Interim Results 2017 Prepared for next generation offshore windturbines. 24 August 2017

Transcription

1 Interim Results 2017 Prepared for next generation offshore windturbines 24 August 2017

2 Representing Sif today Jan Bruggenthijs Chief Executive Officer 38 years industry experience on the management boards of: - GTI (currently part of Engy) - Stork Industry Services - Hertel Middle East - Eriks Continental Europe west Leon Verweij Chief Financial Officer 30 years industry experience as CFO of: - Royal IBC - Royal Volker Wessels - Smulders (interim) - Ballast Nedam (interim) 2

3 Open Helden production facility for vessels 1948 Infographic on Sif s Strategic Phases Transformational history Start-up phase Rapid growth phase ( ) 1961 Silemetal founded by Jan Jacob Schmeitz as metal working company in Sittard Focus on foundations (sleeves, piles and legs) for oil & gas and large pressure vessels Transfer to new facility in Roermond Egeria Capital acquires 82.5% in Sif 2000 Redefine the business phase ( ) 2005 Change of strategy to focus on offshore wind: first mover in monopiles/transition piece fabrication Facility upgraded to 13 halls with 3 expanded production lines 2010 Completion of second wind production line totaling 11 halls and 3 production lines Accelerated growth phase (2014-present) Listing at Euronext and successful placement of shares Completion of Maasvlakte 2 facility Rotterdam and first MPs produced and delivered Completion of second production line at Maasvlakte 2 Rotterdam and renewal and realignment of production lines at Roermond Ongoing 2017

4 Sif at a glance Leading provider of mission-critical steel foundations to offshore wind and oil & gas markets Key business description A leading manufacturer of customized tubular components up to 11 meters in diameter for offshore foundations Highly automated and flexible production facilities located along key waterways in the Netherlands (Roermond and Rotterdam main port) Technology leadership in rolling and welding of heavy steel plates up to 15 cm wall thickness, based on more than 65 years of experience and innovative processes developed in house Trusted supplier to longstanding, entrenched customer base Key products Offshore Wind 91% 1) Monopiles Platform Steel tube TP Ladder J-tube MP Jackets Large monopiles ( MPs ) and primary steel sections of transition pieces ( TPs ) for offshore wind turbines Key facts Upon completion of the Rotterdam facility, there will be a total annual delivery capacity of 300 Kton including a capacity for XL monopiles of 150 Kton EBITDA: 33.7 (HY ) Tonnage: 108 Kton (HY Kton) Free float: >44% (11.2 m shares) Some of our blue chip clients Direct Indirect Steel tube Produced by Sif Offshore Oil & Gas Jackets Legs Bracings Legs, pile sleeves, bracings and piles for oil & gas rigs Direct Indirect 9% 1) Pile sleeves Piles Produced by Sif 1) Based on HY 2017 production in kton

5 Operational and financial highlights in the first half of Healthy business environment (CEO Jan Bruggenthijs) Business environment for European offshore wind has further improved: According to Make consultants present Lower Levelized Cost of Energy may lead to shift from onshore to offshore Unsubsidized contract wins for 3 recent German projects Operational results in first half of 2017 satisfactory, but lower than HY 2016 Successful deliveries for Blyth, Galloper and Rentel Successful deliveries for Sverdrup and Beatrice Commissioning of second production line in new plant on track Renewal and realignment of production facilities in Roermond are on schedule 5

6 Business environment has improved for offshore wind Capacity addition offshore for top 20 markets₂ Offshore Wind GW IN TOTAL 2 Far East USA & Canada Europe First projects with zero subsidies (He Dreiht, OWP West and Borkum Riffgrund West II)₂ LCOE for Germany, UK, Netherlands below 100/MWh in 2017; expected to drop below 60/MWh by 2022₂ Turbines get larger (13-15 MW under development), stable at water depths of meters More offshore wind initiatives in Far East and US Installed offshore capacity of 24.6 GW by Offshore Oil & Gas Activities for oil & gas demand higher pricing levels Average UK Brent oil price in first half 2017 above USD 50 per barrel Though improved on 2016, still low for offshore exploration and development of new fields Organization Reinforce organization and cost-leadership (internal) Pull production system introduced (process to project orientation) Further optimize and innovate key processes (rolling, welding) Implement ERP system Appoint new CFO ₁ Source: WindEurope; key trends and statistics 2016 ₂ Source: MAKE Consultants 6

7 Sif operational highlights in first half of 2017 Key offshore wind projects Blyth (gravitybased) and Rentel

8 Sif operational highlights in the first half of 2017 Key offshore wind project Galloper

9 Sif operational highlights in the first half of 2017 Components for Aegir jacket for Sverdrup (offshore oil & gas) and piles for Beatrice jackets (offshore wind)

10 Maasvlakte 2 facility: commissioning of second production line nears completion Commencement of steel construction for the foundations of the assembly and coating hall at Maasvlakte 2 facility Completion of steel construction and floor of assembly and coating hall Installation of overhead cranes First production MPs Commencement of coating of MPs Completion and delivery of first MPs Arrival of innovation jackup vessel Transportation of assembly line 2 from Roermond to Maasvlakte 2 Rearrangement Roermond Change to full-scale can/ cone production Full production capacity in both Roermond and Rotterdam Full capacity of 300,000 ton p.a. Q Q Q Q HY First load in of sections in August 2016 First production in September 2016 First coating in October 2016 First delivery of monopiles in December 2016 First arrival of jackup vessel in January 2017 Commissioning of second production line in August 2017

11 Operational and financial highlights in the first half of Financial results on track (CFO Leon Verweij) Total production in Kton 11% higher at 108 Kton compared to the first half of 2016 Results HY 2017 lower than HY 2016, due to: Exceptional project results in the first half of 2016 Higher than anticipated recurring and non- recurring costs relating to set up costs Rotterdam facility and start- up expenses Financial performance on schedule to meet forecast Contribution % to 74.4 million on production of 108 Kton (97 Kton 2016) Contribution per Kton increased by 2.5% from 671 to 688 Normalized EBITDA 8.7% to 33.7 million ( 36.9 million HY 2016) Revenue million ( million HY 2016) Working capital at HYE 18.1 million ( 8.3 million YE 2016) Net debt at HYE 47.7 million ( 42.0 million YE 2016) Orderbook Kton 11

12 Development of contribution Contribution by segment FY ( m) Contribution by segment HY ( m) FY 2013 FY 2014 FY 2015 FY HY 2015 HY 2016 HY 2017 Offshore Wind Oil & Gas Other Revenue Offshore Wind Oil & Gas Other Contribution is leading financial indicator because it excludes: Steel price fluctuations Raw materials supplied by customers Level of sub-contracting 12

13 Development of EBITDA EBITDA FY ( m) 70 65, FY 2013 FY 2014 FY 2015 FY 2016 EBITDA EBITDA normalized EBITDA HY ( m) HY 2015 HY 2016 HY 2017 EBITDA EBITDA normalized The change in EBITDA was mainly due to: A slow start to 2017 with set-up costs, training and maintenance Longer-than-expected production line adjustments to facilitate larger products (including Hohe See) Relatively low production efficiency due to factors including the required fine-tuning of transfers from Roermond to Rotterdam Normalized for IPO-related costs, 1.4 million in HY 2017 versus 4.8 million in HY

14 Stable operating working capital requirement Operating working capital ( m) Comments ( m) Current operating assets Operating working capital Current operating liabilities Healthy working capital dynamics Maintenance CAPEX approx. 4-6 million per annum and 6-8 million per annum following completion of Maasvlakte 2 plant Expansion program Maasvlakte 2 and Roermond ( 90 million) completed Q Total CAPEX in 2017 approx. 25 million (50) (100) (150) 31-Dec Jun Dec Jun-17

15 Operational and financial highlights in the first half of Offshore wind market continues to show momentum (CEO Jan Bruggenthijs) Realized production in first half of 2017 and order book for 2017 basis for approximately 230 Kton of production in full-year 2017 Full Year 2017 outlook: EBITDA shortfall in second HY 2017 compared to second HY 2016 roughly half of EBITDA shortfall in first HY 2017 compared to first HY 2016 Projects planned for grid connection in 2020 shift to 2021; production of foundations planned for 2018 consequently shift to 2019 Monopiles remain the foundation of preference, with an 80% market share of all offshore wind foundations 15

16 Offshore wind market continues to show strong momentum Growth in offshore wind Expected annual global and European offshore wind installations (in GW) (by grid connection/commissioning date)₁ global The governments of Germany, Denmark and Belgium backed a pledge to install 60 GW of new offshore wind power next decade, more than five times the existing capacity. Date: 8 June 2017 Source: Bloomberg; Jess Shankleman Europe 9.0 The world could see as much as 237MW of floating offshore wind capacity installed by Date: 26 March 2017 Source: Bloomberg New Energy Finance (BNEF) Offshore wind now at the heart of UK economy growth. Date: 23 January 2017 Source: Rechargenews Consortium builds Borssele 3 and 4 for historically low price. Date: 12 December 2016 Source: AD First U.S. offshore wind farm begins operation. Date: 21 December Source: Offshore Wind Industry Europe's offshore wind industry booming as costs fall. Date: 20 October 2016 Source: The Guardian 2017E 2020E 2021E 2024E! Foundation components sold to customer 1-2 years on average prior to grid connection date ₁MAKE consultants Q2/2017 global wind power market outlook update 7 June 2017

17 and there is a strong outlook for the longer term Formulated government ambitions post ) Target of 41GW by 2030; OW at heart of UK growth Goal of 6.5GW of grid-connected offshore wind power by 2020 and target of 11GW by 2025; 4 projects tendered in new tender system (January 2017) Target of 4.5GW by 2023 Borssele I and II awarded to DONG, Borssele III and IV awarded to consortium of Shell, Van Oord, MHI and Eneco Aim to limit global warming by 2 Celsius Target of 100% renewable energy future by 2050 Target of 40% electricity from renewable sources by ,000MW of offshore wind to be realized by 2025 and decided that nuclear power will be phased out by ) Source: Public announcements.

18 Updated market demand with latest grid connection estimates Expected total monopile capacity 2) and demand 1) (kt) Expected XL monopile capacity 2) and demand 1) (kt) Market demand Sif Sif Maasvlakte 2 addition EEW Steelwind Ambau Bladt 1) MP demand shifted 1.5 years from grid connection planning. Sif expects 88-90% of MPs to be XL 2) New EEW facility added Source: Sif (capacity, XL %, % MP foundations); Europe Wind (total GW connected); MAKE (turbine ratings, MP weight, % MPs, all partly extrapolated.) 18

19 Order book for 2018 a priority Order book (Kton) Comments Order book for 2017 filled with 230 Kton contracted Galloper, Rentel, Beatrice, Hohe See and Norther in production in Kton contracted for 2018 Demonstrates volatile character of the project-driven industry with few large projects shifting to 2021 grid connection (France, The Netherlands) 0 FY 2016 FY 2017 FY 2018 Total production capacity Order book - exclusive negotiations Order book - contracted

20 Commissioning of 2nd production line 20

21 Appendices

22 Comparison price for offshore wind to other competitive energy sources 2016 LCOE Global ranges and baselines Source: MAKE Consultants presentation 25 January 2017 Based on the most recent offshore wind strike prices in the Netherlands and Denmark, LCOE levels of around EUR/MWh are expected for final investment decisions taken in 2017.

23 Offshore wind industry cost reduction pathways Offshore wind LCOE structure in 2016 Key drivers for LCOE reduction Foundation 4% Array Electrical 1% Transmission 4% Installation 4% Tower 1% OMS 22% Blades 3% Turbine 7% Project 1% T-Opex 12% Finance 41% Reducing cost of capital (44%) Higher efficiency in maintenance and service (16%) Higher efficiency in transmission of energy (15%) Using larger turbines (14%) Sif is nevertheless focusing on reducing costs through: Faster and more flexible production with the twin line production facilities at Maasvlakte 2 Reducing welding gap Research into integrated foundation/tower designs Integrated cost-savings with installation company Transmission OPEX All operational, inspection and service costs of the transmission assets of the wind farm for its lifetime, plus any grid charges Based on a typical 500 MW wind farm in 25m water depth with MPs and 8 MW turbines and a 40km HVAC connection distance and WACC of 8.9% and FID in 2016 A reduction in WACC from 10% to 5% would drop LCOE by over 30% and the LCOE share of finance cost to below a third. - Giles Hundleby, CEO at BVG Associates in Offshore Wind (no ) Source: BVG Associates October 2016

24 > Disclaimer Some of the statements contained in this release that are not historical facts are statements of future projections and other forward-looking statements based on management s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those in such statements. Historical results are no guarantee for future performance. Forward-looking statements are subject to various risks and uncertainties, which may cause actual results and performance of Sif s business to differ materially and adversely from the forward-looking statements. Certain forward-looking statements can be identified by the use of forward-looking terminology such as believes, may, will, should, would be, expects or anticipates or similar expressions, or the negative thereof, or other variations thereof, or comparable terminology, or by discussions of strategy, plans, or intentions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this release as anticipated, believed, or expected. Sif does not intend, and does not assume any obligation, to update any industry information or forward-looking statements set forth in this release to reflect subsequent events or circumstances. The content of this trading update is for information purposes only and not intended as investment advice, or offer or solicitations for the purchase or sale in any financial instrument. Sif does not warrant or guarantee the completeness, accuracy, or fitness for any particular purposes in respect of the information included in this release. > 24