Subsea 7 S.A. (the “Group”) announced results for the fourth quarter and full year which ended on 31 December 2012. Unless otherwise stated, the comparative period is the three and thirteen months ended 31 December 2011 for Subsea 7 SA and the results of Subsea 7 Inc. following the date of Combination on 7 January 2011.
Jean Cahuzac, Chief Executive Officer, said:
“2012 was another year of significant achievement for Subsea 7. We have delivered strong financial results in line with our expectations. We have built a record backlog, exited non-core businesses and successfully completed the integration process following the Combination in January 2011. Our fleet enhancement program is also on track with the start-up of Seven Borealis in Angola, the ongoing construction of Seven Waves, and the recent order of a new-build diving support vessel for the North Sea.
Tendering activity increased through the year, in particular in the North Sea, Africa and Brazil, reflecting our clients’ ambitious investment plans. We remained disciplined in our bidding approach with a focus on project risk management and profitability, and I am pleased with the quality of our new awards and current level of order in-take.
In the light of continued strong performance, the strength of the balance sheet and confidence in our business, the Board of Directors has recommended that shareholders approve the payment of a special dividend of $0.60 per share at the next Annual General Meeting on 28 June 2013. The Board of Directors has stated that it will continue to prioritise value-adding investment opportunities and has reaffirmed its policy of returning excess cash to shareholders either in the form of share buy-backs or dividends.”
“Levels of tendering remain strong and we remain positive about the medium and long-term market prospects. As we have previously highlighted, delays in project awards and supply chain bottlenecks will temper the rate of progress in 2013.
Nevertheless, we expect both revenue and Adjusted EBITDA to show some progress although higher depreciation, finance costs and effective tax rate will negatively impact earnings per share.
West Africa will move through a period of lower offshore activity in 2013 as operations on SURF contracts awarded in the second half of 2012 and early 2013 are projected to start in 2014 and beyond. We see increased tendering in the Gulf of Mexico where client activity is improving. In Mexico we have recently won our first contract, which will require the deployment of Seven Borealis.
In the North and Norwegian Seas tendering levels remain strong. However, much of our backlog was awarded late in 2012 and offshore activity for recent awards such as the Martin Linge contract will commence in 2014. Results for the first quarter 2013 are expected to be impacted by lower vessel utilisation due to planned vessel maintenance and dry-docking, this compares to unusually high utilisation in the prior year period as clients sought to progress projects in spite of the risk of bad weather.
In Brazil, Petrobras’ demand for flexible pipelay vessels (PLSVs) remains strong. We are in discussion for the renewal of four of our vessels as their contracts are due to complete in 2013. In addition we participated in the recently announced Petrobras tender for new-build PLSVs and market award is expected later this year. The Guará-Lula NE project timeline remains consistent with our revised schedule as disclosed in the fourth quarter 2011. We have however increased the estimated full-life project loss by approximately S52 million, in fourth quarter 2012, to reflect a commercial dispute with our client and revised contingencies related to the timing of equipment delivery from key subsea suppliers. Results in the first quarter 2013 will be impacted by planned dry-docking.
In Asia Pacific, tendering levels are slowly improving and we expect projects to come to market award during 2013, with associated offshore activity commencing in 2014 and beyond.
In this growing worldwide market, the key challenges for the industry continue to be the availability of qualified and experienced personnel and the need to manage an increasingly tight supply chain and assure reliability in complex project delivery. We remain focused on addressing these challenges and on maintaining a strong emphasis on risk management and project management processes. Our engineering and project management capabilities, the size of our fleet and our financial strength, position Subsea 7 well for long-term profitable growth.”
Press Release, March 14, 2013; Image: Huisman