Kvaerner delivers strong results for the second quarter, and the order intake establish a platform for growth in both the short and medium term. The longer-term outlook presents further key prospects in Kvaerner’s key market segments, including growth opportunities in renewable business.
The market outlook again presents opportunities for gradual growth. During the second quarter, Norwegian authorities implemented a temporary adjustment to the tax regime as an incentive for oil companies to start projects. Kvaerner expects that the result will be a number of prospects where Kvaerner is a relevant contractor with a competitive offer. It is estimated that several such large contracts based on the new incentive scheme will be awarded over the next three years.
Within the markets for offshore wind power, CCS, hydrogen production facilities and aquaculture, political authorities and large potential customers in Norway, EU and other regions plan to significantly expand investments. Several of these prospects will have a demand for contractors capable of executing large projects and delivering large structures, and Kvaerner is in dialogue with several potential customers.
“We see key contract opportunities within oil and gas both in Norway and internationally. Our strategy is that these upcoming projects will continue to support a stable activity level for many years to come. However, we see within renewable businesses opportunities for a strong growth from today’s levels. The largest part of the resources we invest in positioning and bidding for new contracts in 2020 are aimed at renewable projects. We will see that this is increasingly reflected in our orderbook as we move forward”, says Karl-Petter Løken, President & CEO.
Order intake in the second quarter was NOK 3.3 billion, including both contracts for new projects as well as orders for increased scope in ongoing projects. At the same time last year, the order intake was NOK 0.7 billion. The solid order intake brought the order backlog to about NOK 9 billion at 30. June this year, which is the same level as one year ago.
Revenues in the second quarter were NOK 1.5 billion, with corresponding EBITDA result for the Field Development segment of NOK 175 million, which brings the EBITDA margin to 11.4 percent. For the same quarter last year, revenues were NOK 1.9 billion and EBITDA for the Field Development segment NOK 132 million, with an EBITDA-margin of 6.9 percent. Accumulated revenues for the first half year ended at NOK 3.7 billion, with EBITDA of NOK 43 million and EBITDA margin of 1.2 percent for Field Development.
For the full year, revenues are anticipated to total approximately NOK 7.5 billion. The corresponding underlying EBITDA margin, excluding expected covid-19 costs of about NOK 150 million for the full year, is expected to be about five percent.
Kvaerner has a strong financial position with no interest-bearing debt as of 30 June 2020. Cash and bank deposits at the end of the quarter were more than NOK 1.7 billion, compared to NOK 2.7 billion at 30 June 2019. NCOA at the end of second quarter was NOK 147 million, compared to negative NOK 681 million at the second quarter 2019. NCOA has temporarily increased in the last quarter due to cash inflow received from customers in July 2020, which was after cut off.