Kvaerner’s Second Quarter in Line with Expectations

Kvaerner delivered results for the second quarter in line with what the company has predicted.

In addition, the order book has increased with new contracts and growth in existing projects. Operating revenues for the second quarter were NOK 2 861 million, while they were NOK 3 278 million in the corresponding quarter last year. The EBITDA was NOK 289 million in the second quarter 2014, compared to the EBITDA of NOK 165 million one year ago. The EBITDA margin improved from 5.0 percent for the second quarter 2013 to 10.1 percent in second quarter 2014.
During the second quarter, Kvaerner completed three large offshore platform projects; the steel substructures for the Edvard Grieg and Martin Linge fields, and the topside for the Eldfisk field.

“Predictability is key in both our strategy and to our competitive edge in the market. In the second quarter, we have delivered three large projects to our customers on schedule and with the specified quality,” says Jan Arve Haugan, President & CEO of Kvaerner.

Kvaerner is a leading contractor for upstream oil and gas installations, and the order book includes the parallel execution of several projects. The increased EBITDA result and margin improvement for the second quarter 2014 includes both positive and negative contributions across this portfolio, including recognition of accumulated profit in a project passing 20 percent progress in the quarter.

The order intake in the second quarter 2014 was NOK 5 360 million, including the Letter of Intent for two steel substructures to the Johan Sverdrup field. This brought the order backlog, including the scope of work of jointly controlled entities to NOK 21 507 million at the end of the last quarter.

“Our first priority remains to be the effective execution of existing orders. In addition, we are working hard to implement further improvements to our productivity and cost level. We see that these initiatives have a limited effect for ongoing projects where there are established agreements with subcontractors and suppliers. For new projects, our aim is that the improvements we now implement will reduce our cost base with 15 percent. We see from the market’s feedback that this is being recognised. The strong order intake in the second quarter documents that we are on the right track to further strengthen our competitive edge,” says Jan Arve Haugan.

The high activity level during the last few years continues, and Kvaerner expects high capacity utilisation throughout 2014 and 2015. There are many prospects in the target regions which are regarded to be a good fit to the company’s expertise, and Kvaerner is optimistic about the opportunities to secure new important contracts over the coming year.