Kvaerner, an engineering, procurement and construction (EPC) contractor, has reported operating revenues in fourth quarter 2014 amounted to NOK 3591 million, compared with NOK 3 939 million for the fourth quarter 2013.
The decrease from last year is mainly due to reduced activity with in the jackets business. Kvaerner reported operating revenues of NOK 13 945 million for full year 2014, compared with NOK 12 960 million for full year 2013.
Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) for the quarter were NOK 175 million, compared with NOK 180 million in the same period last year.
EBITDA margin for fourth quarter 2014 was 4.9 percent, up from 4.6 percent in corresponding period in 2013. EBITDA for full year 2014 was NOK 828 million, compared with NOK 636 million last year. Goodwill impairment of NOK 266 million in the quarter and full year related to business area Contractors International.
Net financial expense for the quarter was NOK 54 million, including net interest expense of NOK 14 million, loss on foreign currency forward contracts of NOK 13 million, foreign exchange loss of NOK 23 million and other financial expenses of NOK 4 million. Net financial expense for the same period in 2013 was NOK 54 million of which net interest expense amounted to NOK 15 million. Net financial expense for the full year was NOK 105 million, compared to NOK 96 million in 2013.
Net result from associated companies and jointly controlled entities presented below EBITDA amounted to negative NOK 1 million for the quarter and negative NOK 59 million for full year 2014, compared to negative NOK 53 million and negative NOK 78 million in the respective periods in 2013. The full year 2014 result was impacted by impairment charges related to investment in associated company. Loss before tax for fourth quarter 2014 of NOK 166 million compared to NOK 54 million for the same period last year. For the full year 2014, profit before tax was NOK 329 million compared to NOK 399 million for the full year 2013.
Total income tax expense in the period was NOK 137 million compared to NOK 43 million for the same quarter previous year. Tax expense for the full year amounted to NOK 301 million, compared to NOK 160 million in 2013. The tax expense reflects an effective tax rate of 92 percent in 2014 compared to 40 percent in 2013.The relatively high rate compared to the Norwegian statutory tax rate of 27 percent is mainly due to goodwill impairment not being tax deductible, tax provisions related to tax audits,provisions for certain tax credits, deferred tax assets not recognised and paid withholding taxes.
Profit from continuing operations was a loss of NOK 302 million and profit of NOK 27 million for fourth quarter and full year 2014 respectively, compared to NOK 11 million and NOK 239 million in same periods in 2013. Basic and diluted earnings per share(EPS)for continuing operations were negative NOK 1.12 for fourth quarter, compared to NOK 0.04 for fourth quarter 2013. Basic and diluted EPS per share were NOK 0.10 for full year 2014 compared to NOK 0.89 for full year 2013.
Net loss from discontinued operations was NOK 25 million for fourth quarter 2014, compared to a profit of NOK 237 million, including gain on sale of assets and operations of NOK 272 million,in same period last year. For the full year, loss from discontinued operations was NOK 96 million compared to profit of NOK 206 million in 2013. There are no operations related to theretained assets following the sale of the onshore construction business in fourth quarter 2013. Remaining activity and costs are related to legacy issues. Basic and diluted earnings per share for discontinued operations were negative NOK 0.09 for fourth quarter 2014, compared to NOK 0.88 for fourth quarter 2013,and negative NOK 0.36 for full year 2014 compared to NOK 0.77 for full year 2013.
Net profit total operations in fourth quarter 2014 was negative NOK 327 million compared to NOK 248 million in the corresponding quarter last year. Basic and diluted earnings per share for total operations for fourth quarter 2014 were negative NOK 1.22 compared to NOK 0.92 in fourth quarter 2013. Net profit for the full year 2014 was negative NOK 69 million compared to a profit of NOK 445 million last year. Basic and diluted earnings per share for total operations for the full year were negative NOK 0.26 and NOK 1.66 for 2014 and for 2013 respectively.
In line with the company’s dividend policy, the Board of Directors proposed to pay a dividend of NOK 0.67 per share in April 2015.
“The results for 2014 mirrors that Kvaerner has had a particular high activity level on several projects in parallel. In addition to utilising the full capacity of our own organisation, we have had a record high number of contract staff and subcontractors assisting us in the execution of this workload. Going forward, we are aiming for an annual activity level of NOK 10 – 11 billion. Kvaerner worked hard in 2014 to improve the results from projects started in a different market situation compared to what we see today. On top of this, claims related to past projects have been settled. In total, these factors have all contributed to a positive development for the results last year,” says Jan Arve Haugan, President & CEO of Kvaerner.
Order intake in the fourth quarter 2014 was NOK 1 274 million, versus NOK 1 925 million in the fourth quarter 2013. The order backlog was NOK 16 451 million at the end of 2014.
“The work to execute the existing order book will mainly be executed this year and in 2016. Hence, Kvaerner’s order book provides a good foundation and momentum for further efforts to increase productivity and improve the cost level. Through 2014, we identified opportunities to cut costs for new projects. The signing of the EPC contract for the steel jacket substructure for the Johan Sverdrup Riser Platform on 20 January 2015 shows that Kvaerner documented that these improvements are implemented. We are not stopping there. Already from the start of 2015, we are taking further, concrete steps in cooperation with our customers to reduce costs and increase competitiveness,” says Haugan.
The company said that Kvaerner’s markets are currently volatile, but the company sees a fundamental, long term demand for offshore platforms and onshore facilities with requirements which fits well with Kvaerner’s strengths. Some few, key contracts with a good match with Kvaerner’s capabilities are expected to be awarded during 2015.
“Even if the long term market fundamentals seem positive, there are only a few important contracts to bid for in 2015. Hence, it is of great importance to us to win key bids in 2015, to enable a continued sound development of Kvaerner as a leading EPC contractor,” Haugan concludes.