Third quarter results 2013
1
© Kvaerner 2013 25.10.2013
Highlights
High activity and good utilisation
Nordsee Ost project delivered
Strong commitment to improvement
processes
Order backlog of NOK 26.9* billion
Semi-annual dividend of NOK 0.58
per share paid
* Including incorporated joint ventures.
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© Kvaerner 2013 25.10.2013
Load-out of the last wind jackets for the Nordsee Ost
project at Verdal.
Key financials
EBITDA
NOK million
4 000
Net current operating assets
NOK million
-85
200
-100
3 500
-200
166
-700
67
50
500
-800
© Kvaerner 2013 25.10.2013
Q3'13
4.5%
4.9%
¹ Gain on sale of EPC Center Houston.
² EBITDA margin excluding sales gain.
Q3'13
Q2'13
3.5%
Q2'13
Q1'13
4.3%
Q1'13
Q4'12
2.8%²
Q4'12
Q3'12
Q3'13
Q2'13
Q1'13
Q4'12
Q3'12
EBITDA
margin
Q3'12
-900
0
3
-500
-600
103
125
163
42 ¹
100
3 383
2 907
2 430
1 500
2 930
2 000
3 616
-400
-840
-300
2 500
-579
150
-514
3 000
1 000
-30
Revenues
NOK million
Order intake and -backlog
Order intake
NOK million
Order backlog
NOK million
16 000
35 000
14 000
30 000
26 908
12 000
25 000
~35%
10 000
20 000
8 000
15 000
6 000
~50%
10 000
4 000
1 690
2 000
5 000
~15%
0
0
Q3'12
Q4'12
Q1'13
Q2'13
Upstream
Downstream & Industrials
Note: All figures include incorporated joint ventures.
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© Kvaerner 2013 25.10.2013
Q3'13
Q3'12
Q4'12
Q1'13
Q2'13
Estimated scheduling as of 30 June 2013:
For execution in 2013
For execution in 2014
For execution in 2015 and later
Q3'13
Health, safety, security and environment
Four lost time injuries
Tree serious incidents
Two serious near miss
Lost time incident frequency (LTIF) and Total recorded incident frequency (TRIF)
Per million work hours and 12 months rolling averages
4,0
LTIF
Highlights
TRIF
3.0
3,0
Focus on
compliance
2,0
1,0
0.6
0,0
Oct
5
Focus on risk
observations
Nov
Dec
Jan
© Kvaerner 2013 25.10.2013
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Operational highlights
Two large jackets in parallel
fabrication at Verdal
MARTIN LINGE JACKET
ELDFISK TOPSIDE
Final assembly and commissioning
activities on Eldfisk
Concrete pouring of major slip
form completed in September
HEBRON GBS
Start-up of civil construction work
at Nyhamna
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© Kvaerner 2013 25.10.2013
NYHAMNA
Status on projects with special attention
7
Longview coal fired power plant:
Nordsee Ost wind jackets project:
 Contracts for engineering, supply of
equipment and construction
 Plant completed in Q4 2011
 Customer in US Chapter 11 since
August 2013
 Automatic stay in arbitration process
due to Chapter 11
 Based on current status of proceedings,
no change in financial outcome expected
 EPC contract for 48 steel jackets for
offshore wind mills
 Last jackets delivered in October 2013
 Commercial settlement remains
 Arbitration expected to be resolved
during 2014
 Wind industry business discontinued
 Based on current status of proceedings,
no change in financial outcome expected
© Kvaerner 2013 25.10.2013
The way forward
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© Kvaerner 2013 25.10.2013
Current status and strategic direction
2013-2014
2013 - 2014
2015-2017
2015 - 2017
2018-2020
2018 - 2020
Improvement processes
Execute solid order
backlog according
to the customers’
specifications
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© Kvaerner 2013 25.10.2013
New contract wins
form platform
for further growth
Gradually establish
platform as international
EPC player
Status on initiatives to improve competitiveness
✓
Develop delivery model
Increase productivity
Leverage adjacent
business
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© Kvaerner 2013 25.10.2013
EPC execution is a close interaction between the
various disciplines
Project management
Engineering
Critical
line
Bid
Inquiry
Final info
Purchase
order
Prelim
info
Close-out
documentation
Procurement (vendors)
Delivery of
equipment
Delivery of bulk
Drawings
for
fabrication
EPC
Contract
completion
Construction
Hook-up and
commissioning
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© Kvaerner 2013 25.10.2013
Delivery model
Key partners in Poland since mid 1990s
Swinoujscie
Morska
Remontowa
Gdynia
Energomontaz-Polnoc
Vistal
Gdansk
Crist
Mostostal Pomorze
Chojnice
Mostostal Chojnice
Sochaczew
Energop
Sochaczew
2006: Steel and pipe racks
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© Kvaerner 2013 25.10.2013
2013: 800t module
Siedlce
Polimex-Mostostal
Future: >2 000t modules
Productivity improvements
Turn many switches simultaneously
FACILITIES
New gantry crane
New multi-wheelers
Area plan
Paint shop upgrade
TECHNOLOGY
Mechanised and
automatised welding
Other welding
improvements
PROCESSES
Interfaces with
engineering,
procurement and
subcontracting
Fabrication
improvements
CONTINUOUS IMPROVEMENT
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© Kvaerner 2013 25.10.2013
PERSONNEL
Familiarisation
programme in project
Fabrication leadership
development training
Third quarter financials
Eiliv Gjesdal, Chief Financial Officer
Income statement
Amounts in NOK million
Total revenue and other income
EBITDA
Depreciation and amortisation
EBIT
Net financial income/(expense)
Profit from associated companies and JVs
Profit before tax
Income tax expense
Net profit
EBITDA margin
Q3 2013
3 383
166
(18)
149
(13)
(3)
132
(48)
84
4.9 %
Q2 2013
3 616
163
(17)
146
(7)
(18)
120
(45)
75
4.5 %
Q3 2012
2 430
109
(17)
93
(11)
(0)
82
(33)
48
4.5 %
YTD 2013
9 906
432
(51)
381
(41)
(25)
315
(118)
197
4.4 %
Note: Restated figures for previous periods are reflecting impacts from implementing IAS 19R Employee Benefits.
Revenues excluding incorporated joint ventures.
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© Kvaerner 2013 25.10.2013
¹
YTD 2012
7 818
354
(47)
306
(14)
(1)
292
(110)
182
4.5 %
FY 2012
Restated
10 748
479
(66)
413
(39)
(7)
367
(130)
237
4.5 %
Upstream review
Financials
 Continued high activity level
 Early cycle projects with limited contribution
Revenues, EBITDA and EBITDA margin
NOK million
Order backlog and order intake
NOK million
5 000
3 914
4 000
3 054
3 000
4 100
21 433
20 000
28 153
25 657
20 226
15 000
2 000
12 805
10 000
1 000
100
137
131
183
197
5 000
1 296
1 848
Q3'12
Q4'12
2 329
1 603
Q2'13
Q3'13
0
0
Q3'12
4.6%
Revenues
Q4'12
Q1'13
4.5%
3.8%
Q2'13
Q3'13
4.7%
4.8%
EBITDA
Note: All figures include incorporated joint ventures.
16
29 844
30 000
25 000
3 411
2 191
EBITDA-%
Orders
 Growth in existing contracts
© Kvaerner 2013 25.10.2013
Q1'13
Order backlog at the end of the quarter
Order intake in the quarter
Downstream & Industrials review
Financials
 Lower activity level than historically expected
for 2013
 Negative EBITDA of NOK 25-30 million
expected for 2013
Revenues, EBITDA and EBITDA margin
NOK million
Orders
 Several prospects
Order backlog and order intake
NOK million
2 000
1 799
900
500
442
261
300
100
46
338
244
10.4%
Revenues
933
358
148
Q4'12
Q1'13
-2
Q2'13
2.7%
(3.1)%
(0.7)%
EBITDA
1 039
981
7
-8
Q3'12
302
1 261
1 000
500
-100
EBITDA-%
1 489
1 500
700
-14
Q3'13
(4.7)%
97
0
Q3'12
Q4'12
Q1'13
Order backlog at the end of the quarter
¹ Figures include net positive effect of NOK 42 million from divestment of EPC Center Houston operations in Q3’12.
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© Kvaerner 2013 25.10.2013
Q2'13
Q3'13
Order intake in the quarter
Strong revenue visibility
Order backlog estimation by execution year (as of 30 June 2013)
NOK million
Revenues in excess of NOK
16 billion expected for 2013
30 000
26 908
Upstream EBITDA margin
2013 expected below
normalised 5-10%
25 000
2015
& later
20 000
2014
& later
15 000
10 000
Gradual margin improvements
expected in 2014
2014
2013
& later
2013
2012
5 000
2013
2011
2012
Q3 2011
Q3 2012
Note: All figures include incorporated joint ventures.
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© Kvaerner 2013 25.10.2013
Q3 2013
Booked
2012-13
Booked
2010-11
Cash flow and working capital development
Amounts in NOK million
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
Customer pre-payments¹ of
NOK 212 million
Fluctuations in working
capital must be expected
Downstream & Industrials:
 Capital tied up in the
Longview project
Upstream:
 Capital tied up in the
Nordsee Ost project
Q3 2013
(386)
(72)
(7)
1
Q2 2013
655
(40)
(176)
1
Q3 2012
317
(10)
3
(4)
YTD 2013
(88)
(133)
(189)
22
YTD 2012
(455)
(68)
(292)
46
FY 2012
(748)
(91)
(481)
(29)
(465)
441
306
(388)
(769)
(1 349)
Net current operating assets (NCOA)
NOK million
1 000
Downstream
& Industrials
500
0
Group
Upstream
-500
-1 000
-1 500
-2 000
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13
¹ Invoicing in excess of cost and estimated earnings less amounts billed in advance but not received (on a project by project basis).
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© Kvaerner 2013 25.10.2013
Balance sheet
Amounts in NOK million
Assets
Total non-current assets
Prepaid company tax
Current operating assets
Other current assets
Total cash and bank
Total assets
30.09.2013
30.06.2013
30.09.2012
Restated
FY 2012
Restated
2 267
130
3 808
681
6 886
2 232
133
2 874
1 146
6 385
2 157
173
2 498
20
1 649
6 497
2 218
91
2 660
1 069
6 039
Total equity
2 348
2 267
2 271
2 195
Non-current interest bearing liabilities
Other non-current liabilities
Current operating liabilities
Current tax liabilities
Total liabilities
Total equity and liabilities
477
201
3 838
22
4 538
6 886
474
189
3 452
4
4 119
6 385
467
273
3 338
147
4 226
6 497
469
172
3 175
28
3 844
6 039
Equtiy ratio
Net cash
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© Kvaerner 2013 25.10.2013
34 %
256
35 %
723
35 %
1 253
36 %
650
Closing remarks
Working on the Hebron gravity based structure at Bull Arm, Canada.
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© Kvaerner 2013 25.10.2013
Opportunities in all target markets
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© Kvaerner 2013 25.10.2013
Summary
High activity – project
execution focus
Strong order backlog
Improving competitiveness
and delivery models
HSSE – core value and
licence to operate
Maintain and develop home
markets
International expansion
Hands-on management
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© Kvaerner 2013 25.10.2013
APPENDIX
25
© Kvaerner 2013 25.10.2013
The current EPC project portfolio
2011
2012
2013
2014
2015
Value at award
Mongstad TCM
NOK 525M
Eldfisk topside
NOK 5.5B
Nyhamna onshore
NOK 11B
Edvard Grieg
topside
Nordsee Ost wind
jackets
NOK 8B
EUR 115M
Clair Ridge jackets
NOK 1.7B
Edvard Grieg jacket
NOK 1.1B
Martin Linge jacket
NOK 1.2B
Sakhalin-1
USD 600M
Hebron
USD 1.5B
Kashagan HUC
USD 1.6B
V&M Star (MEP)
Undisclosed
Calpine Garrison
USD 100-120M
Contractors Norway
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© Kvaerner 2013 25.10.2013
Jackets
Concrete Solutions
Contractors International
Onshore Americas
Revenue distribution
Share of revenues 2011
Percent
Share of revenues 2012
Percent
billion
billion
billion
© Kvaerner 2013 25.10.2013
12.8
10.7
13.3
27
NOK
NOK
NOK
Contractors International
Share of revenues last 12 months
Percent
Onshore Americas
Concrete Solutions
Jackets
Contractors Norway
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regions and industries that are major markets for Kværner ASA and Kværner ASA’s (including subsidiaries and affiliates) lines of business. These expectations, estimates and
projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual
results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets
for Kvaerner’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange
rates and such other factors as may be discussed from time to time in the Presentation. Although Kværner ASA believes that its expectations and the Presentation are based
upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kværner ASA is
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© Kvaerner 2013 25.10.2013