q1 results 2014 - tts group reporting/interim presentation q1... · marine roro equipment, hatch...
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TTS GROUP ASA
Q1 Results 2014 Oslo, 15 May 2014
Björn Andersson, CEO
Arild Apelthun, CFO
Agenda
• 1st quarter headlines
• Order intake and order backlog
• Business segments
• Market development
• 1st quarter consolidated
accounts
• Shareholder structure
• The way ahead and summary
Agenda
• 1st quarter headlines
TTS Group ASA
EPS for the quarter was NOK -0,54
Turnover in the quarter was MNOK 554. This is 24 % lower than last year mainly due
to lower activity within Offshore and Heavy lift division.
EBITDA in the quarter was MNOK -28, mainly due to low utilization in the Offshore &
Heavy Lift division.
Order intake was MNOK 645 excluding joint ventures, a 30% increase from same
quarter last year. The largest orders are relating to car carriers, port equipment and
side loading systems. Gross order intake in the joint venture companies reached the
same level and is mainly related to hatch covers, cargo and marine cranes for China.
Order backlog at the end of 1st quarter 2014 was MNOK 3 109. Cancellations in the
quarter were MNOK 47 relating to the heavy lift cranes.
1st quarter 2014 Summary
TTS Group ASA
Turnover and EBITDA – 1st quarter
Turnover EBITDA
EBITDA margin -5,1% 3,4%
* Restated 2012 due to changes in IAS 19, recognition of actuarial gain/loss on pension liabilities.
MNOK MNOK
554
732
0
100
200
300
400
500
600
700
800
Q1 2014 Q1 2013
-28,4
25,1
-40
-30
-20
-10
0
10
20
30
Q1 2014 Q1 2013
TTS Group ASA
EBITDA development
-28,4
-20%
-15%
-10%
-5%
0%
5%
10%
-120
-100
-80
-60
-40
-20
0
20
40
60
Act Q2 2012 Act Q3 2012 Act Q4 2012 Act Q1 2013 Act Q2 2013 Act Q3 2013 Act Q4 2013 Act Q1 2014
EBITDA EBITDA margin
Notes
1) Restated 2012 due to changes in IAS 19, recognition of actuarial gain/loss on pension liabilities.
TTS Group ASA
Historical turnover development 2000-2013 MNOK
0
500
1 000
1 500
2 000
2 500
3 000
3 500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Marine Offshore & Heavy Lift Services Total
Agenda
• 1st quarter headlines
• Order intake and order backlog
TTS Group ASA
Order intake MNOK
664
485 501
635
492
755
890
775
645
0
100
200
300
400
500
600
700
800
900
1 000
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
TTS Group ASA
Order backlog Q1 2014
Order intake and backlog Q1 2014
Order backlog per Q1 2014
By year of delivery.
Cancellation of order in Offshore
& Heavy Lift relates to heavy lift
cranes.
MNOK
MNOK
Order-intake Cancelled Q1 2014 Q1 2013
Marine 364 0 2 304 1 544
Offshore & Heavy Lift 160 47 804 944
Services 120 0 0 0
Total 645 47 3 109 2 488
*Order reserve includes 50% of Joint Ventures.
Q1 2014 Backlog*
1 956
1 011
142
0
500
1 000
1 500
2 000
2 500
2014 2015 2016+
TTS Group ASA
Order cancellation Q4 2011 – Q1 2014 MNOK
8,5 5,7
225
43
10
21
68
116
47
0
50
100
150
200
250
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14
Q4 2013 consists of termination of the STX drillship contract.
TTS Group ASA
Order backlog* - per 31.03.2014 MNOK
*Order reserve includes 50% of Joint Ventures.
2 304
1 544
804944
0 0
3 109
2 488
0
500
1 000
1 500
2 000
2 500
3 000
3 500
31.03.2014 31.03.2013
Marine
Offshore & Heavy Lift
Services
TTS Group
TTS Group ASA
Order backlog* by division Q4 2011 – Q1 2014 MNOK
*Order reserve includes 50% of Joint Ventures.
0
500
1 000
1 500
2 000
2 500
3 000
3 500
Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14
Marine
Offshore & Heavy Lift
Services
Total
Agenda
• 1st quarter headlines
• Order intake and order backlog
• Business segments
Turnover: 554 MNOK
EBITDA: MNOK -28.4
Offshore
handling
Heavy Lift
Offshore
Cargo Access
Deck
Equipment
Shipyards
Heavy Handling
New group structure - division and business
units
Turnover: 149 MNOK
EBITDA: MNOK -39.1
Turnover: 284 MNOK
EBITDA: MNOK 9.5
Turnover: 120 MNOK
EBITDA: MNOK 6.5
TTS Group ASA
Marine Offshore & Heavy Lift Services
Joint Ventures
Marine RoRo equipment, Hatch covers, Side doors, Cruise and Mega Yachts,
Winches and Deck equipment, Cranes and Davits for ships, shiplift and equipment for port terminals
High activity in car carriers during the period
and additional options on similar vessels are
secured.
Somewhat lower activity and margin within
deck equipment, but the order intake has
been positive for this quarter. Cost cutting
measures are being implemented.
Low activity and profitability within port
business for the first quarter. Structural
changes initiated in Sweden.
Market outlook for the marine division is
positive with high activity.
TTS Joint Venture operations in China
Numbers are on a 100% basis and in MNOK.
Joint Ventures are recognized in the
financial statements according to the equity
method. TTS Group includes only its share
(50%) of profit after tax in financial reports.
The increased contracting, especially in the
bulk and container segment, results in
improved order intake during the period both
for cranes and hatch covers.
Order intake in the joint ventures in Q1 was
MNOK 605 (100% basis).
The joint ventures are seeing a strong
market for its products. The market share is
in a positive development.
Numbers are on a 100% basis and in MNOK.
Offshore & Heavy Lift
Offshore and Heavy lift cranes, Hangar and watertight doors
The division reports again weak results in the
1st quarter with a loss of MNOK 39.
The main reason for the losses are weak
margins on ongoing work (provisions for loss
making projects cover project costs but not
overhead) and low utilization of our
operations in Norway, China and Germany
due to cancellations (STX) and delays.
Cost reduction efforts have been
implemented, resulting in a reduction of
workforce of approx. 100 persons. This effort
is expected to be finalized in Q2.
Order intake for the quarter was MNOK160.
Low activity in the market, specially for
offshore cranes in the quarter. However there
are signs of increased activity in both heavy
lift and offshore and 2 pipe handler cranes
was signed in May.
Services
Spare parts, Service and Maintenance
Services reports a quarter in line with last
year.
The earnings are still influenced by the
market where low volume per order is
affecting profitability.
Services base establishment in Brazil and
Houston is well underway and expected to be
finalized in Q2.
Agenda
• 1st quarter headlines
• Order intake and order backlog
• Business segments
• Market development
Outlook Offshore Vessels & Drill ship Global market 2005-2015
Source: DNB
For OSV we have seen a weaker market over the last 6 months but there are signs of increased
activity.
For Drillship the mid term prospect looks to be weaker due to oversupply, however the longer term
still looks promising.
Still optimistic with regards to Chinese ship yard market share.
Source: Pareto
Ship newbuilding prices are on the move Shipbuilding prices are trending upwards for all segments, impact on equipment prices likely to follow
in 6- 9 months.
Source: DNB
0
20
40
60
80
100
120
140
160
180
Suezmax Tanker 156-158K DWT Capesize 176-180K DWT
VLCC 315-320K DWT Panamax 91-93k dwt Bulkcarrier
Outlook World Fleet
Number of new Ship Orders
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
Tanker Bulker
General cargo/Reefer Container
Car Carriers/RoRo/RoPax Cruise
Source: Maritime Strategies International
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Contracting Deliveries Scrapping
No of ships
Agenda
• 1st quarter headlines
• Order intake and order backlog
• Business segments
• Market development
• 1st quarter consolidated
accounts
TTS Group ASA
Profit and loss statement
MNOK 2014 2013 2013
Turnover 554 732 2 693
EBITDA -28 25 -130
Operating profit -38 18 -164
Net financial items -9 -4 -37
Profit/loss before tax -47 14 -201
Net result -47 9 -227
1st quarter Year
TTS Group ASA
Turnover as per 31.03.2014 MNOK
284338
149
278
120 116
554
732
0
100
200
300
400
500
600
700
800
Q1 14 YTD Q1 13 YTD
Marine
Offshore & Heavy Lift
Services
TTS Group
TTS Group ASA
EBITDA as per 31.03.2014
MNOK
9,5
15,8
-39,1
5,96,5 7,4
-28,4
25,1
-50,0
-40,0
-30,0
-20,0
-10,0
0,0
10,0
20,0
30,0
Q1 14 YTD Q1 13 YTD
Marine
Offshore & Heavy Lift
Services
TTS Group
TTS Group ASA
Balance Sheet
There have been no conversions of convertible bond during Q1 2014.
Equity ratio at end of 1st quarter 2014 is 24.0%.
MNOK 31.03.2014 31.03.2013
Non-current assets 931 925
Current assets 1 161 1 259
TOTAL ASSETS 2 092 2 184
Equity 503 836
Interest bearing liabilities 372 114
Other liabilities and provisions 1 217 1 233
TOTAL EQUITY AND LIABILITIES 2 092 2 184
TTS Group ASA
Equity share development
* Restated from Q4 2011 due to changes in IAS 19, recognition of actuarial gain/loss on pension liabilities.
Percent
22,4 22,9
44,8 44,8
33,8
38,3
33,5 32,8
25,524,0
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
50,0
Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
TTS Group ASA
Net working capital development
Working capital is influenced by the
significant provisions made in Q4.
Overall the Marine Division has
negative working capital while the
offshore and especially heavy lift
projects ties up working capital.
-15,0 %
-10,0 %
-5,0 %
0,0 %
5,0 %
10,0 %
15,0 %
-500
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
Net working capital
Total asset
NWC % of total assets
TTS Group ASA Consolidated cash flow and net interest bearing debt
(*) Convertible loan included at nominal value
(**) Negative indicates net asset position
Cash flow from operations was
negative with MNOK 157, due to
increased working capital related
to ongoing offshore and deck
equipment projects.
Net interest bearing debt
increased to MNOK 268.
TTS is not in breach of its
covenants at end of Q1.
TTS has started discussions with
the banks regarding its longer
term financing following the
significant losses over the last 6
months.
YTD YTD
MNOK 2014 2013
Net cash flow from operations -157 -94
Net cash flow from investments -7 -7
Net cash flow from financial activities 132 -1
Net change in cash -32 -102
Cash and bank deposits at the start of the period 155 227
Effect of exchange rate changes in bank/cash -6 23
Cash and bank deposits at the end of the period 117 148
Net cash continued business 117 148
MNOK Q1 14 Q4 13 Q3 13 Q2 13 Q1 13
Short term interest b. debt 187 50 150 32 32
Long term int. bearing debt 103 103 0 106 6
Convertible Bond(*) 95 95 95 95 95
Total 385 248 245 233 133
Cash 117 156 65 147 148
NIBD (**) 268 92 180 86 -15
Agenda
• 1st quarter headlines
• Order intake and order backlog
• Business segments
• Market development
• 1st quarter consolidated
accounts
• Shareholder structure
TTS Group ASA
10 largest shareholders at May 5th 2014
Rasmussengruppen AS 13.29%
Skeie Technology AS 10.31%
Lesk AS 6.13%
Stisk AS 6.13%
Skandinaviska Enskilda 5.66%
Barrus Capital AS 3.99%
Skagen Vekst 3.72%
Skeie Capital Invest 2.92%
Holberg Norge Verdipapirfondet 2.59%
Tamafe Holding AS 2.49%
Total 57.23%
Agenda
• 1st quarter headlines
• Order intake and order backlog
• Business segments
• Market development
• 1st quarter consolidated
accounts
• Shareholder structure
• The way ahead and summary
Status on the initiatives
The adjustment of the 2013/Q4 accounts
additional loss of MNOK 90, was a
consequence of worse problems than
anticipated related to projects in offshore
and yacht.
As previously communicated, TTS has
launched a group wide restructuring and
cost optimization program. This program
continue with high priority throughout 2014
and 2015
The immediate actions
Cost cut and capacity adjustments,
mainly in Offshore and Heavy lift
Re-organization of Port & Logistics
with Marine to get a better utilization
and improve efficiencies.
Adjustment in management
The medium term processes are
ongoing, but has yet to be reflected in
the financial figures
Process improvement
Market approach adjustments
Momentum initiatives
Operational excellence & Synergies
– release total MNOK 150 in operational costs
Business strategies
GAP analysis
Adjust organization structure
Financial performance. Target
set
Re-engineering of Offshore Handling, Heavy Lift and Deck Equipment
2013 2014 2015
Organizational adjustments and
merging units
Port & Logistics first out
Staff reduction of 10% initiated
Focus on efficient
operation/process
Offshore and Heavy lift
downsizing and new work
process
Enhance market focus
Key account structure
implemented
Corporate driven controller
structure
Momentum cost reduction
projects
Product development plans in all
units
Customer driven growth
market shares to increase
Profitability through cost
efficiencies
substantial lower sourcing
costs
Closing gaps /product
development
reinforced competitive position
Lean and mean business
substantial better focus on
segments where higher
productivity are achieved
Phase 1 Phase 2
Phase 3
A word related to the building blocks
The financial performance from last quarter must be radically improved.
The following highlights are the building blocks:
We are strong positioned with car carriers which will continue for years.
Consolidating our strong market position in China and expanding cooperation
partners. Order intake in JV (100%) exceeds 600 MNOK for 1st quarter.
Our offshore products have high quality and satisfied customers.
Our product range within offshore has been more expensive than anticipated to
develop, but the repeat orders achieve profit.
We will deliver our first drillship this year and we are in the process of finalizing
delivery of our first 900t heavy lift crane, even with the termination of drillship to
Sigma (STX) was a set-back.
The impact of momentum initiatives will demonstrate in the new booked orders.
Product development and product simplification actions.
Our network of design hubs in Poland and Vietnam is set up to provide competitive
cost and high quality.
Summary
We have a road map for the improvement processes going forward in 2014 and
2015 and that has not changed;
Productivity
Sourcing, economy of scale and simplification of logistics
Lead time reduction program
Additional cost cutting to adjust capacity and increase synergies is well
underway.
The changes implemented will generate improved results. However, in near term
the profitability is a challenge. We have a 2 year program.
We start out with some strong building blocks but capitalizing on these will take
time.
Outlook
The marine market remains good. Contracting of new vessels, especially bulkers
continues to be at a high level and Car carriers will continue with several repeats.
Container ships, especially feeder size grow up and General cargo/Heavy lift have
increased since the yearend. Offshore segments of OSV with heavy cranes are in
the pipeline.
TTS GROUP ASA
For further information, please visit us at
www.ttsgroup.com