Kvaerner Reports Positive Development in Q1 Results

Kvaerner delivered a strong positive development in the financial results compared to one year ago.

Operating revenues for the first quarter 2014 were NOK 3 489 million, which is an increase of 31 percent compared to NOK 2 663 million in first quarter in 2013. The EBITDA was NOK 170 million, an improvement of 55 percent compared to the EBITDA of NOK 110 million one year ago. The EBITDA margin improved to 4.9 percent in first quarter 2014 from 4.1 percent for the corresponding quarter last year.

“We deliver predictably, both in terms of the projects we execute for our customers, and with respect to our financial results. Our immediate priority is to execute our existing project portfolio safely and according to plans and budgets, continuing the positive trend we have established,” says Jan Arve Haugan, President & CEO of Kvaerner.

Kvaerner is a leading contractor for deliveries of complete upstream oil and gas offshore platforms and onshore plants to oil companies. The high activity and good utilisation of resources continued in first quarter 2014. The order intake in the first quarter of NOK 1.3 billion included two completion contracts for the Aasta Hansteen project, in addition to some growth in existing contracts.

“This is an industry with a high degree of visibility with respect to when new projects can be expected. We knew already one year ago that we would have 12 – 18 months with relatively few project awards. This has not been, and is not today, a big concern for us, as we a year ago had an order backlog of almost NOK 30 billion. At the end of first quarter of 2014, our order backlog was almost NOK 20 billion, which will be reflected in high activity level this year and next year. Simultaneously, there are many new projects up for bidding in 2014 and 2015. We are optimistic about Kvaerner’s opportunities in our target markets,” says Haugan.

During May 2014, the Jackets business area will complete the Martin Linge jacket for Total at the Verdal fabrication yard. This is currently the last jacket order but the organisation will be utilised on other on-going projects and the Verdal yard will contribute with fabrication for the Nyhamna onshore expansion project.

“We are evaluating the opportunities for future jacket fabrication at Verdal. We will conclude before the summer how we view the opportunities for continuing this production.”

At the fourth quarter presentation in February, Kvaerner announced that the on-going improvement initiatives are targeted to result in a 15 percent cost reduction for a typical EPC project.

“I am pleased to say that the implementations of these improvements are gaining momentum. Much hard work remains but I must both thank and congratulate the organisation for the dedication everyone demonstrates. I am confident that our improvements will ensure that we are in a good position to win the new projects we prioritise to bid for,” Haugan concludes.