Technip Announce Fourth Quarter and Full Year 2014 Results
Record order intake and backlog – dividend increased to €2.00 per share1
4Q order intake of €3.2 billion takes full year to €15.3 billion
Record backlog of €20.9 billion
4Q adjusted revenue up 14%, full year up 16% to €10.7 billion
FY adjusted operating income from recurring activities2 of €825 million
FY adjusted operating margin of 13% in Subsea and 4.7% in Onshore/Offshore
FY adjusted underlying net income3 of €564 million
Proposed 2014 dividend up 8% to €2.00 per share with optional scrip dividend benefiting from a 10% discount
FULL YEAR 2015 OUTLOOK ALIGNED WITH PREVIOUS GUIDANCE
Adjusted Subsea revenue between €5.2 billion and €5.5 billion, adjusted operating income from recurring activities2 between €810 million and €840 million
Adjusted Onshore/Offshore revenue around €6 billion, adjusted operating income from recurring activities2 between €250 million and €290 million
Thierry Pilenko, Chairman and CEO, commented: “Technip starts 2015 in a strong position. During 2014, Technip won a record amount of new work with order intake of €15.3 billion resulting in a €21 billion backlog of high quality and diversified projects. Our adjusted revenue grew 16% and adjusted operating profit reached €825 million with particularly strong performance in the technology, services and equipment parts of our business. All our employees focused hard on our quality and our safety programs in 2014, with clear improvements in both areas.
Subsea delivered ahead of expectations. Operational performance was strong across all regions and we showed flexibility to adapt to client demands. With an adjusted operating margin of 15.3% in the fourth quarter we delivered 13% for the full year 2014, well ahead of the 12% floor set over a year ago. Onshore/Offshore delivered adjusted revenue higher than expected – up 12% year-on-year. Operationally, as we indicated it would be in July, conditions were challenging in a number of respects, reflected in a fall in full year adjusted OIFRA to €276 million.
In our market commentary in July 2014 we identified significant headwinds in the oil and gas services business – client capex discipline and increasing aggressiveness in negotiating value changes and claims on projects as well as irrational bidding behaviour from some competitors. Since then the oil price fall has added to these concerns and our clients are putting increasing pressure on their supply chains. This implies a prolonged, harsh slowdown in many parts of our industry.
Our reaction has been strong and rapid on the elements under our control. We brought down our SG&A expenses by €69 million in 2014, including €27 million in the fourth quarter. Our total headcount has fallen from close to 40,000 at its peak in the second quarter 2014 to 38,200 at year end. We have exited four non-core activities over the year. Our fleet has been substantially reduced to a total of 27 high-performance vessels, setting a strong basis to improve utilization and operational performance. Our cost reduction and efficiency plans are in place to sustain our performance in 2015.
Our record level of backlog enabled us to reinforce our bidding discipline, focusing on projects where our particular value-added for our clients enables us to earn an appropriate return at acceptable risk: despite the difficult markets, we see continued order intake opportunities in many of our businesses.
We invested and recruited in 2014 selectively. In technology, we acquired the Zimmer polymer business at year-end. In equipment, we launched an upgrade of FlexiFrance manufacturing plant following the completion of investments in umbilicals in the UK and flexibles at Açu in Brazil whose performance was excellent in the second half of the year. We will continue our capex discipline: our net capex was €314 million in 2014, and is expected to fall in 2015 and 2016. Regarding our talent, we continued to develop them and add specific skills in our engineering teams and to view the current market as an opportunity to hire additional exceptional people into Technip.
Regardless of the oil price level, our clients have stressed their need to improve the design and running costs of their facilities. Technip has the conceptual engineering skills and innovative technology which can enable them to improve substantially the returns on their projects, including in deep offshore or frontier areas. Where we have had early engagement with our clients, they have seen our ability to deliver substantial optimization. We will continue to add expertise to broaden our position as a valued partner for our client base, in particular by working more closely with partners in adjacent areas of Subsea.
For 2015, based on our record €21 billion backlog, we are able to give clear guidance for revenue and profit growth and our main focus will again be on delivering our projects in line with our clients’ expectations. We are not only managing our own costs but our clients increasingly see our range of technologies, services, products and project experience as compelling in managing their project costs too. With all of this in mind, combined with Technip’s robust balance sheet, we maintain our progressive dividend policy and propose an 8% increase with a scrip alternative, reflecting our confidence in our ability to create value in the coming years for all our stakeholders.”