25 August 2015
Half year results for the six months ended 30 June 2015
View the Group’s financial statements for the six months ended 30 June 2015.
- Strong revenue growth, up 25% to US$3.2 billion (2014: US$2.5 billion), as a number of OEC projects move into execution stage
- Net profit(1) significantly weighted to 2H 2015, reflecting phasing of project delivery, particularly in OEC, as a number of projects are expected to reach their percentage of completion threshold for initial profit recognition in 2H 2015:
- Underlying EBITDA(1) 10% lower at US$305 million (2014: US$340 million)
- Underlying net profit(1) 4% lower at US$130 million (2014: US$136 million)
- Success in new orders for ECOM with around US$6.0 billion of order intake secured in the year to date in our core markets; continue to see a healthy pipeline of bidding opportunities
- Group backlog stood at US$20.9bn at 30 June 2015 (31 December 2014: US$18.9bn), with ECOM backlog up 14% to US$17.8bn over 1H 2015, giving excellent revenue visibility
- On Laggan-Tormore, commissioning is well underway, with major systems handed over to the client; first gas is now expected in Q4 2015 with additional costs recognised of around £30 million in relation to final completion, pre-commissioning and commissioning activities(2)
- Rest of our portfolio remains in good shape and is performing in line with our expectations(2); Greater Stella Area development remains on schedule for production in mid-2016
- Continued focus on cost efficiencies with incremental savings of US$80 million expected in 2015 delivering savings for our clients and maintaining our strong competitive position
- Interim dividend maintained at 22.00 cents per share (2014: 22.00 cents)
- Net debt of US$1.0 billion at 30 June 2015 (31 Dec 2014: US$0.7 billion), primarily reflecting ongoing investment in IES’s Greater Stella Area project and our offshore installation vessel, payment of the 2014 final dividend and incremental costs on Laggan-Tormore
Ayman Asfari, Petrofac’s Group Chief Executive, commented on the half year results:
“Against the backdrop of a challenging environment for the industry, we are in a strong position. We have record levels of backlog in ECOM, which brings excellent revenue visibility for the rest of this year and beyond. Our clients are continuing to invest in large strategic projects in our core markets, where we have an unrivalled track record and a very cost-competitive delivery capability. We continue to drive operational efficiencies to maintain our cost-competitiveness and we are working with our clients to address cost pressures and generate value for them whilst protecting our margins.
“As we look forward, we are focusing on our traditional areas of strength, driving for best in class operations and project delivery and improving our cash generation as we reduce the capital intensity of the business and deliver value from our IES portfolio.”
ENGINEERING, CONSTRUCTION, OPERATIONS & MAINTENANCE (ECOM)
Onshore Engineering & Construction
- On Laggan-Tormore, commissioning is well underway, with major systems handed over to client
- Rest of our portfolio remains in good shape and is performing in line with our expectations
- Achieved order intake in year to date of over US$4 billion, with major new awards in Kuwait
Offshore Projects & Operations
- Secured a number of new wins and extensions, totalling approximately US$800 million, including Oranje-Nassau Energie, CNR International and Eni
- Substantial progress made on the SARB3 and Borwin 3 offshore capital projects
Engineering & Consulting Services
- Good progress made on the Rabab Harweel Integrated Project in Oman
- Record backlog and revenue visibility following the award of the Yibal Kuff project in Oman in June worth around US$900 million
- Awarded a number of contracts in Plant Asset Management, including an Integrity and Maintenance Programme Development contract for the Ichthys LNG Project in Australia
INTEGRATED ENERGY SERVICES (IES)
- Continue to progress contract migration in Mexico and in July we brought on production from Santuario North East, the first developed near-field opportunity on the Santuario field
- Greater Stella Area development in the UK North Sea progressing well, with first production expected mid-2016
- On Block PM304 in Malaysia, completed drilling programme on Cendor field after five years of continuous rig activity on the Block; production levels expected to ramp up as we tie in new wells on Cendor phase 2 and optimise well production
- 1H 2015 production from Chergui gas concession in Tunisia below expectations due to periods of civil unrest during March/April, but production has since returned to full capacity
OUTLOOK AND DIVIDENDS
Against the backdrop of a challenging environment for the industry, we are in a strong position. Our clients are continuing to invest in large strategic projects in our core markets, where we have an unrivalled track record and a very cost-competitive delivery capability. We continue to work with our clients to address cost pressures and generate value for them whilst protecting our margins.
From an already high level, our ECOM backlog has grown 14% to US$17.8 billion over the first half of the year to stand at record levels, giving us excellent revenue visibility for the second half of the year and beyond. Our overall portfolio remains in good shape, with embedded margins consistent with guidance, and we continue to see a healthy pipeline of bidding opportunities.
Our priorities for the immediate future are focused on returning Petrofac to its traditional areas of strength through:
- Execution of our existing backlog, which is primarily in our core markets, to a high standard with a relentless focus on risk management across the portfolio
- Closing-out the Laggan-Tormore gas plant project in line with our expectations and to the client’s satisfaction
- Delivering the FPF1 floating production facility to enable first production from the Greater Stella Area development mid-2016
- Reducing the capital-intensity of the business and delivering value from our IES portfolio
- Continuing to drive operational efficiencies to maintain our cost-competitiveness and retain a healthy backlog
The Board has declared an interim dividend of 22.00 cents per share, in line with the 2014 interim dividend.
(1) Before recognition of the year to date loss on Laggan-Tormore and before exceptional items and certain re-measurements.
(2) On 25 February 2015, we noted that based on an average oil price of around US$60 per barrel in 2015, our net profit after tax was expected to be around US$460m. After recognising the loss in the year to date on the Laggan-Tormore project of US$263m (US$220m (as previously announced up to 23 June) plus US$43m (around £30m) of further costs), the Group’s net profit before exceptional items and certain re-measurements for 2015 is expected to be around US$200m.
Our interim results presentation for analysts and investors will be held at 9.30am today, which will be webcast live via:
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”, “estimate”, “plan”, “target”, or “forecast” and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in these statements and neither Petrofac nor any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed to update any forward-looking statements.