Norwegian STX OSV Reports Increased Revenues
STX OSV Holdings Limited, a major global designer and shipbuilder of offshore and specialized vessels headquartered in Norway, announces its results for the second quarter and first half ended 30 June 2012.
Financial and Operating Review
STX OSV generated revenue of NOK 3,337 million for 2Q 2012, representing a 22% increase from the same period in 2011 due to normal fluctuations in the project portfolio. First-half revenues of NOK 6,148 million were up 4% compared to the same period in 2011, reflecting generally stable operations in a favorable business environment, particularly in Norway, Romania and Vietnam. STX OSV witnessed good yard utilization and 11 successful vessel deliveries during 1H 2012. In Romania, an investment program is underway to improve efficiency and throughput.
The Group’s EBITDA margin (EBITDA to total revenue) came in at 13.8% this quarter, dropping from an extraordinarily strong 16.4% achieved in 2Q 2011, but stabilizing 1H 2012 margins at a still high 13.9%. The cash position remained strong during the second quarter. Cash and cash equivalents stood at NOK 3,329 million as at 30 June 2012, largely boosted by NOK 750 million of net cash generated at the operating level during the quarter.
Mr Roy Reite, Chief Executive Officer and Executive Director of STX OSV, said, “We are encouraged by the continued demand for high-end vessels in the subsea market which has led to strong order intake for STX OSV for the first half of this year. We will continue working towards cohesively strengthening the efficiency and stability of our operations across the network.”
Brazil Operations and New Yard Project
The Group is experiencing delays in several projects at the existing Brazil yard in Niterói mostly due to general yard overload, temporary supplier constraints, and bottlenecks in access to subcontracting capacity. The Group maintains prudent risk management procedures to mitigate the effects of these delays. The financial impact has been accounted for on an ongoing basis, weighing slightly down on Group average margins. Improvement measures have been put in place, including strengthening of the yard organization, as well as an agreement with Rio Nave shipyard for sub-delivery of steel hulls to alleviate capacity constraints.
Meanwhile, work on the new yard in Brazil, STX OSV Promar (“Promar”), is progressing well and shipyard construction is currently approximately 40% complete. Shipbuilding activities are scheduled to begin in the second quarter of 2013, in line with previous estimates. Steel hulls for two of the eight LPG carriers for Transpetro scheduled for delivery from Promar until 2016 will be built at Rio Nave to ease operational pressure, and potentially allow construction of core offshore and specialized vessels to begin earlier at Promar.
Orders, Deliveries and New Contracts
During 2Q 2012, contracts for eight new vessels were secured, and total order intake amounted to NOK 4,986 million. Six vessels were delivered during the quarter, bringing STX OSV’s total order book to 55 vessels and outstanding order book value to NOK 18,267 million as at 30 June 2012. 31 of the vessels in the order book will be of STX OSV’s own design. Since the end of 2Q 2012 STX OSV has firmed up a contract for one additional platform supply vessel (“PSV”) and delivered three more vessels.
The quarter’s strong new order intake has enhanced STX OSV’s average order book length and secured good utilization of yard capacity in Norway and Romania. In Vietnam, workload has been secured for the short to medium by one new order being placed there. The robust order intake for the quarter contributed to the Group’s highest new order intake during the first half of the year since 2007, amounting to NOK 7,328 million.
Outlook: Market Fundamentals Varying by Segment
Despite the Group seeing orders for anchor handling tug supply vessels (“AHTS”) fall slightly behind expectations and lower-than-anticipated day rate levels for AHTS and PSVs currently limiting market opportunities in these segments, a strong subsea construction market continues to drive demand for high-end OSVs. STX OSV is currently engaged in negotiations for projects in several vessel segments including offshore subsea construction vessels (“OSCV”) and other specialized vessels.
Mr Reite concluded, “While ongoing macroeconomic uncertainties are still present, and the financing environment continues to affect order conversion in the short-run, we remain confident in our ability to take advantage of the robust long-term demand for larger, more complex and customized vessels. STX OSV will continue to invest in technology to reinforce our market leadership and competitive edge in the industry.”
Press Release, August 14, 2012