November 15, 2018
FINANCIALS ON TRACK,
FAST4WARDTM GAINING MOMENTUM
Highlights
- Year-to-date Directional[1] revenue of US$1,247 million on
track
- 2018 Directional revenue guidance remains around US$1.7
billion
- Underlying 2018 Directional EBITDA guidance updated from
"around" to "above" US$750 million
- Second Fast4WardTM hull committed
- Agreement signed with the Brazilian public prosecutor, pending
approval by the Fifth Chamber
- Final settlement reached with insurers on Yme insurance
case
- Directional net debt[2] decreased year-to-date by c. US$0.6
billion to US$2.3 billion
Bruno Chabas, CEO of SBM Offshore,
commented:
"SBM Offshore's results for the year-to-date
reflect our continuing track-record of performance and potential.
Encouragingly, activity levels in Turnkey are growing, which bodes
well for the pipeline of future opportunities. Reliable Lease and
Operate performance continues to generate strong cash flow from our
substantial backlog, with visibility nearly 20 years ahead.
The market recovery is accelerating on the back
of industry fundamentals. Investment is required to secure future
production and deep water projects rank favorably in client project
portfolios. SBM Offshore is uniquely positioned to benefit from the
current upturn. The most economically attractive deep water
developments require high production capacities, which can benefit
most from shorter cycle time to first oil, combined with larger and
more complex processing capacities. Fast4WardTM facilitates this
goal, lowering costs and providing a reliable execution plan.
Fast4WardTM, as a product offering, is maturing
in the market. It forms the design basis for the second ExxonMobil
Liza FPSO project, which is moving from concept to reality and
predicated on our first Fast4WardTM hull. On the basis of increased
client interest and better demand visibility, SBM Offshore is
pleased to confirm the commitment to build its second Fast4WardTM
hull with the SWS yard.
In light of forecast market growth, SBM Offshore
will take a selective approach and remain disciplined with respect
to market opportunities."
Financial Highlights
Year-to-date, the Company generated revenues of
US$1,247 million, which is stable compared with the same period
last year. Lease and Operate revenues of US$984 million represented
a decrease of US$143 million, or 13% compared with the same period
last year. This decrease is driven by the sale of FPSO Turritella,
which left the fleet in January 2018. Turnkey revenues increased by
US$135 million to a total of US$262 million, due to increased
activity levels. Although the Liza Destiny project is under
construction in Turnkey, under Directional accounting as a
100%-owned project, it will not contribute revenues or margin
before completion: these will be booked instead during the Lease
and Operating phase, in line with the operating cash flow
generation.
Compared with year-end 2017, net debt decreased
by US$0.6 billion to US$2.3 billion at the end of September. This
is mainly driven by strong operating cash flow from Lease and
Operate combined with the Turritella sale and final proceeds from
the closure of the Yme insurance case. This positive cash flow more
than offset interest payment and investments in the FPSO Liza
Destiny and the first Fast4WardTM hull, which is currently under
construction. The net debt ending balance includes a total of c.
US$390 million cash received by the Company in 2017 and 2018 under
its Yme insurance settlement, which was finalized during the
quarter. After reimbursement of the significant claim related
expenses and legal fees, the remaining amount of the insurance
recoveries will be shared equally between SBM Offshore and Repsol
(on behalf of the Yme license).
Regarding capital allocation, with the requisite
liquidity in place to support anticipated growth, SBM Offshore's
policy remains to give priority to the dividend and overall
consideration of shareholder returns.
Impairment Review
The following non-cash adjustments to the accounts are the
result of SBM Offshore's regular review, as part of its planning
process.
Brazil is a key market for SBM Offshore, where a
number of opportunities are being actively pursued. However, given
the lead time for opportunities to mature in terms of construction
activities, combined with the uncertainty regarding the evolution
of local content regulations, SBM Offshore, together with its joint
venture partner, has decided to take steps to further mothball the
Brasa construction yard for at least the coming two years. This
decision will necessitate the impairment of the investment in the
Joint Venture owning yard (50% ownership) to a net book value of
zero, resulting in an impairment charge of c. US$20 million.
Although the Company will continue to seek
opportunities in the Floating Production Unit (FPU) market, the
visibility of client activity in this segment remains subdued. As a
result, goodwill related to the acquisition of Houston-based
subsidiaries has been impaired in full, resulting in an impairment
charge of c. US$25 million. The establishment of a global resource
pool for engineering, announced in February, has facilitated the
deployment of Houston-based resources towards other product lines,
including FPSO.
These impairments impact the consolidated income
statement below the level of EBITDA.
Project Review
FPSO Liza Destiny
Work on FPSO Liza Destiny is progressing in
accordance with project schedule. The second (and last) dry-dock
session was successfully completed and the vessel is now ready to
receive its topside modules.
Turret Mooring System (TMS) Johan Castberg
FPSO
Fabrication of the TMS for Equinor's Johan
Castberg FPSO is advancing and on schedule to meet the planned
delivery date in early 2020.
Operational Update
The Lease and Operate fleet uptime performance
year-to-date was 97.3%, compared to 97.0% at mid-year 2018. The
uptime performance takes into account planned maintenance and
life-time extension activities on FPSO Capixaba which have
progressed well, in line with planning. When excluding the
maintenance period for FPSO Capixaba, the fleet's year-to-date
uptime is 98.9%. The multi-year historical uptime remains constant
at 99%.
Floating Wind
The classification society, ABS, has issued an
Approval in Principle (AIP) to SBM Offshore for its proprietary
wind floater design. The wind floater is a TLP concept and has been
designed for the full life cycle, including in-place conditions, as
well as wet tow with the wind turbine installed, and mooring
hook-up phase. The AIP demonstrates the successful design of the
floater, compliant with ABS' design standards.
Compliance
At the end of October, the Company received
confirmation from Petrobras of receipt of the amounts the Company
was due to pay under the Leniency Agreement, announced on July 26,
2018 (US$187 million), which allowed the Company to resume normal
business activities with Petrobras.
The agreement the Company announced on September
1, 2018 with the Brazilian Federal Prosecutor's Office (Ministério
Público Federal - "MPF") is subject to approval by the Fifth
Chamber of the MPF. A provision was established in respect of this
agreement, based on the nominal amount of BRL200 million (c. US$48
million). The Fifth Chamber has not yet communicated the date on
which it will decide on the matter. However, it is expected that
after the approval, the Improbity Lawsuit filed by the MPF in 2017,
including the associated provisional measure, will be formally
closed and the agreement with the MPF will become fully
effective.
Dow Jones Sustainability
Index
For the 9th consecutive year, SBM Offshore has
been included in the Dow Jones Sustainability Europe Index,
demonstrating the Company's continued commitment to sustainability.
SBM Offshore ranked 3rd in the Oil Energy Equipment and Services
section.
HSSE
Our overall safety performance has continued the
positive trend witnessed over the last 18 months, with a
year-to-date Total Recordable Injury Frequency Rate (TRIFR) below
0.20. However, nothing can be taken for granted in our operations
and we still need to do more: regrettably one of our contractors
was fatally injured in an incident at a construction yard in
October.
Guidance
2018 Directional revenue guidance is maintained
at around US$1.7 billion, with around US$1.3 billion from Lease and
Operate and around US$400 million from Turnkey. 2018 Directional
EBITDA guidance is updated from "around" to "above" US$750
million.
This EBITDA guidance continues to assume 100%
SBM Offshore ownership of the Liza Destiny project. It excludes the
gains made on the sale of FPSO Turritella (US$217 million) and the
provision associated with the c. US$48 million payment for the MPF
agreement. It also excludes the estimated net positive impact in
2018 from the Yme settlement for an amount of around US$40 million.
To ensure consistency for future reporting, this includes the
positive impact from implementation of IFRS 16 (c. US$30
million).
Conference Call
SBM Offshore has scheduled a conference call
followed by a Q&A session on Thursday, November 15, 2018 at
10:00 (CET).
The call will be hosted by Bruno Chabas (CEO),
Philippe Barril (COO), Erik Lagendijk (CGCO) and Douglas Wood
(CFO). Interested parties are invited to listen to the call
by dialing +31 (0) 20 531 5851 in the Netherlands, +44 (0) 20 3365
3210 in the UK or +1 866 349 6093 in the US.
A replay will be available shortly after the end
of the conference call. Interested parties can listen to the replay
by dialing +31 (0) 20 530 0220 and using access code 933679# until
December 15, 2018.
Corporate Profile
SBM Offshore N.V. is a listed holding company
that is headquartered in Amsterdam. It holds direct and indirect
interests in other companies that collectively with SBM Offshore
N.V. form the SBM Offshore Group ("the Company").
SBM Offshore provides floating production
solutions to the offshore energy industry, over the full product
lifecycle. The Company is market leading in leased floating
production systems delivered to date, with multiple units currently
in operation and has unrivalled operational experience in this
field. The Company's main activities are the design, supply,
installation, operation and the life extension of floating
production solutions for the offshore energy industry.
As of December 31, 2017, Group companies employ
approximately 4,800 people worldwide. Full time company employees
totaling c. 4,300 are spread over offices in key markets,
operational shore bases and the offshore fleet of vessels. A
further 500 are working for the joint ventures with two
construction yards. For further information, please visit our
website at www.sbmoffshore.com.
The companies in which SBM Offshore N.V.
directly and indirectly owns investments are separate entities. In
this communication "SBM Offshore" is sometimes used for convenience
where references are made to SBM Offshore N.V. and its subsidiaries
in general, or where no useful purpose is served by identifying the
particular company or companies.
The Management BoardAmsterdam, the Netherlands,
November 15, 2018
Financial Calendar |
Date |
Year |
Full-Year 2018 Earnings - Press Release |
February 14 |
2019 |
Annual General Meeting of Shareholders |
April 10 |
2019 |
Trading Update 1Q 2019 - Press Release |
May 16 |
2019 |
Half-Year 2019 Earnings - Press Release |
August 8 |
2019 |
Trading Update 3Q 2019 - Press Release |
November 14 |
2019 |
For further information, please contact:
Investor RelationsBert-Jaap
DijkstraDirector Corporate Finance and IR
Telephone: |
+31 (0)
20 236 3222 |
Mobile: |
+31 (0)
6 21 14 10 17 |
E-mail: |
bertjaap.dijkstra@sbmoffshore.com |
Website: |
www.sbmoffshore.com |
Media Relations Vincent KempkesGroup
Communications Director
Telephone: |
+31 (0)
20 2363 170 |
Mobile: |
+31 (0)
6 25 68 71 67 |
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. 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 under IFRS 8 Segment reporting,
represents a pro-forma accounting policy, which assumes all lease
contracts are classified as operating leases and all vessel joint
ventures are proportionally consolidated. This note relates to any
reference made to Directional in this document.
[2] Directional net debt as of December 2017 restated for
adoption of IFRS 16. Impact of IFRS 16 adoption is a Directional
net debt increase of c. US$200 million for both December 2017 and
3Q 2018 positions.
- SBM Offshore Third Quarter Trading Update.pdf
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