Kværner ASA: Q4 2015 results: steadily strengthening solidity

Kvaerner continued to strengthen its financial solidity in the fourth quarter in spite of the demanding market. The results reinforce the already strong financial position with no net debt. This also increases resilience against the uncertain market conditions. In the last quarter, the financial result (adjusted EBITDA) grew to NOK 178 million. This is an increase from both the third quarter 2015 and from the fourth quarter 2014, when the EBITDA results were NOK 148 million and 175 million respectively. A good order backlog of NOK 14.3 billion at 31 December gives the company a sound starting point for the activity level through 2016.

The revenues in the fourth quarter were NOK 2 577 million, compared to NOK 3 591 million in the same quarter in 2014. For the full year 2015, revenues were NOK 12 084 million, down from NOK 13 945 million in 2014.

Adjusted EBITDA for the full year 2015 was NOK 536 million, down from NOK 828 million in 2014. Adjusted EBITDA for the fourth quarter was NOK 178 million. The result is a 20% increase from the third quarter 2015, and up about 1.5% from the fourth quarter 2014. The EBITDA margin for fourth quarter 2015 ended at 6.9%, compared to 4.9% in the corresponding quarter in 2014.

The Board of Directors has proposed no dividend distribution during the first half of 2016. A strong balance sheet and cash position is important to maintain the resilience through a challenging cycle. Retaining the solid financial platform may also provide additional opportunities which Kvaerner can leverage in the market.

The order backlog was NOK 14.3 billion at the end of the year, against NOK 16.2 billion the previous quarter, and NOK 16.5 billion at the end of 2014. The company continues to have a strong balance sheet, maintains a negative working capital of more than NOK 1 billion, and a net cash position of almost NOK 1.6 billion. For 2015 and 2016 combined, Kvaerner will reduce overhead cost with approximately 2%. The enhanced competitiveness provides a good position for winning new contracts in a challenging market. In this landscape, the improvements the organisation is in the process to implement have started to yield concrete effects.

Last year, we were awarded almost 90% of the contract values for platform substructures to Johan Sverdrup. In a competitive joint venture with KBR, we were awarded one of the largest topside contracts in the market last year, for the Utility & Living Quarter platform at Johan Sverdrup. For 2016, we see some few opportunities for new contracts of moderate size. Simultaneously, we see that the timing of key decisions is uncertain. This makes it difficult to predict the activity level in 2017, but our order backlog provides a good starting point for our operations in the current year and the next, says Haugan.

Adapted from a press release by Louise Mulhall

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