26 February 2014
Final Results for the Year Ended 31 December 2013
Download Petrofac's 2013 results in PDF format:
- Revenue up 1% to US$6.3 billion (2012 restated: US$6.2 billion)
- EBITDA(1) up 17% to US$1,031 million (2012 restated: US$883 million)
- Net profit(2) up 3% to US$650 million (2012: US$632 million)
- Earnings per share (diluted) up 3% to 189.10 cents (2012: 183.88 cents)
- Full year dividend up 3% to 65.80 cents per share (2012: 64.00 cents); final dividend of 43.80 cents (26.25 pence(3)) per share (2012: 43.00 cents)
- Backlog(4) up 27% to the record level of US$15.0 billion at 31 December 2013 (2012: US$11.8 billion)
- US$3 billion of new awards in the year to date, which, together with our opening backlog position, gives us good revenue visibility for 2014 and beyond
- Net debt position of US$0.7 billion at 31 December 2013 (2012: US$0.2 billion net cash)
Ayman Asfari, Petrofac’s Group Chief Executive commented on the final results:
“Having delivered modest earnings growth and good operational performance in 2013, we begin 2014 in an encouraging position with record backlog, a project portfolio in excellent shape, a strong bidding pipeline and US$3 billion of new awards already secured in the year to date.
“We see significant long-term growth potential for Petrofac and the depth of capability, skills and talent across the Group gives me confidence that we will continue to build on our proven track record this year and beyond. In line with our previous guidance, we expect flat to modest growth in net profit in 2014 and remain confident of a return to strong earnings growth in 2015.”
ENGINEERING, CONSTRUCTION, OPERATIONS & MAINTENANCE (ECOM)
Onshore Engineering & Construction
- Delivered major projects in Abu Dhabi (GASCO 4th NGL train and Asab oil field development), Algeria (El Merk gas processing facility) and Turkmenistan (Galkynysh gas field development)
- Continued to progress the Upper Zakum project in Abu Dhabi and agreed capacity enhancements with the client
- Commenced full remobilisation on the In Salah southern fields development in Algeria
- Achieved order intake in 2013 of US$6.2 billion, securing major new awards in Abu Dhabi, Algeria and Oman
- Awarded US$2.9 billion of Onshore Engineering & Construction projects in 2014 to date in Kuwait (Clean Fuels Project for KNPC) and Oman (Khazzan gas development for BP)
Offshore Projects & Operations
- Awarded US$500 million SARB3 project offshore Abu Dhabi: our largest EPCI project to date, demonstrating the demand for us to broaden our market-leading EPC capability offshore
- Built on our strong position in Iraq with a US$100 million extension to our contract with South Oil Company and a new award worth US$95 million with Gazprom on the Badra oilfield
- Awarded a US$50 million three-year operations and maintenance contract in Oman for Oman Oil Company Exploration and Production LLC
- Placed all critical path lump-sum orders to build our new proprietary design “Petrofac JSD 6000” offshore installation vessel
Engineering & Consulting Services
- Awarded a project management contract by PEMEX to develop the Lakach project, their first deepwater development
- Awarded a wide range of engineering services and FEED contracts, including in relation to projects in Algeria and Abu Dhabi
- Completed integration of RNZ, which is licensed to undertake major offshore engineering projects for PETRONAS and has approximately 700 employees, taking our total headcount in Asia Pacific to 1,500
INTEGRATED ENERGY SERVICES (IES)
- Good progress on Magallanes and Santuario PECs and improved production by 45% since we took over the blocks in February 2012; early success with near-field appraisal
- Commenced production from West Desaru on Block PM304 in August 2013, only 18 months from approval of the Field Development Programme by PETRONAS
- Announced, together with Taleveras Energy Resources Limited, a 20-year agreement with the Nigerian Petroleum Development Company to develop further NPDC’s offshore block OML119
- FPF3 lease on Jasmine field in the Gulf of Thailand extended for four years with Mubadala Petroleum Thailand; OPO will continue to provide operations and maintenance services
In ECOM, we have enjoyed early success in 2014, with approximately US$3 billion of new awards in the year to date, which, together with our opening backlog position, gives us good revenue visibility for 2014 and beyond. Our pipeline of bidding opportunities remains strong, as evidenced by our recent awards, particularly for onshore engineering and construction projects in the Middle East and North Africa and the Commonwealth of Independent States. Given our success in the year to date, the strength of our bidding pipeline and our competitive position, we anticipate growth in backlog for ECOM, and in particular Onshore Engineering & Construction, across 2014. We have a disciplined approach to business development and our relentless focus on project execution gives us confidence that we will maintain our sector-leading net margins in Onshore Engineering & Construction. These are likely to remain around 11% in 2014.
In Integrated Energy Services, we remain focused on the delivery of key milestones on our existing projects. Following the successful start-up of West Desaru on Block PM304 in Malaysia in 2013, we expect the arrival of the floating production storage and offloading (FPSO) vessel on the second phase of Cendor in the first half of 2014, with first production expected early in the second half. Through Offshore Projects & Operations, we are installing the main topsides processing plant on the FPF1 floating production facility, which will be deployed on the Greater Stella Area in the UK North Sea, with first production expected at the end of 2014. On our Production Enhancement Contracts, we aim to build upon our knowledge of the reservoirs, continue to grow production, add to the resource base through near-field appraisal and deliver more local service capability. We continue to see strong industry demand for commercially innovative integrated oilfield services, and we are looking at a number of opportunities, both on existing and new developments.
Overall, in line with our previous guidance, we expect to deliver flat to modest growth in net profit in 2014. We remain confident of the long-term growth trajectory for Petrofac and of returning to strong earnings growth in 2015.
(1) EBITDA means earnings before interest, tax, depreciation and amortisation and is calculated as profit before tax and net finance costs, but after our share of results of associates (as per the consolidated income statement), adjusted to add back charges for depreciation and amortisation (as per note 3 to the consolidated financial statements).
(2) Net profit for the year attributable to Petrofac Limited shareholders.
(3) The Group reports its financial results in US dollars and, accordingly, will declare any dividends in US dollars together with a sterling equivalent. Unless shareholders have made valid elections to the contrary, they will receive any dividends payable in sterling. Conversion of the 2013 final dividend from US dollars into sterling is based upon an exchange rate of US$1.6688:£1, being the Bank of England sterling spot rate as at midday on 25 February 2014.
(4) Backlog consists of the estimated revenue attributable to the uncompleted portion of lump-sum engineering, procurement and construction contracts and variation orders plus, with regard to engineering, operations, maintenance and Integrated Energy Services contracts, the estimated revenue attributable to the lesser of the remaining term of the contract and five years. Backlog will not be booked on Integrated Energy Services contracts where the Group has entitlement to reserves. The Group uses this key performance indicator as a measure of the visibility of future revenue. Backlog is not an audited measure.
A presentation for analysts will be held at 9.30am today, which will be webcast live via: http://cache.merchantcantos.com/webcast/webcaster/4000/7464/16532/33052/Lobby/default.htm
A replay of the event will be available online for a number of months. Should you have any difficulty accessing the online broadcast or replay, an audio broadcast and replay is available:
UK and international number +44 (0) 203 139 4830
Participant pin code 91660007#
Audio playback numbers (available for 7 days)
UK toll number +44 (0) 203 426 2807
Audio playback PIN 645833#
Full year results interview
An interview with Ayman Asfari, Group Chief Executive, relating to the announcement of Petrofac’s full-year results can be viewed by clicking here
This announcement contains forward-looking statements relating to the business, financial performance and results of Petrofac and the industry in which Petrofac operates. These statements may be identified by words such as "expect", "believe", "plan", "will", "could", "may", "project" and similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements.By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties or assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Statements contained in this announcement regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. You should not place undue reliance on forward-looking statements, which only speak as of the date of this announcement.