Net Income Group share up 174% to €115 million. Increased operating margin1 and capital gains generated €575.7 million EBITDA, up 41.7% compared to 2012.
- EBITDAR2 (excluding capital gains) reached €450.3 million (+17.6%), an increase of 2.1 pts to 34.3% of revenues
- Positive free cash flow generation of €449.7 million for the year, including vessel sales
- Net debt reduced by €449.4 million compared with June 30, 2013, to €1.741.1 million
- Foreign exchange rate movements negatively impacted full year results by approximately €53 million
- Shallow water operating margin increased by 4.3 pts to 31.5% of revenues with 100 Bourbon Liberty series vessels in operation
- Targeting revenue growth of 8-10% and a slight improvement of the EBITDAR/Revenues ratio in 2014
- Proposed dividend payment of €1.00 per share to shareholders, a 34% increase compared with 2012
2013 market and operational highlights
- Strong activity in both deep and shallow water markets with a high, stable oil price
- Focus on operational excellence in execution:
- Safety continued to improve at BOURBON, with TRIR (Total Recordable Incident Rate per million hours worked) of 0.48, a significant achievement compared to 2012
- Technical availability reached 95.5% in the second half of 2013 to bring the annual technical availability up to 94.5%
- The operating cost index declined by 2.5 points from 2012 levels to 104 in 2013 (2010 base = 100)
- Stable contractualization rate of the BOURBON fleet
- Average daily rates increased for the full year across all segments
Full year 2013 results highlights
- EBITDAR (before capital gains) as a percent of revenues (operating margin) increased by more than 2 points to 34.3%, partly due to the benefits of our focus on operational excellence
- EBITDA of €575.7 million (+41.7%) include bareboat charter costs of €13.1 million and capital gains of €138.5 million
- Return on average capital employed (ROACE: EBIT / average capital employed excluding installments) increased to 9.8% compared to 5.8% in 2012. In the future, this ratio will be impacted negatively by the increase in the bareboat charter costs and the reduction of capital gains generation, and positively by the sharp reduction of capital employed following vessels disposal
- Revenues increased across all regions compared with 2012, with Asia having the largest geographic increase in revenues for the 2nd consecutive year, with a combination of new vessels in service and growth in activity in the region
- The majority of the vessel sales were done at the end of the year. The cost of financial debt remained at the same level as 2012 (€73 million). Other financial costs consist mainly of foreign exchange losses, 65% of which are unrealized at year end.
Operating margin increased almost 2 points versus 2012 as the benefits of the focus on operational excellence began to materialize. Combined with increases in the fleet size and only a slight decline in overall utilization rates, this enabled a 15.8% increase in EBITDAR. The reduced utilization rate was partly due to the movement of vessels between regions, offset by improved average daily rates, most notably in the Deepwater and Crewboat segments.
Marine Services indicators by segment
Deepwater offshore vessels
There was strong demand for deepwater PSV due in part to the large number of exploration and production projects. EBITDAR increased 11.2% while the fleet size remained stable. There was a mixed effect of higher average daily rates (strong summer in the North Sea market, renewal of contracts on some medium and large PSVs and a mix effect) and an increase in vessel mobilization time, the latter of which had an adverse impact on both direct costs and utilization rates. These partially offsetting impacts therefore enabled the operating margin to increase by almost a full point. During the year, BOURBON took delivery of the first of its Bourbon Explorer 500 series PSVs, further expanding BOURBON’s offer to clients of standardized, safe and reliable vessels.
Shallow water offshore vessels
Higher shallow water activity was supported by the delivery of new generation jack-up rigs into the market and the continued replacement of older support vessels by newer vessels. There was a significant improvement in operating margin compared with 2012 reflecting the focus on operational excellence and cost control despite a 20% increase in the size of the fleet, while there was also a geographic mix effect due to the end of the Australian contracts which had higher direct costs than other regions. Additionally, direct costs continue seeing the benefits of BOURBON’s strategy of building standardized vessels in series, with the 100th Bourbon Liberty series vessel having been delivered in 2013. With broadly stable average daily rates and utilization rates compared with 2012, the strong improvement in operating margin combined with the larger fleet size resulted in an almost 30% increase in EBITDAR versus the prior year.
Operating margin excluding capital gains were stable for the year at almost 30% and were benefited by the net addition of 7 new vessels, with 14 new vessels delivered during the year that are larger, on average, than the vessels that left the fleet. The higher utilization rates and average daily rates on the larger vessels helped to contribute to an almost 8% increase in EBITDAR. On a global level, there has been improved demand for the larger crewboats, particularly the FSIVs (DP2). Geographically, the market in West Africa has become increasingly more competitive and BOURBON has been diversifying its reach with the addition of vessels in the Middle East and the Caribbean Sea.
In Subsea, there was continued good performance, cost control and the benefit of new, larger vessels entering the fleet, all combining to result in an increase in operating margin (excluding capital gains) of 3.6 points, continuing the increase in margins seen over the past year to 42%. With the new vessels delivered being part of the Group’s strategy of building standardized vessels in series, cost benefits will continue to be more prevalent. 2013 marked the start of Subsea activity in Asia (3 vessels out of the fleet of 18 ships). Combined with increases in both average daily rates and utilization rates, this resulted in a 28.6% increase EBITDAR compared with 2012. Activity continued to see strength from the growth in number of wellhead installations during the year, with the market expecting an increase in installations by more than 10% over the period 2013-2017. Subsea IMR (inspection, maintenance and repair) demand outlook is further supported by the aging subsea equipment, where there are 5,000 installed wellheads with an average age of over 10 years.
Using chartered vessels has two advantages for BOURBON: it makes it possible to meet client demands and generate contracts while new vessels are being built and added to the fleet. Using chartered vessels also enables BOURBON to offer vessels that are not part of its regular line of services when needed for global calls for tenders. Volatility of “Other” revenues is largely due to the variation in the number of chartered vessels during the period.
The demand for offshore vessels is supported by the high level of spending in the offshore oil & gas sector.
In deepwater offshore, average spending over the next three years is expected to grow by approximately 10% per year but delays of some projects and a decrease in utilization rates of deepwater floating rigs, combined with the expected deliveries of new vessels, could affect prices in this segment. This is expected to have minimal impact on BOURBON whose 19 PSVs under construction will be delivered through 2015.
In the shallow water market, vessel demand growth is driven by the steady spending in the oil & gas sector, notably by activities aimed at maintaining production of existing fields. Demand is driven by the high utilization rates for jack-up drilling rigs and by the renewal of the jack-up fleet BOURBON has 12 Liberty series vessels under construction and combined with the existing fleet, is in a good position for the continued growth in the sector.
The Subsea services market is buoyed by the growing number of subsea wellheads and the development of new deepwater oil fields. 3 of the 5 vessels in the Bourbon Evolution 800 series that will be delivered in 2014 are already contracted.
The majority of deliveries for vessels currently on order are expected in 2014. From now on, new orders for vessels will be executed as opportunities arise and will not impact revenues before 2016.
Active Fleet Management
The US$2.5 billion of asset disposals with bareboat charter for 10 years is well under way.
Out of the US$1.65 billion sales already signed with ICBL Leasing and Standard Chartered Bank, US$925 million have been received as of March 5th 2014, corresponding to the effective sale of 36 vessels.
CHANGE IN BOURBON CONSOLIDATION SCOPE
As of January 1, 2013, certain companies that were previously consolidated proportionally have been fully consolidated. The impact of this change in consolidation scope is not significant for the Group. Consequently, and in accordance with regulations, no pro forma financial statements have been established for the current period.
- The 2013 financial statements were closed by the Board of Directors on March 3, 2014
- The auditing procedures have been completed and the audit report relating to certification is in the process of being issued
- While there was some hedging activity in the first half of 2013, since the beginning of the 3rd quarter of this year, BOURBON no longer has any hedging in place. At constant exchange rates, 4th quarter 2013 revenues rose 9.3% compared with the same period last year while revenues for full year 2013 rose 13.1% compared with 2012
- BOURBON’s results will continue to be affected by foreign exchange rate movements, notably the €/US Dollar exchange rate
- At the next Annual General Meeting, The Board will propose a dividend payment to shareholders of €1.00 per share, with an ex-dividend date of May 29, 2014 and a payment date of June 3, 2014
- In January 2014, BOURBON placed an order for one large Norwegian built AHTS that is expected to be delivered in early 2016
- April 30, 2014 2014 1st Quarter Revenues press release
- May 20, 2014 Shareholders’ Meeting
- September 03, 2014 Release and presentation of 2014 1st half results