Kvaerner Order Backlog Triples

Press Release May 7, 2013

At the end of Q1 2013 the Norwegian company's backlog totalled a record-high NOK 31.6 billion, including incorporated joint ventures.

Kvaerner, a specialised provider of engineering, procurement and construction (EPC) services for offshore platforms and onshore plants, reported operating revenues of NOK 2 907 million in the first quarter 2013. Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to NOK 103 million, resulting in an EBITDA margin of 3.5 percent.

"Our order backlog, when including the Hebron project, has nearly tripled over the last 12 months. It provides a robust platform to strengthen our competitiveness", says Jan Arve Haugan, President & CEO of Kvaerner.

Operating revenues in the first quarter 2013 amounted to NOK 2 907 million, compared with NOK 2 388 million for the first quarter 2012. This represents an increase of NOK 519 million or almost 22 percent.

EBITDA for the first quarter 2013 ended at NOK 103 million, down from NOK 159 million for the same quarter last year. The EBITDA margin for the first quarter 2013 was 3.5 percent compared to 6.7 percent in the corresponding period in 2012. The decrease in EBITDA reflects phasing of projects with some projects still not recognising margin, some just passing 20 percent completion and other projects awarded early in the market cycle. In the Upstream segment, early cycle projects with low contribution put pressure on the margin and it is uncertain whether the 2013 EBITDA margin will be within the normalised range of 5-10 percent. These projects are being phased out over the next year and gradual margin recovery is expected as they are replaced by more recent awards.

The order intake in the first quarter totalled NOK 13.7 billion compared to NOK 3.2 billion in the first quarter 2012. The order intake includes Kvaerner's share of the Hebron GBS project which was awarded in March 2013.

"Our focus is on execution of the current project portfolio to our customers' expectations and simultaneously improving our competitiveness. Substantial efforts are being made to reduce our own cost level and to improve our delivery model", Haugan concludes.

The objective of the dividend policy is to increase predictability of dividends to balance out the underlying volatility of earnings. The Annual General Meeting approved the proposed semi-annual dividend of NOK 0.55 per share, which was in accordance with the company's dividend policy.