August 8, 2019
Highlights
- US$6.3 billion order intake year-to-date, driving a 36% backlog
increase
- Contracted cash flow from Lease and Operate fleet provides
visibility up to 2045
- Four major projects under execution in Turnkey, including three
FPSOs, of which two based on Fast4Ward®
- 2019 Directional1 revenue guidance increased to “above US$2
billion” due to Turnkey growth
- 2019 Directional EBITDA guidance increased to “above US$750
million”
- Year-to-date Directional revenue US$965 million; Directional
EBITDA US$399 million, in line with expectation
- Returned US$272 million to shareholders via completed share
repurchase program and dividend
The 2019 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:
“SBM Offshore’s financial results are trending
ahead of expectation for the year as it enters a period of
significant growth. Developments of deep water reservoirs continue
to rank favorably in client project portfolios. This is because
these developments benefit from large scale production facilities.
The Company’s Fast4Ward® program brings scale combined with a
reliable execution schedule and shorter cycle time to first oil.
The program also enables the Company to increase productivity and
resource flexibility. Demand growth and limited FPSO contractor
capacity mean that SBM Offshore will remain selective in its
contract choices.
With the six billion increase in order backlog,
SBM Offshore is going through a disciplined growth phase. The
Company maintains flexibility to adapt to market dynamics. SBM
Offshore is currently working on four major projects. Following
successful integration of its topsides, FPSO Liza Destiny left
Singapore quay side and set course for Guyana on July 18, 2019. The
Johan Castberg turret mooring system continues to make good
progress in Dubai. FPSO Liza Unity’s hull recently came out of dry
dock, representing SBM Offshore’s first Fast4Ward® multipurpose
floater. SBM Offshore recently won the Mero 2 award in Brazil, also
on the basis of Fast4Ward®. This award demonstrates the Company’s
ability to win new work for Petrobras in Brazil again.
SBM Offshore continues to expand on its flexible
outsourcing model, including the cooperation with Nauvata in India.
Fast4Ward® brings additional resource flexibility and efficiency
from repetition and standardization. This effect is visible not
only in execution, but also in tendering and in onboarding new
staff in the new ways of working. SBM Offshore’s teams remain
focused on executing our portfolio of major projects and on
delivering the Company’s strategy.”
Overview
Directional revenue as of June 30, 2019 totaled
US$965 million, representing an increase of US$157 million or 19%
compared with the same period last year. This increase was driven
by a higher activity level in Turnkey on various projects. The
Company did not report adjustments for the period and, as such,
reported EBITDA is the same as Underlying EBITDA. Directional
EBITDA for the period was US$399 million, US$15 million below the
Underlying EBITDA for the same period last year. This 4% decrease
was primarily caused by the one-off nature of a number of positive
close-out items for Turnkey projects during the first half of
2018.
Under Directional, the significant activity in
Turnkey related to FPSO Liza Destiny, as well as FPSO Liza Unity,
is not reflected in Revenues or EBITDA for the period as these are
treated as operating leases and hence are booked in capital
expenditure on the balance sheet. These projects will generate
revenues, margin and cash flow in Lease and Operate starting at
first oil. The sale to the client, which is anticipated after a
period of up to two years of operations on both vessels, will be
booked in Turnkey. See the section on backlog for more
information.
Funding and Directional Net
Debt
Net debt increased by US$0.6 billion to US$3
billion at June 30, 2019. While the Lease and Operate segment
generated strong operating cash flow in line with expectation, the
increase of the net debt mainly reflected significant capital
expenditures over the period (c. US$320 million, including
investment in the 3 Fast4Ward® hulls), the payment to Repsol of
their share of Yme insurance proceeds (c. US$180 million of a total
of US$390 million), shareholder returns (c. US$270 million), as
well as the expected unwinding of a large portion of working
capital in the Turnkey segment (significant milestone payments
invoiced and received as of December 31, 2018).
At mid-year, the Company had undrawn credit
facilities of US$1.3 billion comprising of US$0.6 billion available
under the US$1 billion Revolving Credit Facility (RCF) and the Liza
Destiny project financing for US$0.7 billion, currently available
for drawdown. With respect to the foreseen Liza Unity project
financing, commitments have been received from financial
institutions in excess of the targeted financing amount. These
latter two, when drawn, will reinstate capacity under the RCF.
With respect to Mero 2, SBM Offshore is in
discussion with prospective partners for a divestment of a minority
stake in the companies owning the FPSO. At present, the Company
targets to divest 35% of the FPSO owning and operating entities.
Following the signature of the Letter of Intent, SBM Offshore has
started discussions with prospective lenders and Export Credit
Agencies to put in place the target financial structure for the
project, which is expected to be completed in 2020.
Cancellation of shares
Upon completion of the 2019 share repurchase
program, in line with its reported objectives, SBM Offshore is
planning to cancel 7 million shares currently held in Treasury.
This represents c. 67% of the total shares repurchased. The
cancellation is expected to take place before year end.
Directional Backlog
As ownership and change of ownership scenarios
have the potential to significantly impact future cash flow, net
debt balance as well as the profit and loss statement, the Company
provides a pro-forma backlog on the basis of the most likely
ownership scenarios for the various projects. The pro-forma
Directional backlog increased by c. US$5.3 billion to a total of
US$20.1 billion during the first six months of the year. This
increase was mainly the result of the order wins for FPSO Liza
Unity for ExxonMobil in Guyana and FPSO Mero 2 for Petrobras in
Brazil. Turnover for the period consumed US$1 billion of
backlog.
The pro-forma backlog reflects the following key
assumptions:
- The Lease and Operate backlog includes the FPSOs Liza Destiny
and Liza Unity operating and maintenance scope, for which the FPSO
Liza Unity is pending a final work order.
- For both FPSO Liza Destiny and FPSO Liza Unity, two years of
operations are added to the Lease and Operate backlog. The Liza
Destiny contract covers 10 years of lease and operate but based on
discussion with the client, it is expected that the client will
purchase the unit after a period of up to two years of operations.
The Liza Unity contract covers a maximum period of two years of
lease and operate within which the unit will be purchased by the
client. The subsequent sales are added to the Turnkey backlog for
both FPSOs.
- The pro-forma backlog of FPSO Mero 2 takes into account the
initially targeted SBM Offshore ownership share (65%) in the 22.5
year lease and operate contracts. As a consequence, this targeted
share was added to the Lease and Operate backlog and the partial
divestment to partners (35%), which remains subject to finalization
of the shareholder agreement and various approvals, was added to
the Turnkey backlog.
Project Review
Notes: in cases of a consortium, client refers to the operator.
Mero 2 ownership reflects current contractual situation. Regarding
FPSO Liza Destiny it is expected that the client will purchase the
unit after a period of up to two years of operations.
Fast4Ward®
SBM Offshore currently has three standard,
multipurpose hulls under construction. The first hull left dry dock
in the yard of SWS (Shanghai Waigaoqiao Shipbuilding and Offshore
Co., Ltd.) on June 8, 2019. The hull is allocated to the FPSO Liza
Unity. Good progress is being made on the second hull in the yard
of CMIH (China Merchants Industry Holdings). This hull is allocated
to the FPSO Mero 2. Construction on the third hull recently started
in SWS. SBM Offshore is confident that this hull will be allocated
to an identified opportunity.
FPSO Liza Destiny
The major project FPSO Liza Destiny continues to
progress in line with schedule. After successful topsides
integration and pre-commissioning activities, the vessel left
Singapore on July 18, 2019 and is on its way to its mooring
location in Guyana, where it is scheduled to arrive in the third
quarter of 2019. In Guyana, work is continuing with respect to
operations readiness, setting up the shore base and delivering on
local content commitments.
Johan Castberg Turret Mooring System
Fabrication of the complex turret mooring system
for the FPSO Johan Castberg continues to progress well, in line
with client schedule, to meet delivery early in 2020.
FPSO Liza Unity
The major project FPSO Liza Unity is progressing
according to schedule. The standard multipurpose hull was recently
launched from the dry dock in China. The engineering is progressing
as planned, benefiting from the Fast4Ward® module catalogue.
FPSO Mero 2
The Letter of Intent for the major project FPSO
Mero 2 was signed on June 10, 2019. Its standard multipurpose hull
is currently under construction, passing the first steel cut
milestone in July and progressing in line with project
schedule.
Operational Update
The Lease and Operate fleet uptime as at June
30, 2019 stood at 99.1%.
HSSE
SBM Offshore’s safety performance continued to
be strong during the first half year in 2019. The Total Recordable
Injury Frequency Rate (TRIFR) of 0.13 represents in line
performance as compared with 2018 and 2017.
SBM Offshore has selected three Sustainable
Development Goals (SDG) for which it has developed measurable and
challenging targets for 2019 and started to monitor progress. Going
forward, the Company intends to establish targets linked to a
further four SDGs, which will be integrated with the first phase of
the program.
The Company entered into its first interest rate
swap transaction in the first half of 2019, which incorporates a
link to the Company’s sustainability performance in the pricing
mechanism. This builds on the same principle applied in the
Company’s Sustainable Revolving Credit Facility.
Brazil update
After the approval by the Brazilian Fifth
Chamber for Coordination and Review and Anti-corruption of the
Leniency Agreement with the Brazilian Federal Prosecutor’s Office
(MPF) the next and final step remains the formal withdrawal by the
MPF of the lawsuit that it initiated in December 2017. Upon this
withdrawal, the Leniency Agreement with the MPF, signed on
September 1, 2018 will become fully effective, after which the
Company will pay the agreed fine of BRL200 million to Petrobras. In
this closing procedure, a federal judge declined the request by the
MPF to approve the agreement, considering that despite the
conclusion that the agreement suffices, the redress for damages
agreed by the parties appear to deviate by BRL194 million (c. US$50
million) from a number in an earlier calculation. The MPF and the
Company both filed motions to address this concern. This matter has
no impact on the Leniency Agreement signed by the Company on July
26, 2018 with other Brazilian Authorities and Petrobras that
allowed the Company to resume normal business activities with
Petrobras.
Outlook and Guidance
Management continues to have a positive outlook
for the Company. As a result of growth in Turnkey, the Company’s
2019 Directional revenue guidance is increased to “above US$2.0
billion“ from “around US$2.0 billion”, of which US$1.3 billion is
expected from Lease and Operate segment and more than US$700
million from the Turnkey segment.
2019 Directional EBITDA guidance is increased to
“above US$750 million” from “around US$750 million”.
Analyst Presentation & Conference Call
SBM Offshore has scheduled a conference call and
webcast of its presentation to the financial community followed by
a Q&A session at 10.00am (Amsterdam, The Netherlands) on
Thursday, August 8, 2019.
The webcast 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 20 531 5851 in the Netherlands, +44 203 365 3210 in the
UK or +1 (866) 349 6093 in the US. Interested parties may also
listen to the presentation via webcast through the link below, also
posted on the Investor Relations section of the Company’s
website.
The live webcast and replay, which should be available shortly
after the call, will be available at:
https://channel.royalcast.com/webcast/sbmoffshoreinvestors/20190808_1/
Financial Calendar |
Date |
Year |
Trading Update 3Q 2019 – Press Release |
November 14 |
2019 |
2019 Full Year Earnings |
February 13 |
2020 |
Annual General Meeting of Shareholders |
April 8 |
2020 |
Trading Update 1Q 2020 – Press Release |
May 14 |
2020 |
Half-Year 2020 Earnings – Press Release |
August 6 |
2020 |
Trading Update 3Q 2020 – Press Release |
November 12 |
2020 |
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, 2018, Group companies employ
approximately 4,350 people worldwide, including circa 650
contractors, which are spread over offices in key markets,
operational shore bases and the offshore fleet of vessels. Group
Companies employ a further 400 people, 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,
August 8, 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. 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 under IFRS8 Segment 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 The Company
provides a pro-forma backlog which includes various assumptions,
see the section on backlog for more information. 3 Net debt has
been presented to include the impact of IFRS16 under Directional
and IFRS for both periods.
To see the full version of this press release,
please click on the link below:
SBM OFFSHORE 2019 HALF-YEAR EARNINGS
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