Kvaerner ASA: 4th quarter 2016 - Solid results through predictable project executionSolid results through predictable project execution. Kvaerner delivered an adjusted EBITDA of NOK 219 million in the fourth quarter, and NOK 680 million for 2016. "Predictable project execution coupled with cost reductions and productivity improvements continue to be the key drivers behind our strong performance," says Kvaerner's President & CEO Jan Arve Haugan.
Kvaerner delivered solid operational performance in fourth quarter, driven by successful execution and completion of milestones in the projects. The effect of better performance and improved project-portfolio mix has resulted in a higher margin compared to last year.
In the fourth quarter 2016, total revenues, including jointly controlled entities (Field Development segment), amounted to NOK 2 378 million, compared to NOK 3 334 million in the fourth quarter last year. Adjusted EBITDA, including jointly controlled entities, ended at NOK 232 million (9.7 percent EBITDA margin), up from NOK 202 million (6.1 percent EBITDA margin) in the corresponding quarter in 2015. Net cash inflow from operating activities was NOK 244 million in fourth quarter.
"During one and the same week in December, we flawlessly executed three very well planned, major operations. Common for all three - Hebron GBS, Njord A and the Johan Sverdrup riser platform jacket - was extremely high precision and safe execution. Delivery of such important parts of the complex projects predictably is the best possible marketing for new contracts," says Jan Arve Haugan.
Order intake in the fourth quarter was NOK 768 million. Per 31 December 2016, Kvaerner's order backlog, including Kvaerner's scope of work of jointly controlled entities, was NOK 6 459 million, down from NOK 8 397 million at the end of the third quarter.
"From 2014 to 2016, we improved our cost base for new projects with about 15 to 20 percent. From 2016 and into 2017, we continue the improvements. Our ambition is that we for new topside bids in 2017 have a cost base which is 20 to 25 percent lower than what we had three years ago. We see some important upcoming prospects in the market. The reduced cost base combined with a predictable delivery model will enhance our competitive position and should be seen as a strong enabler to increase our order book," says Jan Arve Haugan.
Subsequent to the quarter, Kvaerner has been awarded a NOK 450 million contract for offshore hook-up of the Johan Sverdrup riser platform, plus a NOK 200 million decommissioning contract.
Full year 2016 results
Total operating revenues, including jointly controlled entities, were NOK 10 364 for the full year 2016, compared with NOK 14 917 in 2015. EBITDA, including jointly controlled entities, ended at NOK 741 million for the full year 2016 (EBITDA margin 7.1 percent), up from NOK 613 million for the full year 2015 (EBITDA margin: 4.1 percent). At the end of the year, Kvaerner's credit facilities were undrawn and net cash was NOK 3 billion.
The Board of Directors has proposed no dividend distribution for second half of 2016. A robust balance sheet and cash position is important to maintain resilience through the challenging cycle and it should support the ambition to come out of the period with an even stronger business. The solid financial position is a competitive lever when positioning for new contracts. It also provides flexibility to pursue selected opportunities for strategic development.