Technip's Second Quarter 2013 Results

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Technip's Second Quarter 2013 Results

Solid Quarter - Full Year Objectives Maintained

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


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

SECOND QUARTER 2013 RESULTS

  • Order intake of €2.8 billion
  • Record backlog of €15.2 billion, of which €7.4 billion in Subsea
  • Revenue of €2.4 billion
  • Operating margin1of 10.0%
  • Net income of €162.4 million

FULL YEAR 2013 OBJECTIVES MAINTAINED2

  • 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 July 23, 2013, Technip's Board of Directors approved the second quarter and first half 2013 consolidated accounts.

€ million (Except Diluted Earnings per Share)  

2Q 12*

 

2Q 13

 Change  

1H 12*

 

1H 13

 Change
Revenue  2,052.2 2,423.6 18.1%  3,817.5 4,439.4 16.3%
EBITDA3  257.3 294.4 14.4%  462.0 521.3 12.8%
EBITDA Margin  12.5% 12.1% (39)bp  12.1% 11.7% (36)bp
Operating Income from Recurring Activities207.3242.016.7%372.5415.511.5%
Operating Margin10.1%10.0%(12)bp9.8%9.4%(40)bp
Operating Income  204.3 242.0 18.5%  369.5 415.5 12.4%
Net Income136.0162.419.4%248.2278.612.2%
Diluted Earnings per Share4 (€)  1.14 1.35 17.8%  2.09 2.32 11.0%
Order Intake2,5162,7645,8265,670
Backlog  12,724 15,185         

* restated for retrospective application of amended IAS 19 standard "Employee Benefits" as of January 1, 2013

Thierry Pilenko, Chairman and CEO, commented: "Technip's second quarter results enable us to maintain our 2013 full year revenue and profit objectives. In Subsea, progress and close-out on projects allowed revenue to grow by 12% with a 15.9% operating margin. Onshore/Offshore revenue was up 23% with operating margin in line with our objectives, at 6.7%. Overall, the Group grew net income and EPS by respectively 19% and 18%.

Order intake reflected the strong activity we see in nearly all our markets and was composed in both segments of a diversified mix of projects. Subsea order intake was characterized by flexible supply contracts and smaller and medium-sized installation contracts: Snøhvit and Norne in the North Sea, and South White Rose Extension in Canada. After the award in the first quarter of Moho Nord in Congo, momentum in West Africa continued in the second quarter with awards to supply umbilicals and flexibles for the Egina field development in Nigeria.

Onshore/Offshore order intake included the engineering, procurement and fabrication contract for the P-76 FPSO topsides in Brazil, as well as the definitive award for the Heidelberg Spar which is being built in our yard in Pori, Finland. We won contracts to perform Project Management Consultancy (PMC) services for our clients, including on the Karbala refinery in Iraq. Technip also secured early stage involvement in a number of important potential developments worldwide, notably in FLNG and LNG, for example with the Pacific NorthWest LNG FEED in Canada.

Our clients remain active, looking to us to design facilities and developments that can be cost- and schedule-effective in more complex and harsh environment situations. We have not seen any meaningful change in our clients' drive to sanction projects in the last few months.

Technip has grown its workforce in the last six months, and we now number nearly 38,000 people in 48 countries worldwide. Their relentless efforts to devise the best engineering and project execution strategies for our customers are central to enable Technip to win projects and execute them safely and profitably.

Our Capex program progressed as regards the major assets under construction: Deep Energy pipelay vessel, Açu flexible pipe manufacturing plant in Brazil, Newcastle umbilical manufacturing plant in the UK. The new Deep Orient pipelay vessel met a major milestone with a good performance on Åsgard and Goliat, her first projects, and she will head to Asia Pacific in the Autumn. Later this year, the Deep Energy will start work on her first projects in the Gulf of Mexico where she will lay umbilicals, rigid and flexible pipes as part of an important and busy schedule of work for Technip in the US.

We enter the second half of the year with a diversified backlog of €15.2 billion, of which €4.4xbillion is estimated to be carried out by year-end. We will be active on projects entering important construction and offshore phases during this period in both segments and, accordingly, Technip's collective focus remains first and foremost on executing those projects in order to deliver our second half objectives, and for the longer term, continued sustainable and profitable growth."

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.
 

I. PORTFOLIO OF PROJECTS

1. Second Quarter 2013 Order Intake

During second quarter 2013, Technip's order intake was €2,763.8 million. The breakdown by business segment was as follows:

Order Intake (€ million)  2Q 2012  2Q 2013
Subsea  1,335.8  1,539.9
Onshore/Offshore1,180.01,223.9
Total  2,515.8  2,763.8
 

Subsea

Second quarter Subsea order intake included a contract for Engineering, Procurement, Construction and Installation (EPCI) of smoothbore risers for the Norne field in Norway, as well aslarge diameter steel flowlines installation for the Snøhvit CO2 project.Technip won contracts for the Project Management, Engineering and Manufacture of steel tube umbilicals and flexible pipes for the Egina project in Nigeria. Across the Atlantic, we were awarded the South White Rose Extension project in Canada. In Brazil, Technip was awarded a major contract for flexible pipes engineered for ultra-deep application on the Iracema Sul field, reinforcing Technip's position in the pre-salt Brazilian market.

Onshore/Offshore

Onshore/Offshore order intake for the quarter included several smaller projects in the Middle East: Technip will provide engineering and procurement services for Takreer's new coke calcination unit in the United Arab Emirates, as well as a PMC scope for the Karbala refinery in Iraq. Our strategy of differentiating and leveraging our capacity to manage complex brownfield projects led to the award of the Sulfur Recovery Unit by Bahrain Petroleum Company (BAPCO).

In Brazil, Technip will be in charge of the design and integration of the topsides for the P-76 Floating, Production, Storage and Offloading unit (FPSO). Following the execution of the Front End Engineering Design (FEED) of NOVA's polyethylene expansion project in Canada, we will perform the engineering and procurement scopes. Technip will also participate in the competitive FEED for the Canadian Pacific NorthWest LNG facilities.

Technip also won a Biomass-to-Liquid plant FEED in Finland, in line with our strategy to get involved in innovative projects in the early stages. A services contract in Venezuela for two hydrogen reformers, which will utilize our state-of-the-art proprietary technology,was also awarded toward the end of this quarter.

Listed in annex IV (b) are the main contracts announced since April 2013 and their approximate value if publicly disclosed.

2. Backlog by Geographic Area

At the end of the second quarter 2013, Technip's backlog rose to €15.2 billion, compared with €14.8 billion at the end of first quarter 2013, and €12.7 billion at the end of second quarter 2012.

This backlog remains diversified in terms of project types, sizes, technologies and geographical areas as set-out in the table below:

Backlog  March 31,  June 30,  Change
(€ million)  2013  2013  
Europe, Russia, Central Asia4,0954,1682%
Africa2,3462,5498.7%
Middle East1,4361,204(16.2)%
Asia Pacific3,2042,963(7.5)%
Americas3,6974,30116.3%
Total  14,778  15,185  2.8%
 

3. Backlog Scheduling

Approximately 29% of the backlog is estimated to be scheduled for execution in 2013.

Backlog Estimated Scheduling

as of June 30, 2013 (€ million)

  Subsea  Onshore/Offshore  Group
2013 (6 months)  1,938  2,453  4,391
20142,4853,1365,621
2015 and beyond2,9332,2415,173
Total  7,355  7,830  15,185
 

II. SECOND QUARTER 2013 OPERATIONAL & FINANCIAL HIGHLIGHTS

1. Subsea

Subsea main operations for the quarter were as follows:

  • In the North Sea, satisfactory marine conditions allowed offshore operations to continue work on various projects such as Åsgard and Goliat in Norway on which our new vessel, the Deep Orient, delivered a good performance. In the UK, the engineering and procurement phase of the major Quad 204 project moved forward. Other projects, notably Bøyla, Gannet, Greater Stella and Juliet made progress on their engineering and procurement phases.
  • In the Americas:
    • In Brazil, construction of the new flexible pipe plant in Açu made headway with key equipment delivered on site, and we pursued plant operator training. The first batch of Integrated Production Bundle risers and flowlines for the Papa-Terra field manufactured in France arrived in Brazil, and is ready to be installed. Meanwhile, the construction of two 550 ton PLSVs, for long-term charter to Petrobras progressed well in Korea.
    • In the Gulf of Mexico, our key vessels were all active on offshore operations: the Deep Blue was mobilized on the Walker Ridge gas gathering system, while the G1200 installed the first pipeline for the South Timbalier Block 283 Junction Platform.
  • In West Africa, mobilization started on the Egina project, in Nigeria, for the design of steel umbilicals and flexible pipes. In Congo, ramp-up and engineering activities continued for the development of the Moho Nord field, whilst the CoGa project progressed towards its completion phase.
  • In Asia Pacific, in China, the G1201 vessel completed the pipe installation for the Liwan gas platform, while the Panyu project's engineering phase is on-going. Wheatstone in Australia is moving forward with the umbilical design phase as is the Malikai subsea project in Malaysia.

Overall Group vessel utilization rate for the second quarter 2013 was 84% compared with 74% for the second quarter 2012.

Subsea financial performance is set out in the following table:

€ million  2Q 2012*  2Q 2013*  Change
Subsea      
Revenue981.21,102.912.4%
EBITDA190.1218.715.0%
EBITDA Margin19.4%19.8%46bp
Operating Income From Recurring Activities147.3175.419.1%
Operating Margin  15.0%  15.9%  89bp

* restated for retrospective application of amended IAS 19 standard "Employee Benefits" as of January 1, 2013

2. Onshore/Offshore

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

  • In theMiddle East, work started on the recently announced BAPCO Sulfur Recovery Unit modification EPC project in Bahrain. In Abu Dhabi, the Satah full field development moved into its construction phase while engineering and procurement activities reached the final phases for Upper Zakum 750 EPC1, for which the FEED was completed last year. In Saudi Arabia, commissioning of the Jubail 2A and 5A packages was carried out successfully, and we have been demobilizing progressively on both packages. Procurement continued for equipment and bulk material to be installed on the KEMYA Halobutyl project.
  • In Asia Pacific, in Malaysia, the first steel was cut for the Malikai hull and topsides. Engineering and detailed design progressed for Petronas FLNG 1 and first steel has also been cut. In Australia, Shell's Prelude FLNG moved forward in its construction phase, and the Wheatstone gas processing platform engineering and detailed design progressed.
  • In the Americas, engineering for the Westlake ethylene plant in Kentucky continued and purchase orders were placed. The Mosaic fertilizer FEED in Louisiana reached its final phase. In Canada, Technip and partners started the competitive FEED for Pacific NorthWest LNG. In Venezuela, progress was made on the Petrocarabobo and Petrourica FEEDs for two PDVSA upgraders in the Orinoco belt. In Mexico, EPC activities continued on the Etileno XXI plant.
  • Elsewhere, in Norway, engineering for the Martin Linge platform progressed and materials were purchased for the Aasta Hansteen Spar. In Finland, construction of the Heidelberg Spar continued. Meanwhile, engineering and procurement services continued on the PTA plant in India, and Burgas' refinery in Bulgaria made good progress in its construction supervision and procurement phase.

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

€ million  

2Q 2012*

  

2Q 2013

  Change
Onshore/Offshore      
Revenue1,071.01,320.723.3%
Operating Income From Recurring Activities77.588.914.7%
Operating Margin  7.2%  6.7%  (50)bp

* restated for retrospective application of amended IAS 19 standard "Employee Benefits" as of January 1, 2013

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  

2Q 2012*

  

2Q 2013

  Change
Group      
Revenue2,052.22,423.618.1%
Operating Income From Recurring Activities207.3242.016.7%
Operating Margin  10.1%  10.0%  (12)bp

* restated for retrospective application of amended IAS 19 standard "Employee Benefits" as of January 1, 2013

In the second quarter 2013, foreign exchange had a negative impact estimated at €28.4 million on revenue and a negative impact estimated at €5.5 million on operating income from recurring activities. Financial result on contracts recognized as revenue amounted to €3.6 million in second quarter 2013.

4. Group Net Income

Operating income was €242 million in second quarter 2013, versus €204 million a year ago.

Financial result in second quarter 2013 included a €3.6 million positive impact from changes in foreign exchange rates and fair market value of hedging instruments, compared with a €12 million negative impact last year.

The slight variation in Diluted Number of Shares is mainly due to stock options granted to Technip's employees.

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

  

2Q 2012*

  

2Q 2013

  Change
Operating Income  204.3  242.0  18.5%
Financial Result(18.9)(10.7)(43.4)%
Share of Income / (Loss) of Equity Affiliates-(0.1)nm
Income Tax Expense(48.7)(67.8)39.2%
Effective Tax Rate26.3%29.3%3%
Non-Controlling Interests(0.7)(1.0)42.9%
Net Income136.0162.419.4%
Diluted Number of Shares123,391,178124,410,5860.8%
Diluted Earnings per Share (€)  1.14  1.35  17.8%

* restated for retrospective application of amended IAS 19 standard "Employee Benefits" as of January 1, 2013

5. Cash Flow and Statement of Financial Position

As of June 30, 2013, the Group's net debt was €271 million compared to €91 million at the end of March 2013.

€ million   
Net Cash Position as of March 31, 2013 (90.9)
Net Cash Generated from / (Used in) Operating Activities182.6
of which:
Cash Generated from / (Used in) Operations

257.7

 

Change in Working Capital Requirements

(75.1)

 

Capital Expenditures(170.8)
Dividends Paid(186.0)
Other including FX Impacts(6.1)
Net Cash Position as of June 30, 2013  (271.2)
 

Capital expenditures for the second quarter 2013 increased to €171 million compared to €152 million one year ago. In the first half 2013, capital expenditures amounted to €282 million versus €248 million one year ago.

Shareholders' equity as of June 30, 2013, was €4,003 million compared with €3,962 million as of December 31, 2012, restated.

III. FULL YEAR 2013 OBJECTIVES MAINTAINED

  • 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%

°

° °

The information package on Second Quarter 2013 results includes this press release and the annexes which follow, as well as the presentation published on Technip's website: www.technip.com

NOTICE

Today, Thursday, July 25, 2013, Chairman and CEO Thierry Pilenko, along with CFO Julian Waldron, will comment on Technip's results and answer questions from the financial community during a conference call in English starting at 10:00 a.m. CET.

To participate in the conference call, you may call any of the following telephone numbers approximately 5 - 10 minutes prior to the scheduled start time:

France / Continental Europe:  +33 (0)1 70 77 09 47
UK:+44 (0)203 043 2441
USA:+1 866 907 5925
 

The conference call will also be available via a simultaneous, listen-only audio-cast on Technip's website.

A replay of this conference call will be available approximately two hours following the conference call for 90 days on Technip's website and for two weeks at the following telephone numbers:

  

Telephone Numbers

  

Confirmation Code

France / Continental Europe:+33 (0)1 72 00 15 00282183#
UK:+44 (0)203 367 9460282183#
USA: Read Full Story

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