HitecVision investor day - Jan Arve Haugan, President & CEO 1 December 2016 - Kvaerner
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HitecVision investor day Jan Arve Haugan, President & CEO 1 December 2016
Well positioned for future market opportunities
1) Leading contractor within proven track record
2) Competitive position strengthened
a) Delivering projects predictably: Safely, on time, with right quality
b) Improved cost position
3) Near term market opportunities in selected regions
4) Solid financial platform
2 © Kvaerner 2016 01.12.2016
Kvaerner’s core expertise
FEED E P C HUC & I DECOM
Concept development / FEED Engineering management Procurement Project Management
Project management
Fabrication Assembly Hook-up and commissioning Tow-out, installation,
Assembly production start
© Kvaerner 2016 01.12.2016
Key issues in 2016
Several clients financially restrained, projects delayed
Oil price lower
Few EPC projects with immediate awards
for longer
Norwegian suppliers have improved competitiveness
Operational Focus on predictable execution of ongoing projects
performance vs Activity provides momentum for further improvements
cost reductions Maintain and develop core competence
Operators with new project execution strategies
New trends and
opportunities Operators establish long term alliances through value chain
New technologies and solutions
4 © Kvaerner 2016 01.12.2016
Improvements yield concrete effects
Joint industry
improvement
Joint
initiatives
initiatives
Productivity with clients
improvements
Reducing internal
costs by NOK
250 mill (2015-2016)
New operating model
Reductions to capacity and administration
Refined and leaner organisation
15% Most Norwegian operations in one unit
improved
cost base
by Q1 2015
5 © Kvaerner 2016 01.12.2016
Meeting the USD 40 / barrel threshold
Total costs for new jackets reduced 17-20% Total costs for new topsides reduced 15-20%
120 120
100 100
Index: % change
Index: % change
80 ~17-20% 80 ~15-20%
60 60
40 40
20 20
0 0
Typical Typical Typical Typical
jackets cost jacket cost topsides cost topsides cost
2012- 2013 for new bids 2016 2010 - 2015 for new bids 2016
6 © Kvaerner 2016 01.12.2016
Ongoing projects progressing well
Johan Sverdrup: EPC contracts for the Riser, Johan Sverdrup: EPC for the utility and living Nyhamna: EPCM onshore contract with options for
Drilling and Process platform steel jackets quarters topside Maintenance and Modifications to 2022.
Hebron: Detailed engineering, procurement, Aasta Hansteen: Sub-contract to provide services
Njord A: Frame agreement for upgrading of the
construction and installation (EPCI) of GBS for inshore and offshore hook-up and
semi-submersible platform
Marine installation commissioning assistance for the topsides
7 © Kvaerner 2016 01.12.2016
Solid foundation, need new contracts
Order backlog development (NOK million) Solid financial platform
30 000
Improved project portfolio
25 000
EBITDA margin increase in
20 000 2016 vs. 2015
15 000 Net cash of NOK 2.8 billion
(incl. NOK 1.5 bn working capital)
10 000
8.4
NOK 2.0 billion in undrawn
5 000 facilities
0
Q3'11 Q1'12 Q3'12 Q1'13 Q3'13 Q4'13 Q2'14 Q4'14 Q2'15 Q4'15 Q2'16
Estimated scheduling as of 30 Sept 2016:
Note: All figures include incorporated joint ventures.
For execution in 2016
8 © Kvaerner 2016 01.12.2016 For execution in 2017 and later
Focus on selected geographic regions
Near term market
Studies and FEEDs ongoing
Some few but important prospects of moderate size:
Completion, hook-up and commissioning, decommissioning, modifications
Greenfield / brownfield EPC for offshore platforms and onshore facilities
9 © Kvaerner 2016 01.12.2016
Few, but important near term NCS opportunities
Trend towards FPSOs and unmanned WHP
NCS project sanctioning (Number of PDOs by year)
SPAR Tieback (subsea tieback with potential host platform
FPSO upgrades, or potential for unmanned wellhead
platforms (WHP) and host platform upgrades)
Fixed platform
Greenfield capex: 28 BNOK/year Greenfield capex: 22 BNOK/year
10 © Kvaerner 2016 01.12.2016 Sources: Rystad uCube, Kvaerner assessmentsBased on core competence, solid financial platform and credibility in the market
Strategic development
Leading EPC & HUC contractor
11 © Kvaerner 2016 01.12.2016Concluding remarks
Safe, predictable execution HSSE – core value and
Continue to strengthen licence to operate
competitiveness
Maintain and develop home
Challenges for capacity utilisation in markets
2017, but some relevant prospects
Develop global delivery model
Use our solid financial platform to for Norway and abroad
develop and grow the business
Hands-on management
12 © Kvaerner 2016 01.12.2016Topsides, floaters & onshore facilities Jackets Concrete solutions 13 © Kvaerner 2016 01.12.2016
Copyright and disclaimer Copyright Copyright of all published material including photographs, drawings and images in this document remains vested in Kvaerner and third party contributors as appropriate. Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction. Disclaimer This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Kværner ASA and Kværner ASA’s (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as “expects”, “believes”, “estimates” or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Kvaerner’s businesses, oil prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation. Although Kværner ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Kværner ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Kværner ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use. 14 © Kvaerner 2016 01.12.2016
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