“We have arrived at the end of a downturn that has lasted since late 2008, and the market for modern offshore vessels is now turning around. BOURBON has every chance of being the first to benefit from this new turn of events thanks to a high-performance modern fleet and a worldwide network. BOURBON’s operating income for the period is up 19.9% over the first half of the previous year and 145% over the previous six-month period. Net income is affected by the sharp fall in the dollar (down 11 cents) over the period. Utilization rates of the industry’s modern vessels are gradually increasing as a prelude to the improvement in average daily rates we are expecting by year-end 2011 and in 2012,” is how BOURBON Chief Executive Officer Christian Lefèvre neatly summarized the company's 1H 2011 performance. “In this context of recovery, which is starting to be reflected in our operating figures, BOURBON is actively moving ahead with its BOURBON 2015 Leadership strategic plan”.
Revenue
Revenues for the period amount to 482.7 million euros, up 18.8% over the first half of the previous year, owing mainly to the strong growth of shallow water offshore, as well as the good performance of the Subsea Services Activity.
Compared with the second half of 2010, revenues are up 8.8%. This growth comes mainly from the Shallow water offshore segment, which is seeing both an increase in utilization rates and a steadily increasing number of vessels.
EBITDA
Gross operating income (EBITDA) for the period amounts to 142.1 million euros, which is up 16.6% compared with the first half of the previous year, very close to the revenue growth rate. Compared with the second half of 2010, EBITDA is up 19.3%. After a fall in profitability to 26.8% in the second half of 2010, the Group is returning to first half 2010 levels with a ratio of EBITDA to Revenues again approaching 30%.
Operating Income
Operating income for the period stands at 43.1 million euros, up 19.9% compared to the first half of the previous year, despite the increase in depreciation related to the arrival of new vessels. The very sharp increase (+144.8%) over the second half of 2010 comes from the increase in EBITDA and the size of the provisions set up in the previous half year.
Financial Income
Financial income in the first half is negative at 62.7 million euros. The cost of net debt amounts to 30.2 million euros owing to a slight increase in the average debt. The change in currency exchange rates generated net financial expenses of 30.5 million euros, including a 14.9 million euros unrealized exchange loss. For the record, the change in foreign exchange rates in the first half of 2010 resulted in a reverse trend in the form of foreign exchange gains of 16.9 million euros. The Group share shows a net loss of 21.4 million euros in the first half.
OUTLOOK
The market continues to show signs of recovery despite the recent financial crisis. Investments in the offshore oil and gas sector are being driven by steady per-barrel prices for several months (price of Brent still around USD 100 at the end of August) and are also proving necessary to replace the reserves.
BOURBON activity should take full advantage of the 15% increase in investments by the oil companies, recently announced for 2011, a revision of the 12% initially forecast on the market compared with 2010. Orders for drilling rigs confirm the market’s optimistic outlook, with 61 orders in the first half of 2011 compared with only two over the same period in 2010. With these new drilling rigs, priority will undoubtedly be given to modern, multipurpose vessels operating in complete safety. The order books of the offshore construction companies are also filling up much faster. While the average utilization rate of the modern vessels on the market is rising, the utilization rate for vessels over 25 years old is continuing to decline, confirming the already proven trend of a preference among oil clients for chartering vessels that are modern, safer, more efficient and more reliable. The policy of efficient management of fuel consumption of vessels operating for clients, implemented as part of the cost-reduction operating strategy, will also be a considerable advantage in a context of high oil prices.
At the same time as the gradual increase in utilization rates for modern vessels and in line with the increase in the rates of deepwater offshore supply vessels, which is already noticeable today, the market is expecting daily rates to rise as of end of 2011 and in 2012. It is logical to expect BOURBON to be one of the first companies to benefit from this. BOURBON’s strategy, which is based on a very modern and high-performance fleet, positions the Group very
favorably to reap the benefit of the upcoming increase in charter rates.