Press Conference held by Mr.Valot, Chairman of Technip-Coflexip's management board
In a difficult year for the whole of its sector of activity, Technip-Coflexip demonstrated its staying power, attaining for 2002 revenues of 4.452 billion euros, with an EBITDA of 348 million euros, i.e. an EBITDA/revenues ratio of 8% (on a comparable basis), compared to 9.1%.
In an environment shaken by the events of September 11, their prolonged impact on investment decisions, the fluctuations in exchange rates and the continued strong pressure from competitors, the Group won major contracts, thus bringing its backlog to 5.8 billion euros at December 31, 2002 (+ 17% compared to December 31, 2001), which represents nearly 16 months of revenues.
The evolution of activities in the different branches was as follows.
In 2002, the Offshore Branch (47% of revenues) generated 62% of EBITA. However, even though fabrication and installation of SURF (Subsea, Umbilicals, Risers, Flowlines) facilities continued to grow, the Floaters activity dropped significantly, due to the lack of attractive opportunities. All totaled, offshore represented slightly more than 30% both of the Group’s order intake and of its backlog at December 31, 2002. The Group won major contracts in the SURF sector, notably a project worth 165 million euros in Canada, as well as several projects in West Africa. The Floaters activity remained high in the Gulf of Mexico, thanks to the current fabrication of several Spar platforms, as well as the award of a contract at the end of 2002 for a new application developed by the Group—the Cell Spar. In the sector of fixed shallow water platforms, Technip-Coflexip successfully completed a lumpsum turnkey contract worth $600 million for CTOC’s Cakerawala gas field development in Malaysia/Thailand and is continuing construction of the Amenam platform in Nigeria.
With regard to the “Onshore and Downstream” branch (44% of revenues), the slowdown in order intake in 2000-2001 resulted in a decrease in revenues and income. On the other hand, in 2002 order intake substantially increased and contributed to the growth of the Group’s backlog. Technip-Coflexip notably won and brought into force several major projects in the Middle East (a refinery in Abu Dhabi, a gas complex in Saudi Arabia, a fertilizer complex in Oman and a steam cracker in Iran), to which was recently added, at the beginning of 2003, a $675 million project for the world’s first large-scale GTL plant, in Qatar. The Group was also awarded trains 4 and 5 of the liquefied natural gas complex in Nigeria, as well as several significant contracts in China in the petrochemicals sector. These new projects, which are for the most part still in the engineering phase, will enter a more active phase in the second half of 2003. They should contribute to a significant increase in revenues and income in the second half of 2003 and even more so in 2004.
The Industries Branch (9% of revenues) performed well in 2002, with its backlog and EBITDA both rising significantly. It renewed its order book in the life sciences sector, mainly in Europe, as well as in chemicals (Europe and China). It also won at the beginning of 2003, in the framework of a 50/50 joint venture, a $600 million project concerning an aluminum smelter for Pechiney in South Africa.
Technip-Coflexip is positioned on two markets that constitute the main lines of development for the coming years: deepwater developments in which it is well placed to win major integrated contracts in the near future and natural gas (treatment and onshore pipelines, LNG and GTL, in which it is the leader thanks to the recent contract in Qatar). Backed by the necessary expertise, it is also capable of taking significant shares of other growing markets (hydrogen, ethylene, polyolefins, PTA, chemicals, electricity), notably in areas possessing abundant low-cost natural gas (the Middle East, West Africa, Russia) or in fast-growing countries such as China.
In order to rationalize its organization and reduce its overheads, Technip-Coflexip has begun a development program for the period 2003-2005: relocation of Paris staff to a single location, merger of Technip-Coflexip and Coflexip, streamlining of management structure, disposal of non-strategic assets and cost savings and synergies in various areas such as procurement, IT and overheads.
In spite of the uncertainties that today remain concerning the situation in the Middle East, the evolution in exchange rates and pressure from competitors, Technip-Coflexip should see its revenues and income grow as of the second half of 2003, with an objective of a 5% increase in revenues for the year, an increase twice as fast as EBITDA and three times as fast as net income per share (before goodwill).
One year after the creation of the new Group, backed both by a substantial high-quality backlog and a strengthened financial structure, Technip-Coflexip begins a new growth cycle which should fully materialize in 2004 and 2005.
With a workforce of about 18,000, Technip-Coflexip ranks among the top five in the field of oil and petrochemical engineering, construction and services. Headquartered in Paris, the Group is listed in New York (NYSE: TKP) and in Paris (Euronext: 13170). The main engineering and business centers of Technip-Coflexip are located in France, Italy, Germany, the UK, Norway, Finland, the Netherlands, the United States, Brazil, Abu-Dhabi, China, India, Malaysia and Australia. The Group has high-quality industrial and construction facilities in France, Brazil, the UK, the USA, and Finland as well as a world class fleet of offshore construction vessels.
Statements in this news release other than historical financial information are forward-looking statements subject to risks and uncertainties. Actual results could differ materially depending on factors such as capital expenditures in the oil and gas industry, the timing of development of offshore energy resources, materialization of construction risks, the strength of competition, interest rate movements and stability in developing countries.
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