First quarter results 2012 1
Our strategic pillars HSE CORE VALUE AND LICENCE TO OPERATE Findings and improvements from Verdal accident Key criteria for being awarded Nyhamna contract MAINTAIN AND DEVELOP HOME MARKETS Several important contract awards: Two jackets, an onshore EPCM contract and a topside Continued high tendering activity INTERNATIONAL EXPANSION Detailed engineering and EPC related services for Hebron GBS Browse TLP tender submitted with partner COOEC HANDS-ON MANAGEMENT Ekofisk jacket and bridge support delivered Strategic and selective approach to prospects 2 Kvaerner 2011
Recap from previous quarters STRONG MARKET HIGH TENDERING ACTIVITY CHALLENGING UNCERTAIN PROJECTS 2012 UNCERTAIN 2012 JACKET CAPACITY 3
Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 192 169 159 2 623 2 388 249 3 004 3 722 3 947 464-1 336-1 264-1 280-1 028-717 Key financials Revenues NOK million 4 500 EBITDA NOK million 500 Net current operating assets NOK million 4 000 450-200 3 500 3 000 2 500 2 000 1 500 1 000 400 350 300 250 200 150 100-400 -600-800 -1 000-1 200 500 50-1 400-1 600 4
Order intake and backlog Order intake NOK million Order backlog NOK million 8 000 18 000 7 000 16 000 6 000 14 000 5 000 12 000 10 813 4 000 3 000 3 197 10 000 8 000 6 000 2 000 4 000 1 000 2 000 0 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 0 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Upstream Downstream & Industrials For execution in 2012 For execution in 2013 For execution in 2014 5
First quarter operations 6
Health, Safety and Environment - keystone in our strive towards operational excellence HSE status: 7 incidents with 9 injuries Verdal accident Pro-active approach to improve Lagging indicators: Lost time incident frequency (LTIF) Per million work hours and 12 months rolling averages 1 0,5 0 Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Total recorded incident frequency (TRIF) Per million work hours and 12 months rolling averages 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar 7
Operations and market UPSTREAM CONCRETE JACKETS NORTH SEA INTERNATIONAL DOWNSTREAM & INDUSTRIALS E&C AMERICAS Sakhalin-1 project: nearing completion New milestone, Hebron GBS Ekofisk jackets delivered Nordsee Ost: 15 jackets completed Clair Ridge nearing halfway mark Martin Linge and Edvard Grieg projects in engineering Eldfisk topside fabrication started Investment in facilities at Stord Official inaguration of carbon capture test center (TCM) Kashagan Hook-up close down until summer 2012 Browse tender submitted V&M MEP project progressing per acceleration plan FEEDs and studies on going STRONG MARKET IN ALL BUSINESS AREAS. STRATEGIC AND SELECTIVE APPROACH REQUIRED 8 8
New contracts in April and May Ormen Lange delivered with Kvaerner as main contractor in 2007. EPC contract for Lundin s Edvard Grieg topside of NOK 8 billion. 9
High number of EPC prospects North Sea Hejre Edvard Grieg Martin Linge Mariner Bressay Aasta Hansteen Dagny Draupne Victoria Tommeliten Snorre Skrugard Johan Sverdrup Havis Ormen Lange Kollsnes Snøhvit Phase II Nyhamna expansion From the Q3 presentation in November 2011. 10
Future NCS topside demand of 37 tonnes per year Topside tonnes delivered historically and forecasted demand Metric tonnes 60000 Kvaerner Other Future 50000 Future peak NCS topside demand ~45 tonnes per year 40000 Future NCS topside demand ~37 tonnes per year 30000 High share concrete developments 20000 10000 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 11 Source: Rystad Energy team research and analysis, Kvaerner data
Topside capacity gap on the NCS NCS Demand and current estimated Norwegian yard capacity for greenfield topside construction Annual thousand tonnes 35-40 ~15 ~30 Demand/ capacity gap 12-15 Stord Others Total capacity in Norway Average demand 2012-2020 12
Delivery of 20 tonnes of integrated topsides annually from 2014 Studies Concept FEED E Engineering P Procurement C Construction Commissioning In house Subcontracting 13
Kvaerner s market position Solid track record in strong home market Preparing for further growth Facing tough global competition 14
First quarter financials Eiliv Gjesdal, Chief Financial Officer
Income statement Amounts in NOK million Q1 2012 Q1 2011 Full year 2011 Operating revenue 2 388 3 722 13 295 EBITDA 159 464 1 073 Depreciation and amortisation (15) (12) (54) EBIT 144 452 1 019 Net financial items, including result from associated companies and JVs (2) (1) (116) Profit before tax 142 451 903 Income tax expense (50) (130) (344) Net profit 92 321 559 EBITDA margin 6.7% 12.5% 8.1% 16
Revenue distribution Share of revenues 2010 Percent Share of revenues 2011 Percent Share of revenues last 12 months Percent NOK 13.2 billion North Sea NOK 13.3 billion Jackets NOK 12.1 billion Jackets 17 Important projects in 2010 Sakhalin-1 Gjøa delivered Kollsnes onshore Mongstad Test Centre Kashagan HUC Cameron LNG delivered Longview Gulf LNG Important projects in 2011 Sakhalin-1 Gudrun jacket delivered Clair Ridge jackets Nordsee Ost wind jackets Skarv FPSO delivered Kollsnes onshore delivered Eldfisk Kashagan HUC delivered Longview delivered Gulf LNG delivered Important projects Sakhalin-1 Gudrun and Ekofisk jackets delivered Clair Ridge jackets Nordsee Ost wind jackets Skarv FPSO delivered Kollsnes onshore delivered Eldfisk Kashagan HUC delivered Longview delivered Gulf LNG delivered
Increased visibility Order intake NOK million 16 000 Order backlog NOK million 30 000 14 000 12 000 10 000 8 000 25 000 20 000 15 000 2015 & later 2014 6 000 4 000 3 197 10 000 2014 2013 2014 2013 2013 2 000 5 000 2012 2012 2012 0 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 * 0 Q4'11 Q1'12 Q1'12* Upstream Downstream & Industrials * Contracts announced from 1 April to 8 May 2012 * Including announced order intake in Q2, but excluding revenues for Q2. 18
Q1 2012: Downstream & Industrials review Financials Low activity level for Houston EPC centre until new EPC projects awarded Union Construction around break even level until Longview is concluded Orders Growth in existing contracts Various growth in steel industry services Revenues, EBITDA and EBITDA margin NOK million Order backlog and order intake NOK million 1000 500 673 345 549 850 496 2 000 1 500 1 404 1 558 1 376 1 287 1 130 0-500 EBITDA margin 3 3-39 -15-300 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 0.4% (86.7)% (7.1)% (1.8)% 0.5% 1 000 500 0 537 716 298 381 104 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Revenues EBITDA Order backlog Order intake 19
Q1 2012: Upstream review Financials Activity level reflecting projects in an early phase EBITDA positively affected by release of contingencies Orders Edvard Grieg jacket of NOK 1.1 billion Martin Linge jacket of NOK 1.2 billion Revenues, EBITDA and EBITDA margin NOK million Order backlog and order intake NOK million 4 000 3 000 2 000 1 000 0 EBITDA margin 3 600 3 058 2 052 2 176 1 891 477 554 253 287 196 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 15.6% 15.4% 12.3% 13.2% 10.4% 15 000 10 000 5 000 0 14 273 11 738 10 482 8 834 9 683 6 955 2 817 1 068 789 573 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Revenues EBITDA Order backlog Order intake 20
The current EPC project portfolio 2011 2012 2013 2014 Value at award Kashagan HUC USD 1.6B Mongstad TCM NOK 525M Sakhalin-1 USD 600M Ekofisk jacket Undiscl. Nordsee Ost EUR 115M Clair Ridge NOK 1.7B Eldfisk NOK 5.5B V&M Star (MEP) Undiscl. Edvard Grieg jacket NOK 1.1B Martin Linge jacket NOK 1.2B Nyhamna onshore Edvard Grieg topside NOK 6B NOK 8B Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 21 North Sea International Jackets Concrete E&C Americas
Cash flow and working capital Amounts in NOK million Q1 2012 Q1 2011 Full year 2011 Cash flow from operating activities (385) 831 1 069 Cash flow from investing activities (39) (42) (231) Cash flow from financing activities 0 4 (1 105) Translation adjustments 47 58 8 Net increase/(decrease) in cash and bank deposits (376) 851 (259) Net current operating assets (NCOA) NOK million 1 000 500 0-500 -1 000-1 500-2 000 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'11 Downstream & Industrials Kvaerner Group Upstream The EPC business is cash positive through negative working capital: Customer pre-payments¹ of NOK 248 million Downstream & Industrials: Capital tied up in the Longview project ¹ Invoicing in excess of cost and estimated earnings less amounts billed in advanced but not received (on a project by project basis). 22
Balance sheet Amounts in NOK million Q1 2012 Q1 2011 Full year 2011 Assets Total non-current assets 1 980 1 728 1 954 Prepaid company tax 184 93 169 Current operating assets 2 651 4 402 2 256 Other current assets 20 2 026 25 Total cash and bank 2 043 3 528 2 418 Total assets 6 878 11 778 6 823 Total equity 2 582 2 857 2 445 Non-current interest bearing liabilities 462 509 460 Other non-current liabilities 174 223 161 Current operating liabilities 3 368 5 740 3 491 Current tax liabilities 292 0 257 Other current liabilities (0) 2 449 8 Total liabilities 4 296 8 920 4 378 Total equity and liabilities 6 878 11 778 6 823 Equtiy ratio 38 % 24 % 36 % Net cash 1 642 3 903 2 012 Access to liquidity totalling NOK 4.1 billion 23
Summary and closing remarks 24
Number of EPC prospects higher than in decades North Sea Jackets International Concrete E&C Americas Martin Linge Mariner Bressay Aasta Hansteen Dagny Draupne Victoria Tommeliten Snorre Skrugard Johan Sverdrup Havis Ormen Lange Kollsnes Snøhvit Phase II Montrose/Arbroath Dagny Draupne Mariner Bressay Johan Sverdrup Peregrino Jackdaw Nordsee Ost extension Browse Other international prospects on a case by case basis White Rose Hebron GBS EPC-phase Piltun South Petchora LNG Kammennomyskoye Yamal Dolginskoye Amuligak LNG-Liquefaction Gas processing/syngas Chemical/phosphates Heavy oil Refining Steel Pipe manufacturing industry Gas fired power plants Plant maintenance and services Power plant environmental compliance projects Existing and prioritised markets Note: The list is not exhaustive or indicative of Kvaerner s priorities. 25
Summary and closing remarks Highlights Substantial increase in order backlog Uncertain 2012 financial results Market opportunities requires selective approach HSE core value and licence to operate Maintain and develop home markets International expansion Hands-on management 26
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