Technip Net Income at EUR 67 Mln
Technip said its operating income was €120 million in the first quarter of 2014, versus €172 million a year ago.
- order intake of €2.8 billion including major Subsea awards such as Block 15/06 in Angola;
- revenue of €2.5 billion;
- operating margins1: Subsea 5.5% and Onshore/Offshore 5.9%;
- net income of €67 million;
- first-time application of IFRS 10, 11 & 12: no significant adjustments except on backlog.
Thierry Pilenko, Chairman and CEO of Technip, commented: “Revenue in both Subsea and Onshore/Offshore segments was above expectations in the first quarter and operating margins were in line.
“In Subsea, we started commercial production at our new flexible pipe facility in Açu, Brazil. We continued to complete the series of projects in the Gulf of Mexico and ramp-up activity on newer, large projects worldwide. In Onshore/Offshore, we handed some older projects over to clients and also started an intensive period of critical execution phases on newer projects which will continue over the next several quarters.
“Concerning our investment program, we held the naming ceremony for the two 550-ton flexlay vessels in South Korea and signed an agreement to take a stake in offshore technology company, Kanfa, in Norway. We also signed agreements for the disposal of several non-core assets.
“Order intake has been very strong in Subsea, with over €2 billion of new orders, including a very large project in Angola on the Block 15/06 development for product supply and installation with offshore phases starting already in 2014. In the Onshore/Offshore segment, a number of smaller and medium-sized projects, for example a medium-sized EPC in Brunei or technology FEEDs, contributed to over €700 million of new orders. We continued to assist multiple clients in the engineering and design of their projects, at both the early and redesign phases. At the end of the quarter, our backlog was €16.3 billion taking into account significant currency effects and before adjustment for IFRS 10, 11 & 12. Our total backlog of €15.4 billion reflects the application of the new IFRS standards. An estimated €7 billion is for execution in 2014.
“Although our clients remained focused on optimizing their investments on both existing and new projects, we continue to see a determination on their part to move ahead with key projects.
“Since the quarter-end, we have been awarded along with our alliance partner, Heerema, a very major Subsea scope on the Kaombo project, Angola, worth more than US$3.5 billion to the alliance. Therefore, we continue to have good visibility embedded in our Subsea backlog which enables us to be selective in our project targeting and to sustain our business should award momentum slow.
“The first quarter Subsea performance (both execution of the current project portfolio and the order intake) underpins our expectation of a sharp improvement in margins in the second quarter. As a result, we remain confident in our ability to deliver our 2014 and 2015 Subsea objectives.
“In Onshore/Offshore, we progressed on the early engineering and long lead items for the Yamal LNG project and the contract closing for the following EPC phase is now imminent. Yamal LNG, which as previously indicated is not currently part of our Onshore/Offshore guidance, is likely to bring incremental revenues over the next two years, notably in 2015. In 2014, the need to ramp-up the project rapidly may come at the expense of winning other short-term engineering studies, and therefore the overall change in revenues compared to current objectives may be marginal. Profit will be recognized on this project as and when it can be reliably estimated from the operational schedule, as usual. If required, updated guidance for Onshore/Offshore reflecting this very large EPC project will be given with our second quarter results.
“Technip holds its Annual General Meeting of shareholders in Paris today. We will reiterate our confidence in the Group’s ability to deliver sustainable and profitable growth in our business over the coming years.”