Bergen Group’s Restructuring Lowers Profit

In the 4th quarter of 2013, Bergen Group had a turnover of NOK 716 million, and a negative operating profit before depreciation and impairment (EBITDA) of NOK 76 million.

An accounting loss due to the sale of the Kimek companies in Kirkenes affects the quarterly profit with NOK 33.4 million.

Bergen Group has spent the 4th quarter organising the Group’s company structure further. In addition to the sale of the Kimek companies in Kirkenes at the end of the year, the operations in Bergen Group Vest Elektro were terminated in the 4th quarter. In 2013 this company had a total operating loss (EBITDA) of NOK 16 million.

CEO Asle Solheim considers the cleaning process necessary in order to create more profitable operations where the industrial area at Hanøytangen becomes the main base for the Group’s future growth.

“Bergen Group is already well underway with further developing Hanøytangen to include far more offshore-related business area than rig service. We expect this process to yield a significantly better foundation for healthy and stable growth in the years to come”, says CEO Asle Solheim. He points out that three new business areas are now being established at Hanøytangen: Maritime service, Subsea & offshore service and Decommissioning projects.

“The purchase of the decommissioning company Scanmet is expected to be completed during the summer. We have reasons to believe that the purchase already will affect the activity at Hanøytangen positively during this year. At the same time we see an increase in the demand for our services towards subsea and other offshore-related service. Here we currently have established competence that depends on better facilities in order to be able to grow further. The coordination at Hanøytangen will provide us with this opportunity”, Solheim points out.

As expected, the Group’s offshore division had a low level of activity during the 4th quarter of last year. During this period Bergen Group Hanøytangen was awarded a new contract for a rig project from Floatel International. This is a new rig customer for the Group, and the project will be carried out during the 1st quarter of 2014. The new project and administration building, with capacity for 150 workplaces, was put into use in January this year, which has improved the office facilities significantly.

So far this year, new framework agreements of close to NOK 100 million have been entered into. One of these is a 4-year service and maintenance agreement with the Norwegian Armed Forces’ logistics organisation (FLO) connected to engine maintenance of the propulsion engines for a number of units in both the Navy and the Army.

“Over a long period of time, Bergen Group has worked purposefully towards further developing the Group’s competence and capacity for the implementation of complex maritime projects. Therefore, we consider the framework agreement with the Armed Forces to be very important in a purely strategic sense as well”, Solheim says.

The Shipbuilding division had during the 4th quarter a turnover of NOK 594 million, and positive operating profits before depreciation and impairment of NOK 4 million. During the quarter, the division has delivered satisfactory development on the existing projects, both when it comes to progress and cost management. The last cruise ferry to Fjord Line was delivered in the first week of February. The ship owner has notified that the ship will be put into use in early March already, three weeks before the original plan.

Today the Shipbuilding division has four projects under construction. Two of these are currently being fully outfitted at Bergen Group Fosen and Bergen Group BMV, and will be delivered in the 2nd and early 3rd quarter this year. The two other projects are under production at the hull yard in Romania, and will arrive in Norway for outfitting later this year. Bergen Group is in the process of finalising the construction funding for these two projects.

Bergen’s Shipbuilding division will be sold to NorYards AS in the 1st quarter of 2014, where the international company Calexco will become the main shareholder.

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Press Release, February 27, 2014