SBM Offshore Half Year 2021 Earnings
August 5, 2021
Record-breaking
backlog, increased
shareholder returns, positioning
for New Energy
Highlights
- Financial results in line with
management expectations
- Record-level US$29.5 billion proforma
backlog, up by c. US$8 billion
- Launch of EUR150 million (c. US$180
million) share repurchase program
- Scaling-up renewables: 200 MW floating
offshore wind development
- 2021 Directional1 revenue guidance
maintained at around US$2.6 billion
- 2021 Directional EBITDA guidance
maintained at around US$900 million
The 2021 Half Year Results and Interim Financial Statements are
published on the Company’s website
under https://www.sbmoffshore.com/investor-relations-centre/financial-information/financial-results/half-year-results/.
Bruno Chabas, CEO of SBM Offshore,
commented:
“All our three value platforms, Ocean
Infrastructure, Growing the Core and New Energies show good
performance in line with our vision and commitment for providing
safe, sustainable and affordable energy.
Our staff and contractor teams continue to
perform very well despite the challenging conditions from the
continuing pandemic. We maintained our fleet uptime of 99%. Our
projects under construction continue to progress well despite the
various challenges that COVID-19 continues to pose to our project
teams.
In addition, SBM Offshore has successfully
secured significant backlog growth. The backlog of our Ocean
Infrastructure platform is approaching a record-breaking US$30
billion. This contracted backlog allows us to deliver sustainable
and resilient sector-leading value to our stakeholders including
shareholder returns. Today’s announcement of a EUR150 million share
repurchase demonstrates our commitment to this.
Our Growing the Core platform delivered two new
awards in the first half. We now have five Fast4Ward® FPSOs under
construction. The latest awards have an emission intensity of 8 to
11.5 kg CO2e/boe2, well below current industry average. We will
further improve on this through our emissionZEROTM program.
New Energies is set to provide further growth
and value. We are establishing a strategic position in the
fast-developing floating offshore wind market. We intend to play a
role in project co-development in order to enhance the positioning
of our technology in the market. Our participation in the 200 MW
Llŷr Project in the UK marks a first step. The EPC activities for
the deployment of our first project in France in 2022 remain on
track.
We are delivering value to our stakeholders:
helping our clients to transition towards lower carbon oil
production at affordable cost, providing renewable and energy
transition solutions and growing shareholder returns.”
Financial Overview
|
|
Directional |
|
IFRS |
|
|
|
|
|
|
|
|
|
in US$ million |
|
1H 2021 |
1H 2020 |
% Change |
|
1H 2021 |
1H 2020 |
% Change |
Revenue |
|
1,072 |
1,179 |
-9% |
|
1,555 |
1,592 |
-2% |
Lease and Operate |
|
752 |
829 |
-9% |
|
631 |
735 |
-14% |
Turnkey |
|
321 |
351 |
-9% |
|
924 |
857 |
8% |
Underlying Revenue |
|
1,147 |
1,179 |
-3% |
|
1,630 |
1,592 |
2% |
Lease and Operate |
|
827 |
829 |
0% |
|
706 |
735 |
-4% |
Turnkey |
|
321 |
351 |
-9% |
|
924 |
857 |
8% |
EBITDA |
|
426 |
523 |
-19% |
|
411 |
489 |
-16% |
Lease and Operate |
|
456 |
538 |
-15% |
|
323 |
436 |
-26% |
Turnkey |
|
9 |
25 |
-62% |
|
129 |
93 |
39% |
Other |
|
(40) |
(40) |
0% |
|
(40) |
(40) |
0% |
Underlying EBITDA |
|
501 |
523 |
-4% |
|
486 |
489 |
-1% |
Lease and Operate |
|
531 |
538 |
-1% |
|
398 |
436 |
-9% |
Turnkey |
|
9 |
25 |
-62% |
|
129 |
93 |
39% |
Other |
|
(40) |
(40) |
0% |
|
(40) |
(40) |
0% |
Profit attributable to Shareholders |
|
64 |
38 |
69% |
|
148 |
98 |
51% |
Underlying Profit attributable to
Shareholders |
|
61 |
94 |
-36% |
|
145 |
155 |
-6% |
Earnings per share [US$ per share] |
|
0.34 |
0.20 |
72% |
|
0.79 |
0.52 |
53% |
Underlying earnings per share [US$ per share] |
|
0.32 |
0.50 |
-35% |
|
0.78 |
0.82 |
-5% |
|
|
|
|
|
|
|
|
|
in US$ million |
|
1H 2021 |
1H 2020 |
|
|
1H 2021 |
1H 2020 |
|
Non-recurring items impacting Revenue |
|
(75) |
- |
|
|
(75) |
- |
|
Deep Panuke termination fee |
|
(75) |
- |
|
|
(75) |
- |
|
Non-recurring items impacting EBITDA |
|
(75) |
- |
|
|
(75) |
- |
|
Deep Panuke termination fee |
|
(75) |
- |
|
|
(75) |
- |
|
Non-recurring items impacting Profit |
|
78 |
(57) |
|
|
78 |
- |
|
Deep Panuke termination fee |
|
78 |
- |
|
|
78 |
- |
|
SBM Installer impairment |
|
- |
(57) |
|
|
- |
(57) |
|
Total non-recurring items impacting Profit |
|
3 |
(57) |
|
|
3 |
(57) |
|
|
|
|
|
|
|
|
|
|
in US$ billion |
|
1H 2021 |
Dec-31-20 |
% Change |
|
1H 2021 |
Dec-31-20 |
% Change |
Pro-Forma Backlog3 |
|
29.5 |
21.6 |
36% |
|
- |
- |
- |
Net Debt |
|
4.6 |
4.1 |
12% |
|
5.8 |
5.2 |
11% |
Underlying Directional revenue for the first
half of 2021 came in at US$1,147 million, broadly in line with
2020. Underlying Directional revenue from Lease and Operate was
similar to last year’s figure with US$827 million recognized in the
first half of 2021 against US$829 million in the year-ago period,
reflecting the stability of the fleet. Directional Turnkey revenue
reduced by 9% year on year to a total of US$321 million for the
period. Despite the major growth phase in Turnkey, the balance of
activities continues to be more weighted to projects to be
transferred to the Lease and Operate portfolio with therefore lower
contribution to Turnkey revenue. Three out of four FPSOs under
construction were 100% owned by SBM Offshore during the period. As
such, the decrease is mostly attributable to the comparative impact
of the Johan Castberg turret project delivery which contributed to
the first half year 2020 revenue.
Underlying Directional EBITDA for the first half
2021 totaled US$501 million, representing a 4% reduction compared
with the prior period. Underlying Directional Lease and Operate
EBITDA came in at US$531 million in the first half year of 2021, in
line with the prior year period, despite the incremental costs from
the additional measures linked to the safe management of the
impacts from the COVID-19 pandemic.Underlying Directional Turnkey
EBITDA decreased by US$16 million to a total of US$9 million,
mainly reflecting the same drivers as the decrease in the Turnkey
revenue. The Other non-allocated cost was in line with the previous
year and stood at US$(40) million and continues to include the
Company’s investment in digital initiatives.
The increased level of activity in the
construction of new FPSOs did not significantly contribute to
EBITDA in 2021 under Directional reporting because the FPSO Liza
Unity project and the FPSO Prosperity project are 100% owned by the
Company and classified as operating lease as per Directional
accounting policies. As such, these projects do not contribute to
the Company’s net result before first oil. FPSO Almirante Tamandaré
is also 100% owned by SBM Offshore; the planned partial divestment
is subject to finalization of the shareholder agreement and various
approvals by the Company and its prospective partners.
Underlying Directional Revenue and EBITDA
includes US$75 million related to final cash received during the
period under the final settlement signed with the client following
the redelivery of the Deep Panuke MOPU in July 2020. These expected
cash receipts in 2021 were excluded from the Underlying 2020
Revenue and EBITDA as reported in the 2020 Annual Report.
Considering the associated depreciation of the vessel, this
non-recurring item only negligibly impacted the Underlying profit
attributable to shareholders.
Funding and Directional
Net Debt
As a direct result of investment in growth,
Directional net debt increased by US$510 million to US$4.6 billion
compared with year-end. This includes capital expenditures
associated with the FPSO projects Liza Unity, Sepetiba, Prosperity
and Almirante Tamandaré and the expenditures on the Fast4Ward®
multipurpose floater (MPF) hulls. While the Lease and Operate
segment continues to generate strong operating cash flow, the
Company drew under the project loan facility of Liza Unity (FPSO)
and the Revolving Credit Facility (RCF) to fund continued
investment in growth during the first half year 2021. The first
drawdown on the US$1.05 billion project loan facility of Prosperity
(FPSO) closed on June 25, 2021, occurred in July 2021 and allowed
full RCF repayment.
The majority of the Company's debt at half year
consisted of non-recourse project financing (US$3.1 billion) in
special purpose companies. The remainder (US$1.7 billion) comprised
mainly of borrowings to support the construction of Liza Unity
(FPSO) and FPSO Sepetiba, the loan related to diving support and
construction vessel SBM Installer and the Company’s RCF which was
drawn for c. US$290 million as at June 30, 2021. The net cash
balance stood at US$310 million and lease liabilities totaled c.
US$61 million.
Directional Pro-Forma
Backlog
Change in ownership percentages and lease
contract durations have the potential to significantly impact the
Company's future cash flows, net debt balance as well as the profit
and loss statement. The Company therefore provides a pro-forma
backlog on the basis of the most likely ownership scenarios and
lease contract durations for the various projects.
The pro-forma Directional backlog increased by
US$ 7.9 billion to a total of US$29.5 billion compared with the
position at December 31, 2020. The increase was mainly the result
of the awarded contract for the FPSO Almirante Tamandaré and the
signed Letter of Intent for FPSO Alexandre de Gusmão.
(in billion US$) |
|
Turnkey |
Lease & Operate |
Total |
2H 2021 |
|
0.5 |
0.8 |
1.3 |
2022 |
|
1.2 |
1.6 |
2.7 |
2023 |
|
0.7 |
1.6 |
2.3 |
Beyond 2023 |
|
2.6 |
20.5 |
23.2 |
Total Backlog |
|
5.0 |
24.5 |
29.5 |
The pro-forma Directional backlog at June 30,
2021 reflects the following key assumptions:
- The FPSO Liza Destiny contract
covers 10 years of lease and operate.
- The FPSO Liza Unity and Prosperity
contracts cover a maximum period of two years of lease and operate
within which period the units will be purchased by the client. The
impact of the sale is reflected in the Turnkey backlog, assumed at
the end of the contractual lease and operate period.
- FPSO Almirante Tamandaré and FPSO
Alexandre de Gusmão are added to the backlog based on the initially
targeted SBM Offshore ownership share (55%) in the lease and
operate contracts. The partial divestment to partners (45%), which
remains subject to finalization of the shareholder agreement and
various other approvals, was included in the Turnkey backlog.
For further details of the overall assumptions applicable to the
backlog, refer to the 2021 Half Year Earnings report.
Project Review
Project |
Client/country |
Contract |
SBM Share4 |
Capacity, Size |
Percentage of Completion |
Expected First Oil |
Liza Unity |
ExxonMobilGuyana |
2 year Build, Operate, Transfer |
100% |
220,000 bpd |
>75% |
2022 |
Sepetiba |
PetrobrasBrazil |
22.5 year Lease & Operate |
64.5% |
180,000 bpd |
>50% <75% |
2023 |
Prosperity |
ExxonMobilGuyana |
2 year Build, Operate, Transfer |
100% |
220,000 bpd |
>25% <50% |
2024 |
Almirante Tamandaré |
PetrobrasBrazil |
26.25 year Lease & Operate |
100% |
225,000 bpd |
<25% |
2024 |
Alexandre de Gusmão |
PetrobrasBrazil |
22.5 year Lease & Operate |
100% |
180,000 bpd |
<25% |
2025 |
SBM Offshore’s construction activities continue
to face challenges related to the COVID-19 pandemic with
difficulties posed by remote working, travel restrictions and
effects on yards capacity. Project teams are working closely with
client teams and contractors to mitigate impacts on project
execution and an update on individual projects schedule is
provided below considering latest known circumstances.
Liza Destiny (FPSO)
The flash gas compression system on Liza Destiny
(FPSO) is now operating. Approximately 96% of the gas produced is
being consumed and reinjected, and production levels are at
120-125,000 bpd. The team continues to perform maintenance and
optimization activities to minimize flaring until the arrival of
the redesigned third stage flash gas compression system, still
expected to be installed around the end of the year.
Liza Unity (FPSO)
The topsides integration phase is completed and
the onshore commissioning campaign is making significant progress.
The crew is currently mobilizing for the vessel departure from
Singapore planned in the third quarter of this year. The
project continues to target first oil in 2022 in line with client
schedule.
FPSO Sepetiba
The Fast4Ward® MPF hull was successfully
delivered and arrived safely in the integration yard allowing the
commencement of the topsides modules lifting campaign. The
project’s planned preliminary acceptance is at the end of 2022 with
planned first oil in 2023.
Prosperity (FPSO)
The Fast4Ward® MPF hull has arrived safely in
Singapore where the topsides fabrication phase is ongoing. The
project is progressing in line with schedule with a planned
completion in 2024.
FPSO Almirante Tamandaré
The FPSO construction is progressing as per plan
with the expected first oil in the second half of 2024.
Fast4Ward® MPF hulls
Under the Company’s Fast4Ward® program, the
total number of MPF hulls ordered to date stands at six, five of
which have been allocated to FPSOs Liza
Unity, Sepetiba, Prosperity, Almirante Tamandaré and
Alexandre de Gusmão. The Company currently has one remaining MPF
hull supporting its tendering activity.
Operational Update
Despite the ongoing challenging circumstances
due to the COVID-19 pandemic, the Company demonstrated operational
resilience. The fleet uptime in the first half of the year was
99.1%, in line with the fleet’s lifetime historical average.
HSSE
The Company’s Total Recordable Injury Frequency Rate stands at
0.10 as of June 30, 2021, compared with the full year 2021 target
of below 0.18.
New Energies
Floating Offshore Wind
SBM Offshore has taken a position as
co-developer in floating offshore wind projects with the
establishment of the joint venture Floventis Energy, a newly
established joint venture between SBM Offshore and Cierco Ltd.
Floventis Energy seeks to secure seabed rights and relevant
permits, to develop and implement state-of-the-art technologies for
floating offshore wind activities.
Floventis Energy is working on its first
project, the Llŷr project, which covers the lease of two 100 MW
floating wind test and demonstration sites in the Celtic Sea, for
which the Crown Estate confirmed an intention to move forward with
the lease process. The formal award will be subject to a Habitats
Regulations Assessment, following which, the project will progress
with environmental assessments and surveys in line with the
regulatory consent processes.
The Company’s ambition as project co-developer
is to enhance the positioning of its technology in the market. As
such it is also targeting rights in various other regions of the
world. The current opportunities for the floating offshore wind
market amount to at least 6 GW for the next decade; this is
expected to grow significantly over the next few years. The
ambition is to co-develop or participate as a technology or turnkey
provider in 2 GW of this existing global pipeline. Total associated
development expenditure over the next 7 to 8 years is estimated to
be c. US$150 to 200 million. The investments will be generally
phased so that significant de-risking of returns has occurred
before the final investment decision, committing most of the
expenditure, is taken.
Through the further development and optimization of its
technology, focusing on obtaining cost benefits from enhanced
design and scale-up, the Company is on the pathway towards a
competitive levelized cost of electricity.
Provence Grand Large
SBM Offshore is providing and installing 3
floaters and mooring systems for this 25 MW project. Assembly of
first sub-components has started as planned for the floating
substructures to be ready for load-out and installation at the end
of 2022. This project is on track to be the first floating offshore
wind project worldwide installed with tensioned leg platform
technology.
Capital Allocation
and Shareholder Returns
After having reviewed the current liquidity
position including the incremental net cash proceeds from the FPSO
Cidade de Ilhabela bond issuance in the first quarter 2021 and
taking into account the progress with project financing and the
capital requirements for growing the company business, the Company
has determined that it currently has the capacity to repurchase
shares. Consequently, on August 5, 2021 the Company will commence a
EUR150 million (c. US$180 million) share repurchase program with
the objective to be completed in the year. More details can be
found in the Company’s press release announcing the share
repurchase on August 5, 2021.
Outlook and Guidance
The Company’s 2021 Directional revenue guidance
remains around US$2.6 billion, of which around US$1.6 billion is
expected from the Lease and Operate segment and around US$1 billion
from the Turnkey segment. 2021 Directional EBITDA guidance remains
around US$900 million for the Company.
This guidance includes Directional revenues and
EBITDA of US$75 million related to the cash receipts in 2021 from
the Deep Panuke contract, which were both excluded from the 2020
outlook and underlying results. It also considers the currently
foreseen COVID-19 impacts on projects and fleet operations. The
Company highlights that the direct and indirect impact of the
pandemic could continue to have a material impact on the Company’s
business and results and the realization of the guidance for
2021.
Conference Call
SBM Offshore has scheduled a conference call
together with a webcast, which will be followed by a Q&A
session, to discuss the 2021 Half Year Earnings release.
The event is scheduled for Thursday, August 5,
2021 at 10.00 AM (CEST) and will be hosted by Bruno Chabas (CEO),
Philippe Barril (COO), Erik Lagendijk (CGCO) and Douglas Wood
(CFO).
Interested parties are invited to register prior
to the call using the
link:https://www.kpneventcall.nl/EventRegistration/d582aee4-64a3-49b6-8981-85b04a49de6c
Please note that the conference call can only be
accessed with a personal identification code, which is sent to you
by email after completion of the registration.
The live webcast will be available at:
https://channel.royalcast.com/landingpage/sbmoffshoreinvestors/20210805_1/
A replay of the webcast, which is available
shortly after the call, can be accessed using the same link.
Corporate Profile
The Company’s main activities are the design,
supply, installation, operation and the life extension of floating
production solutions for the offshore energy industry over the full
lifecycle. The Company is market leading in leased floating
production systems, with multiple units currently in operation.
As of December 31, 2020, the Company employed
approximately 4,570 people worldwide spread over offices in our key
markets, operational shore bases and the offshore fleet of
vessels.
SBM Offshore N.V. is a listed holding company
headquartered in Amsterdam, the Netherlands. It holds direct and
indirect interests in other companies.
Where references are made to SBM Offshore N.V.
and /or its subsidiaries in general, or where no useful purpose is
served by identifying the particular company or companies “SBM
Offshore” or “the Company” are sometimes used for convenience.
For further information, please visit our
website at www.sbmoffshore.com.
The Management BoardAmsterdam, the Netherlands,
August 5, 2021
Financial Calendar |
Date |
Year |
Trading Update 3Q 2021 – Press Release |
November 11 |
2021 |
Full Year 2021 Earnings – Press Release |
February 10 |
2022 |
Annual General Meeting |
April 6 |
2022 |
Trading Update 1Q 2022 – Press Release |
May 12 |
2022 |
Half Year 2022 Earnings – Press Release |
August 4 |
2022 |
For further information, please contact:
Investor RelationsBert-Jaap
DijkstraGroup Treasurer and IR
Mobile: |
+31 (0) 6 21 14 10 17 |
E-mail: |
bertjaap.dijkstra@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Media RelationsVincent
KempkesGroup Communications Director
Mobile: |
+377 (0) 6 40 62 87 35 |
E-mail: |
vincent.kempkes@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Disclaimer
This press release contains inside information
within the meaning of Article 7(1) of the EU Market Abuse
Regulation. This press release contains regulated information
within the meaning of the Dutch Financial Markets Supervision Act
(Wet op het financieel toezicht). Some of the statements contained
in this release that are not historical facts are statements of
future expectations and other forward-looking statements based on
management’s current views and assumptions and involve known and
unknown risks and uncertainties that could cause actual results,
performance, or events to differ materially from those in such
statements. Such forward-looking statements are subject to various
risks and uncertainties, which may cause actual results and
performance of the Company’s business to differ materially and
adversely from the forward-looking statements. Certain such
forward-looking statements can be identified by the use of
forward-looking terminology such as “believes”, “may”, “will”,
“should”, “would be”, “expects” or “anticipates” or similar
expressions, or the negative thereof, or other variations thereof,
or comparable terminology, or by discussions of strategy, plans, or
intentions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in this
release as anticipated, believed, or expected. SBM Offshore NV does
not intend, and does not assume any obligation, to update any
industry information or forward-looking statements set forth in
this release to reflect subsequent events or circumstances. Nothing
in this press release shall be deemed an offer to sell, or a
solicitation of an offer to buy, any securities.
1 Directional view, presented in the Financial
Statements under Operating segments and Directional reporting,
represents a pro-forma accounting policy, which assumes all lease
contracts are classified as operating leases and all vessel
investees are proportionally consolidated. This explanatory note
relates to all Directional reporting in this document.2 Carbon
intensity (in greenhouse gas equivalent units of CO2 emissions)
calculated based on nameplate capacity.
3 The pro-forma backlog at June 30, 2021
reflects assumptions which are in line with year-end 2020 pro-forma
backlog assumptions, for more details, refer to the 2021 Half Year
Earnings report.4 SBM share reflects current contractual
situation
- SBM Offshore Half Year 2021 Earnings press release
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