Lula Nordeste pre-salt fields at a water depth of 2,250 meters, while offshore operations continued on BC-10 phase 2 project with the Deep Blue and the Deep Pioneer,
  • In Africa, offshore phases were completed on the Gabonese work scope for CoGA project and the G1200 vessel finalized subsea operations on Jubilee 1A project in Ghana. In Angola, fabrication of umbilicals progressed for CLOV project at our Angoflex plant and the engineering phase started on GirRI phase 2 project with team mobilizations in Paris and Luanda,
  • Elsewhere, offshore installation was completed on South West Fatah and Falah project in the UAE.

Overall Group vessel utilization rate for the fourth quarter 2012 was 78%, compared with 77% for the third quarter 2012.

Subsea financial performance is in line with expectations reflecting notably the year-on-year impact of the integration of the acquisition made late 2011.

             
€ million   4Q 2011   4Q 2012   Change
Subsea         
Revenue964.11,200.424.5%
EBITDA218.2219.90.8%
EBITDA Margin22.6%18.3%(431)bp
Operating Income from Recurring Activities158.3178.712.9%
Operating Margin   16.4%   14.9%   (153)bp
 

2. Onshore/Offshore

Onshore/Offshore main operations for the quarter were as follows:

  • In the Middle East:
    • Abu Dhabi: commissioning was completed on Asab 3, and civil works progressed on Satah full field development. Mobilization of engineering teams started on Upper Zakum 750 EPC1 project and the first orders were placed,
    • Saudi Arabia: on Jubail refinery, procurement was completed, construction works progressed on package 2A while pre-commissioning advanced on package 5A. Engineering works progressed and procurement started on KEMYA Halobutyl project, while the installation of subsea cables, wellhead jackets and topsides progressed on Khafji Crude Related project,
    • Qatar: construction works progressed on PMP,
  • In Asia Pacific:
    • Malaysia: FEED activities on RAPID project progressed, as well as engineering works on Petronas FLNG1,
    • Australia: construction works started for Prelude FLNG at the South Korean construction yard, while engineering activities progressed on Wheatstone platform and Ichthys FPSO,
  • In the Americas,
    • USA: fabrication of Lucius Spar hull progressed in Pori, our yard in Finland, while early works for the Heidelberg Spar commenced. FEED works started on Mosaic ammonia and Dow Chemical Freeport Ethylene projects,
    • Mexico: detailed engineering and procurement progressed and construction started on Ethylene XXI project,
    • Brazil: engineering works were completed on P-58 & P-62 FPSOs, while construction works progressed on Cubatao refinery,
  • Elsewhere, procurement continued as construction activities began on the Burgas refinery in Bulgaria. Engineering works continued on Hejre platform in the North Sea and construction activities progressed on Algiers refinery in Algeria.

Onshore/Offshore financial performance is set out in the following table:

             
€ million   4Q 2011   4Q 2012   Change
Onshore/Offshore         
Revenue1,050.21,100.14.8%
Operating Income from Recurring Activities67.979.316.8%
Operating Margin   6.5%   7.2%   74bp
 

3. Group

Technip Group's operating income from recurring activities including Corporate charges as detailed in annex I (c) is set out in the following table:

             
€ million   4Q 2011   4Q 2012   Change
Group         
Revenue2,014.32,300.514.2%
Operating Income from Recurring Activities208.2237.514.1%
Operating Margin   10.3%   10.3%   (1)bp
 

Compared to fourth quarter 2011, foreign exchange had a positive impact estimated at €47 million on revenue and no impact on operating income from recurring activities in fourth quarter 2012.

Financial result on contracts recognized as revenue amounted to €3 million in fourth quarter 2012.

4. Group Net Income

Operating income was €235 million in fourth quarter 2012, including €3 million of acquisition costs, versus €197 million a year ago.

Financial result in fourth quarter 2012 included a €9 million negative impact from changes in foreign exchange rates and fair market value of hedging instruments, compared with a €16 million positive impact in fourth quarter 2011.

The variation in diluted number of shares is mainly due to the potential dilution of convertible bonds (OCEANE), capital increase for Technip employees, as well as share subscription options and performance shares granted to Group employees.

             

€ million, except Diluted Earnings per Share, and Diluted
Number of Shares

   4Q 2011   4Q 2012   Change
Operating Income from Recurring Activities   208.2   237.5   14.1%
Income / (Charges) from Non-Current Activities(11.0)(2.5)
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