Kværner ASA: Third quarter results 2014

28 October 2014 - Increased activity. Kvaerner's third quarter results reflect an increased activity level. Kvaerner is in a market segment where there are key upcoming projects, and the company is about to complete the processes to improve its competitive position in time for new bids. Operating revenues for the third quarter amounted to NOK 4 004 million, compared with NOK 3 080 million for third quarter 2013. Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) for the quarter were NOK 194 million, compared with NOK 180 million in the same period last year.

Kvaerner reported operating revenues of NOK 10 354 million for the first nine months of 2014, compared with NOK 9 021 million for the same period in 2013. With an EBITDA result for the last quarter of NOK 194 million versus NOK 180 million one year before, the EBITDA margin for third quarter 2014 was 4.8 percent, down from 5.9 percent in corresponding period in 2013. EBITDA for the first nine months of 2014 was NOK 653 million, compared with NOK 456 million for the same period in 2013.

- Throughout 2014, we have systematically implemented measures to increase efficiency. The aim for this process is to enable competitive prices for new projects in parallel with gradual margin improvements. As a first step, we expect to complete the announced 15 percent cost reductions over the next months. However, as we communicated in second quarter, it is challenging to capture the full effect of improvements in on-going projects. The negative cost developments we experienced last quarter have not improved in third quarter, putting pressure on margins says Jan Arve Haugan, President & CEO of Kvaerner.

Order intake in third quarter totalled NOK 2 801 million, including scope of work of jointly controlled entities, compared to NOK 1 594 million in the same quarter last year. As of 30 September 2014, the order backlog, including scope of work of jointly controlled entities, amounted to NOK 19 353 million. Estimated scheduling for the order backlog is approximately 20 percent for execution in 2014, approximately 40 percent for execution in 2015 and remaining 40 percent for execution in 2016 and later.

Kvaerner has enjoyed a high activity level through the past 12 months, and expects this situation to continue into 2015. During third quarter, Kvaerner successfully completed the work on the Transocean Barents drilling rig ahead of schedule. The Hebron GBS was successfully towed out to the deep water site where the remaining construction activities will continue. The Edvard Grieg topside has progressed as planned, and the living quarter and other key sections have now been assembled at Stord and in Egersund. Work on the Nyhamna expansion continues with civil work on site and construction of modules has started in six different fabrication yards. Kvaerner is also a key contractor for the offshore commissioning and project completion for the Eldfisk 2/7 S topside, which was delivered from Kvaerner earlier this year.

- We note that key customers have announced reductions in the plans for both new projects and upgrading of existing facilities. However, the operators demonstrate a strong commitment for progressing with several offshore platform projects. This includes the Johan Sverdrup project, which in itself is the largest market opportunity in decades at the Norwegian continental shelf.  We find that Kvaerner's strategy, with focus on just the segment for new offshore platforms and substructures, now presents interesting opportunities also beyond Sverdrup, Haugan concludes.  

The full report and presentation can be downloaded below and at www.kvaerner.com.

ENDS

For further information, please contact:

Investor Relations: Ingrid Aarsnes, SVP Investor Relations & Communications, Kvaerner,
Tel: +47 67 59 50 46, Mob: +47 950 38 364, email: ir@kvaerner.com

Media: Torbjørn Andersen, VP Communications, Kvaerner, Mob: +47 928 85 542,
email: torbjorn.andersen@kvaerner.com

About Kvaerner:
Kvaerner is a leading provider of engineering, procurement and construction (EPC) services, and delivers offshore installations and onshore plants for upstream oil and gas production 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
3 000 HSSE-focused and experienced employees are recognized for delivering some of the world's most amazing and demanding projects.

In 2013, the Kvaerner group had consolidated annual revenues of close to NOK 13 billion and the company reported an order backlog at 30 September of NOK 19.4 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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