OilVoice - Technip Announces Second Quarter Results

Technip Announces Second Quarter Results

Friday, July 23, 2010

On July 20, 2010, Technip's Board of Directors approved the unaudited second quarter 2010 consolidated accounts. Chairman and CEO Thierry Pilenko commented: 'At the half of year, Technip remains on track to deliver its 2010 objectives, following two quarters of good project execution and delivery across all segments.

Highlights
• Revenue of €1,485 million, of which €688 million in Subsea
• Group operating margin of 10.8%
• Net Income of €106 million
• Net cash of €1,498 million
• Backlog of €8,263 million, underpinned by an order intake of €1,521 million

On July 20, 2010, Technip's Board of Directors approved the unaudited second quarter 2010 consolidated accounts.

Chairman and CEO Thierry Pilenko commented:
'At the half of year, Technip remains on track to deliver its 2010 objectives, following two quarters of good project execution and delivery across all segments.

During the second quarter we made good progress on key projects in Subsea, and despite lower activity in the North Sea and Asia, we accordingly delivered a solid operating margin above our expectations at 16.9%. In Onshore/Offshore the underlying profitability of our newer book of business combined with the completion of key projects drove a satisfactory operating margin of 7.1%.

Order intake was €1,521 million split nearly 50:50 between Subsea and Onshore/Offshore. In Subsea, major orders include Tupi pilot in Brazil and Burullus in Egypt. In Onshore/Offshore, we took a significant reimbursable EPCIC order in Asia, a project for Eastern Europe and various other projects.

Our expectations for an improvement in the North Sea have been confirmed by a pick up in awards in the quarter notably on the Norwegian side: we expect this to continue in the second half. Brazil continues to show promise and prospects in the Middle East and Asia are substantial although competition remains intense particularly Onshore.

It is difficult to predict all of the repercussions from the tragic incident in the Gulf of Mexico. At this stage, there has been no adverse impact on our 2010 operations. The drilling moratorium will likely delay near-term FIDs for Subsea and Offshore order intake in the Gulf even if FEEDs and studies continue to be awarded. In the longer term we believe operators will everywhere prefer to work with contractors that have been investing consistently in safety, high-performing assets, operational excellence, and technology - elements that are central to Technip's strategy.

For the balance of the year, we will continue to focus on the key drivers of our business: good project execution (notably for our Subsea projects in installation phase), and a balanced, profitable order intake. Furthermore Technip will continue to invest in its strategy, with a particular focus on local content and partnerships, technology and hiring key talent throughout our business.'

Operational Highlights

Subsea business segment's main events were:
• In the Gulf of Mexico:
- Cascade & Chinook project was successfully completed,
- Offshore operations on other projects continued as planned,
• Pipelayer Apache II sea trials were completed in May. She successfully completed her first projects: Talisman Auk North and Burghley in the North Sea,
• Vessel utilization rate was 70% compared with 83% a year ago and 70% in the first quarter 2010,
• Offshore operations continued on Jubilee field in Ghana,
• Procurement and fabrication progressed well in preparation for offshore operations on Pazflor and Block 31 projects in Angola,
• Operations offshore Brazil on the Tupi gas export pipeline continued,
• Good activity at flexible pipe production units continued.

Offshore business segment's main events were:
• FEED activities continued to progress as planned for Floating LNG contracts for Shell Prelude field near Australia and for Petrobras in Brazil,
• FEED activities progressed on Wheatstone gas processing platform for offshore Australia,
• Projects in Brazil and Asia progressed well.

In the Onshore business segment:
• Construction and pre-commissioning continued to progress for Qatargas 3&4 Trains 6 and 7 in Qatar,
• Dung Quat refinery in Vietnam was turned over to the Client,
• Saudi Arabian Khursaniyah gas plant, Trains 1 & 2 were turned over to the client,
• Second train of the Yemen LNG natural gas liquefaction plant turned over to the client,
• Construction activities and pre-commissioning progressed well, and commissioning started on the Gdansk refinery for Grupa Lotos in Poland,
• Engineering and procurement continued for the Jubail refinery in Saudi Arabia; early construction works started,
• Biodiesel plants for Neste Oil progressed well with construction in Rotterdam, The Netherlands, while commissioning started in Singapore,
• Basic engineering was completed while detailed engineering and procurement progressed as planned on the Yinchuan, Ningxia LNG in China.

Order intake and Backlog
During second quarter 2010, Technip's order intake was €1,521 million compared with €873 million in second quarter 2009.

Subsea order intake of €773 million comprised notably of a wide variety of projects in the North Sea including Devenick for BP, the Marulk reeled pipe-in-pipe project for Eni and several frame agreements (BP, BG, and Statoil). We won several contracts in Brazil including Tupi 2Pilot, and in Egypt, where we were awarded the West Delta Deep Marine (WDDM) Phase VIIIa project for Burullus.

Onshore/Offshore order intake included a significant reimbursable EPCIC project in Asia, as well as an extension of the Artificial Island FEED in UAE for ZADCO and several small and medium-sized projects in Europe and Latin America.

Capital expenditures
Capital expenditure for second quarter 2010 was inline with expectations at €90 million compared with €175 million a year ago (which included the Apache II acquisition).