First Half 2013: Solid results in a steady market

Wednesday, 28 August 2013 00:00

Revenues up 14.1% vs. first half 2012 as a result of increasing daily rates overall and a high average utilization rate.

Paris, August 28, 2013,

EBIT increased 44.4% versus first half 2012; EBITDA up 22.2% over the same period, benefiting from an increase in average daily rates, cost reduction efforts and a change in consolidation scope
Net income (Group share) decreased €2.6 million year on year
All regions realized increases in revenues compared with the first half 2012, notably in Asia
Average daily rates increased in all segments year on year
Utilization rates stable year on year despite high level of classification drydocks in the period
The final agreement of the sale of 51 vessels for up to US$1.5 billion to ICBC Financial Leasing (“ICBCL”) has been signed and the transfer of the first 9 vessels of this agreement for US$144 million is expected to take place in the very near future

“In a steady market, BOURBON continues to deliver revenue growth,” says Christian Lefèvre, Chief Executive Officer of BOURBON. “During the first half of 2013, BOURBON maintained satisfactory utilization rates while managing a higher level of classification drydocks and higher pace of vessel deliveries than the same period in 2012. This performance reflects our clients’ trust in the unique service BOURBON provides with its fleet of latest generation vessels under the highest standards of safety.

BOURBON has signed the final agreement for the sale of 51 vessels for up to US$1.5 billion with ICBCL after the period closed, allowing the Group to begin the reduction in debt as per the Asset Smart portion of the “Transforming for beyond” action plan. The sale of the first 9 vessels, representing US$144 million has been signed. We expect to complete the execution of the remainder of the US$1.5 billion within 10 months. The Group’s rapid debt reduction in the coming months will be a major asset to build the future beyond 2015.”

Half year 2013 results/additional highlights

EBITDA as a percent of revenues increased partly due to realization of benefits of standardized maintenance through the efforts of our centralized maintenance organization, Bourbon Docking
Revenues increased across all regions compared with the first half of 2012, with particularly strong increases in Asia (+46.8%) while revenues in Africa gained 6% despite reduced spot activity in the shallow water market
Average daily rates increased both year on year and sequentially across all segments, with the exception of a slight decrease in the Shallow water offshore segment average daily rate compared with the second half of 2012
Compared with the first half of 2012, the level of classification drydocks remained high overall in the first half of 2013 and increased in the Deepwater offshore segment, thus contributing to the decline in its average utilization rate; compared with the second half of 2012, total drydocking time increased significantly across all Marine Services segments, thus significantly contributing to the decline in their respective average utilization rates
Taxes were up €10 million year on year due to, among others, higher profits in regions with higher tax rates; and broadly in line with taxes in the second half of 2012
Foreign exchange rate changes resulted in a negative impact of almost €8 million on the 2013 first half results versus the corresponding period in 2012; however, there was a net benefit versus the second half of 2012 of nearly €11 million
One 18-year old deepwater AHTS was sold during the period

BOURBON 2015 Leadership Strategy

As the BOURBON 2015 Leadership Strategy covers the period starting from the beginning of 2011 through to the end of 2015, we are now at the halfway point in this timeline
Regarding the average annual revenue growth objective of 17% in 2015, BOURBON had annual revenue growth of 18.6% in 2011, 17.7% in 2012 and 14.1% for the first half of 2013
EBITDA as a percent of revenues (excluding capital gains) continued to increase, reaching almost 34% for the first half of 2013
The above percentage has been positively impacted by the cost reduction efforts
EBITDA/average capital employed excluding installments increased by 1.3 points compared with the first half 2012 to 14.6%
Technical availability rate marginally down from first half 2012 and still at a high level of 93.5%

MARINE SERVICES

Compared with the first half of 2012, Marine Services revenues were up 14.5% to €527.3 million, outpacing the rate of increase in the size of the fleet (approximately 5%) reflecting, among others, the improved average daily rates across all segments. Despite significant classification drydocks and the transit of new additions to the fleet to their respective regions of operation, EBITDA as a percent of revenues (excluding capital gains) continued to increase, notably as a result of a slowing pace of direct cost increases on a per ship per day basis.

Compared with the second half of 2012, business activity continued to grow as evidenced by both revenue growth and growth in EBITDA (excluding capital gains), despite taking into account the seasonal impact from the first quarter in addition to the effects mentioned in the comparison to the first half above. Direct costs declined slightly overall compared with the second half of 2012 as the effects of cost reduction efforts throughout Marine Services despite an increase in the fleet of 13 vessels over this period.

Marine Services indicators by segment

Deepwater offshore vessels

Compared with the first half of 2012, revenues from Deepwater offshore vessels in the first half of 2013 were up by 11.6% to €195.3 million due to, among others, an increase in the average daily rate of more than 8%, helped by steady activity in Europe and West Africa. This was partly offset by a reduction in the average utilization rate due in part to several ships in transit between regions and classification drydocking activity.

Compared with the second half of 2012, revenues increased due to a combination of the end of the seasonal impact affecting the first quarter and the inclusion for the entire period of 2 additional PSVs from the PX105 MACS® series. EBITDA (excluding capital gains) as a percent of revenues was steady at a strong level of over 36%, helped by a minimal increase in direct costs. The fourth PSV vessel in the PX105 MACS® series, the Bourbon Rainbow, was delivered into the fleet and has been operating in the North Sea since mid-May.

Shallow water offshore vessels

Compared with the first half of 2012, revenues for the first half of 2013 for Shallow water offshore vessels were up significantly by 18.9% and the average utilization rate increased while at the same time growing the fleet by more than 10%. Reduced activity in the shallow water spot market in West Africa impacted a portion of the period, offset by new contracts in Asia and improved rates in Europe & Mediterranean/Middle East.

Compared with the second half of 2012, EBITDA as a percent of revenues increased despite revenues being flat in the first half of 2013, notably as a result of a reduction in direct costs by almost 5% sequentially. This was attributed to savings in maintenance costs thanks to the standardization of the fleet through series built vessels. The reduced activity in West Africa and the monsoon season in Asia during the first quarter both contributed to the flat revenues in the period. The first vessel in the Bourbon Liberty 150 series, an extension of the Bourbon Liberty 100 series, was delivered during the first half and operating for Maersk Oil in Qatar.

Crewboats

Compared with the first half of 2012, revenues in the first half of 2013 for the Crewboats segment were 13.3% higher at €149.1 million, with contributions from an increase in the fleet, steady average utilization rate and improved average daily rate. The latter is most notably from the larger crewboats and FSIVs while rates on the medium and smaller crewboats remained stable.

Compared with the second half of 2012, revenues continued to increase while direct costs only marginally increased, thereby enabling EBITDA as a percent of revenues to return above 30%. Direct costs increased by less than 1%, demonstrating that cost reduction efforts are realizing their benefits despite the steady growth of the fleet.

SUBSEA SERVICES

Compared with the first half of 2012, revenues in the first half of 2013 for the Subsea Services Activity were up by 18.2% to €109.0 million, benefiting from reduced unplanned maintenance and new vessels entering the fleet with increases in both average daily rate and utilization rate. Operating margin increased significantly, most notably the EBITDA to revenue ratio climbing above the 40% mark.

Compared with the second half of 2012, increases in average daily rates and utilization rates combined to result in EBITDA as a percent of revenues continuing its increase since the first half of 2012. The 3rd vessel in the Bourbon Evolution series was delivered and has been operating in Malaysia, our client having already indicated a high level of satisfaction with the vessel.

OTHER

Compared with the first half of 2012, "Other" revenues were down 24.5%.

Compared with the second half of 2012, "Other" revenues were up 25.5%.

Using chartered vessels has two advantages for BOURBON: it makes it possible to meet client demands and generate contracts while new vessels are being built and added to the fleet. Using chartered vessels also enables BOURBON to offer vessels that are not part of its regular line of services when needed for global calls for tenders. Volatility of “Other” revenues is largely due to the variation in the number of chartered vessels during the period.

OUTLOOK

Robust investments in Exploration/Production by oil and gas clients continue to stimulate demand for offshore vessels.

In deepwater offshore, the demand for medium size PSVs and large PSVs is expected to increase during the coming months, boosted by development of deepwater projects. This should have a positive impact on the market while absorbing part of the new vessels coming out of the shipyards. The market for AHTS vessels is expected to gradually become more well balanced.

In shallow water offshore, there are 108 jack-up rigs under construction, which should have a positive impact on the demand for modern shallow water offshore vessels. On the supply side, less vessels are expected to be coming out of shipyards, further contributing to an improvement in the market.

Subsea activity is expected to remain high. The Bourbon Evolution 800 series design is well recognized in the subsea IMR market. Interest is foreseen for the capabilities of vessels to support the upcoming growing subsea installation and deepwater field maintenance.

The level of classification drydocks is expected to be slightly lower for the second half of 2013.

The strategy of fleet standardization, the focus on crew training through the use of simulators, and the systematization of maintenance and procurement procedures aim to continue to underpin BOURBON’s operational and financial performance.

BOURBON is fully committed to reducing its debt in order to build future high value-added growth.

“TRANSFORMING FOR BEYOND” ACTION PLAN

In March 2013, BOURBON announced the action plan “Transforming for beyond” to lay the foundations for the Group’s future growth beyond 2015. The financial aspect of this transformation plan consists of selling up to 30% of the supply vessels’ fleet, up to US$2.5 billion, and retain the vessels on bareboat charter for a period of 10 years.

On April 9, 2013, BOURBON announced that the terms of the first phase were signed with the Chinese company ICBC Financial Leasing (“ICBCL”) for 10-year fixed rate (10.66%) bareboat charter of up to 51 supply vessels either in operation (24 on that date) or under construction (27 with delivery expected by June 2014) for a total of up to US$1.5 billion.

EVENTS SINCE JUNE 30, 2013

BOURBON has signed the final agreement for the sale of 51 vessels for up to US$1.5 billion to ICBCL and signed the sale agreement for the first 9 vessels as part of the $1.5 billion vessel sale previously announced; the transfer of the remaining 15 vessel currently under operation is expected to be completed within 2 months and the transfer of the 27 vessels under construction is expected to be completed within 10 months
The 9 vessels to be included as part of the first transfer to ICBCL is comprised of 1 deepwater vessel and 8 shallow water vessels, in keeping with the Group strategy to include latest generation, built in series vessels for the sale and bareboat charter operation
One 15-year old deepwater AHTS and one 10-year old tug were sold
BOURBON has strong activity in Africa and is very attentive to events unfolding, namely in Egypt, in particular as far as its employees are concerned, even if the country is not significant in terms of revenues to the Group

CHANGE IN BOURBON CONSOLIDATION SCOPE

As of January 1, 2013, certain companies that were previously consolidated proportionally have been fully consolidated. The impact of this change in consolidation scope is not significant for the Group. Consequently, and in accordance with regulations, no pro forma financial statements have been established for the current period.

ADDITIONAL INFORMATION

The accounts for the first half of 2013 were closed by the Board of Directors on Monday, August 26, 2013
The accounts for the first half of 2013 underwent a limited examination by the statutory auditors
BOURBON’s results will continue to be affected by the €/US$ exchange rate