Technip 4Q profit down 9.1%. Order intake on the rise

French oilfield services provider Technip has reported a drop in its fourth quarter 2013 earnings. Full year profit rose 3.6%.

The company’s net profit was 134.5 million euro, a 9.1% decline when compared to the 147.9 million euro earned in the fourth quarter of 2012. For the full year 2013, net income was 563.1 million euro, up 3.6% from EUR 543.3 million achieved in 2012.

Order intake

Capital expenditures net of disposals for the fourth quarter 2013 were €100 million compared to €159 million one year ago. This reflects continued investment in assets such as the Acu facility in Brazil, and the impact of the sale of assets such as older vessels. During fourth quarter 2013, Technip’s order intake was €3,187.6 million, up from €2,975.1 million in 2012.

Subsea order intake was supported by the award of T.E.N project, in Ghana, where Technip will supply and install umbilicals, flowlines and risers. In the North Sea, Technip was also awarded several contracts that included brownfield works, notably diving operations and subsea welding for the Edvard Grieg field. In Malaysia, after the Front-End Engineering Design (FEED), a contract for the installation of 75km of pipeline for the development of Block SK316 was awarded.

Onshore/Offshore order intake included the full notice to proceed for the design and supply of two polyethylene production units, with the company’s construction partner, in the USA. The American downstream market remained active with the award of a technology and FEED for an ethylene project, as well as a FEED for a Gas-To-Liquid (GTL) facility, both located in Louisiana. In Kuwait, Technip was awarded a five-year Project Management Consultancy (PMC) contract to support its client for the development of new facilities as well as for the upgrade of existing ones.

In Malaysia, along with the subsea scope, Technip will design, build and install Block SK316 central processing platform which will be linked to a well-head platform.

Outlook for 2014

In its presentation, Technip said it expected subsea revenue to grow to between €4.35 and €4.75 billion, with operating margin of at least 12% and Onshore/Offshore revenue growing to between €5.4 and €5.7 billion, with operating margin between 6% and 7%.

Thierry Pilenko, Chairman and CEO, said : “2013 was a year of both achievements and challenges. In Onshore/Offshore, our 2013 operational performance was overall in line with our objectives. We made good progress in completing major projects such as the Lucius Spar and the Jubail refinery. In Subsea, after 9 months of revenue and profit growth, we had to revise our expectations for the fourth quarter. However, project delivery was good in many areas, notably for example the North Sea. It is important to note that the Group met all its revised financial and operational goals for the fourth quarter.”

“Throughout the year, we were able to add value to our clients, thanks to our sustained recent investments in people, assets, technology and geographic presence, both organically and by acquisition. Consequently, we were awarded a record level of orders worth €12 billion. These include the first orders for our new A$u flexible pipe plant in Brazil, the Moho Nord project in Congo utilizing our S-Lay fleet, the CP Chem downstream investment in the US and a major project management consultancy assignment in Kuwait, both capitalizing on the Stone and Webster Process Technologies acquisition in 2012.”

Dividend increase

“Our year-end backlog stands at €16.6 billion and is profitable and well diversified by segment, client and geography. Our relatively high level of visibility on our business outlook has enabled us to set out realistic and achievable financial targets for these two years. These targets are reiterated in full today. Accordingly, following the growth in 2013 of our revenues, profit and cashflow, we propose to shareholders a 10% increase in our dividend to €1.85 per share. Looking forward, our clients’ capex continues to increase globally, even if at a more moderate rate than in the past decade. Some themes remain clear in our industry – amongst them the fast depletion of older reservoirs, the abundance of new finds potentially to replace them, a long- term trend towards gas production, the importance of shale oil and gas to the US onshore market. For some years now, larger projects have taken longer to sanction, but recent actual project awards as well as announcements confirm that our clients remain focused on moving most of them forward. More and more, they are engaging their supply chain in the definition and implementation of fit-for-purpose solutions.”

FLNG benefits

“Technip is well placed to benefit from its presence in regions such as Brazil, Africa and North America, as well as technology areas such as (F)LNG, where client investment is rising. We are consistently able to help our clients optimize their investments, participating in projects from conceptual, through to FEED and, notably, value-engineering phases. We can offer technology and engineering solutions to make projects, large and small, cost-effective. We see the benefits of our positioning today in our ability to take many projects on the basis of our added-value. For the medium-term, this is manifested in a growing number of long-term alliances with clients and industrial partners, such as Shell, ExxonMobil, BP, Sasol, COOEC, Huanqiu and Heerema.”

Growth expectations

“Our focus in the year ahead will be on demonstrating our execution capability, delivering our projects safely and reliably, so as to drive profitable growth over 2014, 2015 and beyond. We will maintain our strategic direction – profitability and diversification in our project portfolio, prudent investment in key assets, development of proprietary technology, and being closer to our clients through local presence and investment. We expect the result to be a reinforcement of our leading position in our industry.”